Services market liberalization is a part of the regulatory reform led by the Ministry of Economy and Sustainable Development. The main objective of this reform is to facilitate services market entry and to boost productivity and competitiveness.
Services market liberalization was implemented by the end of May 2023 with 270 measures in approximately 50 activities and professions.
In this way, the target value was achieved as a result indicator under the National Reform Programme 2020. At the same time, the expected dynamics of implementing additional measures is achieved with the National Recovery and Resilience Plan 2021-2026, the National Reform Programme 2022, and the National Reform Programme 2023, in a way that there are at least 300 measures in total by the end of 2024.
Since 2019, measures in this area have been implemented through action plans for liberalization of the services market, following the regulatory analysis of professional services by the World Bank (funded by the European Commission under the Structural Reform Support Programme). In the process, 18 out of 20 measures of the first action plan and 13 out of 18 measures of the second action plan were implemented. Other measures are in the process of implementation during 2023.
The aim of the continuation of the reform is to further open the institutional framework for the potential and existing entrepreneurs and to simplify or lift at least 50 regulatory requirements for the private professional services sector by the end of 2024. Several measures have already been implemented. Since the second half of 2023, the reform has continued through the third action plan on liberalization of the services market, which contains measures foreseen for implementation during 2023 and 2024 within the following professions: tax advisors, auditors, architects, civil engineers, mechanical engineers and electrical engineers, energy certifiers, geodetic engineers, public notaries, pharmacists, physiotherapists, psychologists, social pedagogues, social workers, educational rehabilitators, patent agents, trademark representatives, veterinarians, and tourist agency managers. In almost all these professions, certain liberalization measures have already been implemented.
SUMMARY OF THE MEASURES IMPLEMENTED
Open cross-border market competition
The domestic market is open to competition from the EU market. Freedom of establishment on a permanent basis has been provided mutually within the EU. Furthermore, freedom to provide cross-border services on a temporary and occasional basis has been provided for various business activities for EU/EEA nationals, without obligation to register a company, to be a member of a professional chamber or to pass a professional exam. Freedom of establishment has been provided as well.
Starting a business has been simplified, accelerated and digitalized. As regards the access to the services market, digital procedures are available for the growing number of professions (architects, civil engineers, mechanical engineers and electrical engineers, geodetic engineers, tax advisors, auditors, detectives, driving schools, tourism and catering industry, tourist guides, intellectual property, private education, real estate agents, retail and e-commerce), and process is ongoing. For a variety of other services, scanned documents may be sent by e-mail, without seals and stamps, as well as without the additional obligation of sending the documents via post office. Information on requests for the services sector are available in a single place, without obligation to go to institutions in person.
Less duplication and zero-licensing
Equivalent types of professional liability insurance is recognized from other EU/EEA states. The access to regulated professions through automatic recognition of professional qualifications for EU/EEA citizens has been facilitated, and the same applies to Croatian professionals in the EU market. The government does not demand information from domestic service providers that it already has in the system. The use of IMI system for verification of information on the cross-border service providers has been increased. Relicensing of construction companies has been removed, including energy certification, auditors, psychotherapists, as well as licensing of tourist guides, employment agencies and accountants. Professional chamber is not mandatory for construction site managers, anymore.
Removing fixed tariffs has enabled free price formation and negotiation in various professions and sectors such as accountants, real estate agents, architects, engineers, auditors, tax advisors, taxi drivers, driving schools, etc. Furthermore, it is possible to determine the price of legal services more flexibly, in such a way that in all legal matters lawyers can agree with the client in writing to work on an hourly basis, whereby they are not obliged to adhere to the minimum hourly rate.
Less exclusive rights
Interior and landscape design is not exclusively under the competence of architects, so there are no limitations for others to perform this business activity.
Easier recognition of professional qualifications
Automatic recognition of the professional qualifications has been implemented for the professions from other EU/EEA states. A general system for recognition of professional qualifications from the third countries has been introduced as well. European Professional Card issued for provision of services on temporary and occasional basis gives an automatic right to practice the profession without fulfilling any additional requirement. A person who wants to provide regulated professional services may notify electronically the competent authority thereof or Point of Single Contact for services. Obligation of testing Croatian language proficiency is not obligatory anymore for professionals from EU/EEA states, except for healthcare professions due to patient safety. There is a 30-day deadline for a competent authority to issue a decision on recognition of foreign professional qualifications after fulfilment of an additional measure.
Architects and engineers, lawyers, pharmacists and physiotherapists are no longer banned to advertise their services, and this is also the case in many other professions.
No office and license restrictions
Territorial restrictions considering the number of licenses have been removed (for example driving schools and taxi services). Taxi drivers may obtain licenses in any municipality. This enables expansion of professional businesses and their new investments. Furthermore, founders of driving schools, private archives, private educational institutions and private scientific institutes are no longer under obligation to have economic justification of their business by means of a study. Architects, engineers, auditors and lawyers are free to open new offices as most of other occupations and professions.
Selection of legal form
In the majority of professions, there are no limitations in terms of the legal form. Therefore, the entrepreneurs decide independently whether they want to start a business as natural or legal persons. This enables removal of costs of obligatory status change, for example from natural to legal persons. For example, lawyers and tax advisors may also establish a limited liability company.
No permanent residence obligation and less certificates
Architects, engineers and geodetic engineers, as well as many other professions are no longer under obligation to register their permanent residence in Croatia. Architects and geodetic engineers are no longer under obligation to prove that they are not under any criminal investigation or criminal proceeding.
Less time to obtain the license
Mandatory work experience for architects, engineers and geodetic engineers has been reduced to two years, for veterinarians to six months, while it is no longer required for tourist agency managers. Work experience for notaries has been reduced.
More open employment practices
As other professions, civil engineers and online travel agencies are no longer under obligation of hiring minimum number of employees; instead, they independently decide in this matter. Freedom of concluding full-time or part-time job contracts is provided for driving schools. Online travel agency office manager is no longer under obligation to have permanent residence. Also, there is no obligation to have a full-time employed office manager in every branch office of a travel agency.
Facilitated provision of lawyer services
Croatian lawyers may practice their profession in companies in other EU Member States. When the profession is practiced outside a law firm, the right to practice law profession does not cease to exist for Croatian lawyers in other EU Member States. Branch offices of EU law firms may provide consulting services on Croatian law as well. Lawyers from other EU Member States may start a law firm in Croatia, and they can provide legal services jointly with Croatian lawyers or lawyers form other EU Member States, without obligation to wait for recognition of qualifications to have an equal status with Croatian lawyers. It is possible to start employment as a lawyer with another lawyer who as an employer independently practices legal profession, and within a joint law firm. Lawyers who without a justified cause do not practice their profession more than 6 months will no longer be deleted from the register. Specific administrative requirements for European lawyers have been reduced. The high fee for chamber re-enrolment is no longer payable, while the fee for the first enrolment has been reduced by 40%.