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Foreign Direct Investment in Central Europe: Croatia

Foreign Direct Investment in Central Europe: Croatia

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The global pandemic has impacted all markets, with subsequent ramifications for M&A. Investors are now seeking greater protection against general lock-downs and supply-chain disruptions, while governments aim to protect critical supplies and services by imposing new regulations on foreign investment in crucial or strategic industries.

If you are considering investment opportunities in Croatia, take a look at this overview to get insight into the regulations on foreign investment in strategic industries.

​The following overview is an extract from the Foreign Direct Investment in Central Europe publication, which gives insight into the regulations on foreign investment in strategic industries in the region.

Have FDI screening rules been implemented (or will they be implemented) in the country?

Croatia is planning to implement FDI screening rules, but has not yet brought any relevant national legislative act.

Namely, the Act on the implementation of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (,,Act on implementation’’) was provided for in the Plan for harmonizing the legislation of Republic of Croatia with EU acquis communautaire in 2020. The respective Act should have entered the legislative procedure by July this year, however, the legislative procedure has not yet begun.

Furthermore, according to unofficial information from the Ministry of European and foreign affairs, the Act on implementation will not enter the legislative procedure at all. Instead of the primarily planed Act on implementation, a short Regulation on the implementation of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (,,Regulation on implementation’’) shall be adopted. The Regulation on implementation will designate the Ministry of Economy and Sustainable Development national contact point for FDI screening rules and should be made available for the public consultation later in August. Moreover, the Critical Infrastructure Act shall also be amended according to the Regulation 2019/452.

Currently, FDIs are regulated by the Foreign Exchange Act (Official gazette 96/2003, 140/2005, 132/2006, 150/2008, 92/2009, 153/2009, 133/2009, 145/2010, 76/2013) and the accompanying Decision on data collection for the purposes of compiling the balance of payments, the state of external debt and the state of international investments. The reporting obligation under those acts in not connected with the implementation of the Regulation 2019/452, since they are in force from 2013(7).

By Tarja Krehic, Partner, Krehic & Partners in cooperation with Deloitte Legal

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