Why Open a Flat-Rate Sole Proprietorship for Taxi Services in Croatia?
Starting your own taxi business in Croatia can be both rewarding and financially viable, especially when done through a flat-rate sole proprietorship (paušalni obrt). This model is designed to simplify business ownership for individuals offering professional services, including taxi drivers.
What is a flat-rate sole proprietorship?
A flat-rate sole proprietorship (in Croatian: paušalni obrt) is a simplified form of self-employment in Croatia. It allows individuals to legally operate as solo business owners with minimal administrative burden and predictable tax obligations.
Unlike other business structures, the flat-rate model is based on fixed quarterly tax payments, determined by your income bracket, not on complex bookkeeping or monthly tax calculations. This makes it especially popular among freelancers, tradespeople, and service providers, such as taxi drivers.
Key features of a flat-rate sole proprietorship include:
- No initial capital required
- No VAT obligations, unless you exceed the threshold or register voluntarily
- Fixed tax payments based on expected annual revenue
- Simple recordkeeping requirements, often manageable without an accountant
- Eligibility to use your home address as your business address
This model is designed for small, one-person operations and is ideal for individuals who want to work independently, ensuring full legal compliance and low overhead.
Why open a flat-rate sole proprietorship for taxi services in Croatia?
There are several compelling reasons why this is the preferred structure for many:
- Low costs & no setup fees: As of 2021, opening an obrt is entirely free. You won’t need to pay for company registration, notarization, or startup capital, as you would with a limited liability company (d.o.o.).
- Simplified taxation: Flat-rate taxation means you pay a fixed amount of income tax based on your revenue tier—no complicated accounting or detailed tax returns.
- Quick registration & flexibility: You can register your business in person or online, and even use your home as your official address. Perfect for getting started quickly.
- Retain full control: As the sole owner, you make all the decisions—work when and where you want, without sharing profits.
- Ideal for one-person operations: Since many taxi drivers work independently, the flat-rate obrt aligns perfectly with the nature of the job.
- Eligibility for social benefits: By registering for pension and health contributions (unless already covered by another job), you’re building toward long-term security.
Whether you're driving full-time or as a side business, the paušalni obrt gives you a legal, streamlined, and cost-effective way to operate. It's one of the simplest ways to become your own boss in Croatia’s transport sector.
How to open a flat-rate sole proprietorship for taxi services in Croatia?
One of the most common and cost-effective ways to get started in launching your own taxi business is by opening a flat-rate sole proprietorship (paušalni obrt). This legal form is especially popular among independent drivers thanks to its simplified tax obligations, low setup costs, and straightforward administration. Here’s everything you need to know to open a flat-rate obrt for taxi services in Croatia, step by step:
1. Choose your business name, activity, and address
Before registration, you’ll need to decide on your business name, the main activity, and your official address.
Your craft name (obrt name) must include the word obrt, your full name, and your business location. You’re free to add a unique label if you wish. For taxi drivers, the official activity code according to the Croatian Classification of Activities (NKD) is 49.33.0.
Your official business address can be wherever you operate from. If you don’t use a commercial space, your home address is acceptable. If you operate in multiple locations, just choose one for registration purposes.
2. Register your business
To officially start your taxi obrt, you must register it with the local Crafts Register office (Obrtni registar). For Zagreb-based entrepreneurs, here are a few locations:
- Main Office: Zapoljska 1, Peščenica | Phone: 01 2333 777 | Email: obrtni-registar@zagreb.hr
- Sesvete Branch: Trg Dragutina Domjanića 4 | Phone: 01 610 1600
- Susedgrad Branch: Sigetje 2 | Phone: 01 658 5888
Bring a filled-out OR form, a valid ID or passport, and a lease agreement or ownership statement for your business space.
Alternatively, you can complete your registration online via the official e-Obrt system. As of September 1, 2021, registering an obrt is free of charge.
3. Create a business stamp (optional)
Although not mandatory, many sole proprietors in Croatia opt to obtain a business stamp for official use. It must contain your obrt’s name and address and require a copy of your registration decision.
4. Open a business bank account
With your ID, crafts registration decision, and craft license, you can open a giro account (žiro račun) at any Croatian bank.
While it’s legal to use your private account for business purposes, it's strongly recommended to keep business and personal transactions separate. This will simplify accounting, especially when preparing the PO-SD annual tax report.
5. Register for pension and health insurance
You must register your obrt in the Croatian pension and health insurance systems unless you’re already employed elsewhere.
To register for pension insurance, fill out and submit the following forms available from Narodne novine:
Attach your registration decision and sign the documents. After this, your health insurance registration will be completed automatically.
If you’re employed by another company, you are not required to register for pension and health insurance as an obrt owner.
6. Tax registration
Within 8 days of starting your business, you must register with the Tax Administration office based on your residence.
To register, fill out the RPO form and submit it to the appropriate tax office. This process ensures your obrt is officially entered into the taxpayer register.
7. Chamber of Trades and Crafts contributions
If you started your obrt after January 1, 2021, you’re exempt from paying chamber contributions for the first two years. The Chamber of Trades and Crafts will notify you and the Tax Administration of this exemption automatically.
8. Keep the required tax records
Even though the paušalni obrt is simplified, some essential bookkeeping still applies.
You must maintain the following documents:
- Book of turnover (KPR): Logs all income and expenses. Download template
- PO-SD form: Submitted annually by January 15. View current version
- Cash register limit decision: Sets how much cash you can legally hold before depositing into your account.
- Internal act on fiscalization: Describes your invoicing system, cash register handling, and business premises.
You can simplify your bookkeeping using this Excel tool designed for flat-rate sole proprietors.
9. Understand taxes and contributions
The annual flat-rate tax is based on your expected income and is determined by the Tax Administration. The tax is paid quarterly and varies depending on the tax bracket you fall into. You can view current tax levels and brackets here.
In addition to income tax, you’ll need to pay monthly pension and health contributions by the 15th of each month for the previous month.
10. Health & safety requirements
If you’re a solo craftsman without employees, you are not subject to occupational health and safety inspections under the current Occupational Safety Act. However, if you hire employees, interns, or apprentices, these obligations will apply.
You can read and download our guide in Croatian here.
Conclusion: Start driving legally and efficiently
Opening a flat-rate sole proprietorship for taxi services in Croatia is a relatively accessible and affordable way to work legally and independently. From choosing your business activity to registering with the tax office, every step is manageable, especially with digital options and updated regulations designed to support micro-entrepreneurs. By following this guide, you can ensure your taxi business is compliant, financially organised, and set up for long-term success.
FAQs
Q: How much does it cost to open a paušalni obrt for taxi services in Croatia?
A: Since 1 September 2021, registering a craft is free. However, there may be small costs for documentation, a stamp (if you choose to make one), or bank fees.
Q: Can I use my private account for business transactions?
A: Yes, but it’s recommended to separate personal and business finances to avoid confusion during tax season.
Q: Do I need an accountant for a flat-rate obrt?
A: No, but it can be helpful, especially when submitting your PO-SD form or navigating your first tax year.