Retire to Europe's new Riviera

By International Living

Croatia has become a hot destination -- again.

Early last century, kings and queens, movie stars and moguls flocked to its unspoiled shores and fabled seaside towns. Before the war that followed its independence from the former Yugoslavia, a half-million British tourists visited Croatia each year. In the decade since the conflict ended, that number has edged its way back up, but today stands at only a quarter what it was in this country's tourism heyday.

Now tourists are returning to Dubrovnik and the Dalmatian Riviera in force. The Croatian government is intent on marketing the country as a top-end destination -- it's often compared to Tuscany. Real development of the coast is just gearing up, and the government is controlling the development plan to ensure the coastline doesn't end up looking like Torremolinos in Spain.

Adriatic property prices are what you could find on the Mediterranean a generation or so ago. Although prices have been increasing fast -- 30% annually in some places, and 30% in the last six months alone in the splendid medieval city of Dubrovnik -- it's not too late to find great values. Prices are still well below European averages.

The length of Croatia's highly indented coastline totals almost 1,100 miles. But when you take into account the islands, the country's coastline actually adds up to a massive 3,646 miles of loveliness. This is a coastline that delivers sheer drama. Swathed in pines and cypress trees, carpeted with wildflowers and herbaceous, aromatic undergrowth, it meanders past medieval walled towns, thousand-year-old little stone churches, orange-roofed fishing villages and acres of vineyards.

The peninsula of Istria and the coast of Dalmatia vie for Croatia's tourist market. To date, Dalmatia has been winning. Europeans seem to prefer its coastline to that of Istria. It's warmer ... and there's no denying its dramatic beauty, its mountains dropping straight into the clear blue sea at their base. While Istria is lush and, in the springtime, a burst of oranges, reds and golds, Dalmatia's barren white hillsides are beautiful, too.

Special benefits for retirees

For those who do not receive a salary, consultancy fees or other similar income in Croatia, the tax situation is favorable, particularly for retirees. Croatia has no wealth tax, and the following income is tax-free:

• Pensions received from abroad;

• Interest payments on loans, investments, securities, deposits with financial institutions and similar incomes;

• Capital gains from trading securities and other financial assets;

• Capital gains from real estate (if you occupied the property, owned it for more than three years, or sold it to your spouse or an immediate family member); and

• Inheritance and gifts are exempt from taxation in the first line of succession. (In other cases there is a flat rate of 5%.)

If you want to retire only part-time to Croatia and rent your house or apartment for the rest of the year, a one-bedroom apartment can fetch $575 a week in the off-season (November through March) and as much as $900 a week in peak.

Health care

Croatians enjoy good health with a life expectancy on a par with North America and other European countries. Although fast-food outlets are burgeoning, the country's agriculture and fishing industries lend themselves to healthy eating.

Most food selections in the markets aren't of the mass-produced variety. When you're traveling around Croatia and the nearby islands, you'll notice that everyone has something growing, from tomatoes to lavender, in small plots outside their homes. As one expat notes, "really, all the market vegetables are organic."

Employed persons and their families have access to state health care, which is covered by government-subsidized medical insurance. However, you will need to pay the equivalent of Social Security taxes to access it. In any case, just about all expats choose to go private.

All major population centers have decent health-care facilities. Zagreb is the best served, with a large general hospital. The island of Sveti Duh offers seven specialized polyclinics and 13 medical centers.

Istria

This triangular-shaped bit of land pointing down toward the Mediterranean was owned by Italy between the two World Wars (signs are often in both Croatian and Italian). It has the mountains, the vineyards, the hill towns, the wine festivals, the architecture, the landscapes . . . it's the best of Tuscany without the tourists or their trappings. And, being within easy driving distance of five airports (four international -- Zagreb, Ljubljana in Slovenia, and Trieste and Venice in Italy -- plus the local airport in Pula, with flights from Zagreb), access isn't a problem. In fact, it's easier to get to this region of Croatia than any other.

Most of the local roads have been recently paved, and a new two-lane highway makes it a breeze to get from Pula on the southern tip up to the Slovenian border.

Split and the Dalmatian Coast

We can't claim to be the first to recommend the Dalmatian Coast as a retirement destination. That distinction goes to the Diocletian (AD 245-316), the only Roman emperor ever to retire. He chose to spend his golden years in his palace in Split, where he remained until his death in 316.

In 1979, the Diocletian Palace was declared a UNESCO World Heritage site, and it remains at the heart of Croatia's second-largest city. You can walk from the Riva, the palm-lined promenade overlooking the harbor, into the palace complex itself, which sprawls over seven acres.

Diocletian took quality of life and retirement seriously. He spared no expense, building his palace using the white stone from the nearby island of Brac and importing marble from Italy and Greece for the squares and columns. He even imported a sphinx from Egypt.

If you'd like to live overlooking Split's 1,700-year-old monuments, at the time of print, Croatian Sun was offering a 970-square-foot apartment for $258,000. It's at one of the four entrances to Diocletian's Palace, the Golden Gate.

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