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Although the Croatians have one of the oldest traditions of statehood among the Slavic nations, the Republic of Croatia is one of the youngest European countries. The process of Croatia becoming independent from Yugoslavia started in 1990: the first free, multiparty democratic elections were held in late April and early May, as a result of which the democratic Croatian Parliament was constituted on 30 May 1990. The parliamentary elections in 1990 were not Croatian in today's sense of the word. Namely, these were elections within the Socialist Republic of Croatia, which was still part of the Socialist Federal Republic of Yugoslavia. A referendum on the country's independence was held on 19 May 1991 and resulted in the declaration of independence on 25 June 1991. Croatia's independence was recognised by the European Economic Community (currently European Union) on 15 January 1992.

In November 2000 and March 2001, the Parliament (Sabor) amended the Constitution, transforming the semi‑presidential system to a parliamentary system. According to the amendment, the former Chamber of Counties was abolished, and the Croatian Parliament became unicameral.

Following a referendum on 22 January 2012, in which a majority (66,27%) voted in support of Croatia's accession to the EU, Croatia officially joined the European Union as its 28^th member state on 1 July 2013.

According to Article 1 of the Constitution, Croatia is a unitary State with three levels of governance: the central level, the regional level with the counties (županija) and the local level with the municipalities (općina) and cities (grad). The City of Zagreb has a special status, performing competences of both city and county, and a significant role in performing State administrative tasks in its territory. The decentralisation process started on 1 July 2001 when certain functions and costs of elementary and secondary education, health care, welfare, and firefighting service were transferred from the national budget to the budgets of the local governments.[1] Towns that are county seats received widened competencies at the same time. Statistical regions in Croatia are delineated as follows: NUTS-1 – the whole country; NUTS-2: two regions: two statistical regions:  Continental Croatia and Adriatic Croatia (until 2012, there were three), and NUTS-3: counties.[2]

Croatia is divided into 21 regional government units: 20 counties (županija) and the City of Zagreb. Each county (apart from the City of Zagreb, which as a capital and the largest city has a special status of both town and county) consists of towns and municipalities. There are 127 towns (excluding Zagreb) and 428 municipalities in total.[3] Among the towns, the category of so-called large towns has been introduced in 2005 for local government units with more than 35,000 citizens, with a wider circle of self‑government competences.[4]

Local government is enshrined in the Constitution (Art. 133-138). Counties have a relatively large degree of autonomy. Local and Regional Authorities (LRAs) have a general competence for matters of interest at their respective levels. They exercise their functions in accordance with the subsidiarity principle, which was recognised as a constitutional principle in 2000.

Besides the Constitution, which defines the local government system (Art. 133-138), Law on Local and Regional Self-Government (2001), Law on Public Utilities, and many other special laws further describe the LRAs' responsibilities.

A recent study categorises the Croatian self-government system as an intermediate model with three fiscal levels (state, regional, and local).[5] According to the Croatian Association of Municipalities, self-government units have limited responsibilities determining the rates and the base of local tax revenues. Central government has an exclusive right to determine the county taxes, whilst the rates of municipal and city taxes are authorised by the municipal and city authorities with the restrictions set by the central government. The only type of tax that the local authorities can set independently is the tax on public land use. Moreover, local self-government units almost exclusively determine non-tax revenues. The central government only decides on the minimum rate of non-tax revenues that can be introduced by local units. Being the most important source of revenue for the self-governments, these contributions are usually used to finance construction and communal and utility infrastructure.[6]

 ​Central level​

The state authorities at the central level are responsible for:[7]

• Overall legislation and execution;
• The state budget and annual accounts;
• Security and defence;
• Adoption of decrees to implement laws;
• Foreign and domestic policy;
• Direction and control over the civil service operation;
• Economic development;
• Direction of the performance and development of public services.
  
   
  
  LRAs may perform public services pertaining to the central state administration. Performance of these tasks is regulated by the law and financed from the central stated budget.
   
  

 Regional level - counties (županije)

​Municipality, town, and county are independent in making decisions within their self‑governmental remitin accordance with the Constitution of the Republic of Croatia and Law on Local and Regional Self-Government[8]. Counties carry out affairs of regional importance which are not assigned to central bodies by the Constitution or other laws. The scope of counties' responsibilities can be self-managing and entrusted (government affairs).

In their self-governmental remit, counties have tasks of  regional  importance, in particular:[9]

• Primary and secondary education;
  
• Government funded healthcare;
  
• Regional and urban planning;
• Economic development;
• Transport and traffic infrastructure;
• Establishment and development of the network of educational, medical, social welfare, and cultural institutions;
• Maintenance of public roads ;
• Issuing of location and building permits and other documents related to construction and implementation of regional and urban planning in the county,  excluding the area of large town and a county seat town.

 By decision of a body of a local self-government unit (town or municipality), certain tasks from the self‑governing remit of the municipality or town may be transferred to the county. Conversely, a local authority may demand from the county to transfer a task to it, if it has budget for it.[10]

Local level – municipalities and towns (općine i gradovi)

Municipalities and  towns in their self-governmental remit have the tasks of local importance that directly address the needs of the citizens, and are not assigned to state bodies by the Constitution or other laws,in particular:[11]

• Organisation of settlement and housing;
• Spatial and urban planning;
• Utility services;
• Childcare;
• Social welfare;
• Primary health protection;
• Elementary schools;
• Culture, sports and recreation;
• Consumer protection;
• Protection and improvement of environment;
• Fire protection and civil protection;
• Local traffic.
  
   
  
  In addition to  these competences, large towns (defined as towns with more than 35.000 inhabitants or towns that are county seats) also have competence in the field of[12]

• Maintenance of local public roads;
• Issuing of location and building permits and other documents related to construction and implementation of urban planning.
  
   

[1] Ministry of Finance: Decentralisation of Public Sector in Croatia

[2] Croatian Bureau of Statistics

[3] Ministry of Public Administration

[4] Ministry of Public Administration

[5] Jerković E. Decentralisation of Financing of Self-Government Units in the Republic of Croatia. European Scientific Journal. February 2018, pp.108-109

[6] Bajo, Anto and Bronić, Mihaela: Fiskalna decentralizaciia u Hrvatskoj: problemi fiskalnog izravnanja, Financijska teorija i praksa 28 (4), IJF., Zagreb, 2004.

[7] Constitution of the Republic of Croatia, 6 July 2010 (published in the OJ of the Republic of Croatia, Narodne novine, No. 56/90, 8/98 – consolidated text, 113/2000, 124/2000 – consolidated text, 28/2011, 41/2001 – consolidated text, 55/2011 – correction) and the amendments to the Constitution of the Republic of Croatia (published in the OJ of the Republic of Croatia, Narodne novine, no. 76/2010).

[8] Art. 18, Law on Local and Regional Self-Government (consolidated text), valid from 01/01/2020, available in Croatian at: https://zakon.hr/z/132/Zakon-o-lokalnoj-i-područnoj-(regionalnoj)-samoupravi

[9] Ibidem, Art. 20

[10] Ibidem, Art. 22

[11] Ibidem, Art. 19

[12] Ibidem, Art. 19a​