The Republic of Croatia shall enter the Eurozone on 1 January 2023. The draft proposal of the Act on Introduction of Euro as the official currency in Croatia is currently in the public consultation phase, until 15 February 2022, while the final adoption of the Act in the Parliament is expected in late spring. The provisions of the Draft provide several aspects of introducing euro that are of significance for public authorities, business entities and citizens, in particular:
Method and deadline for cash replacement
The exchange of kuna cash for euro cash, free of charge, will be possible in banks, Financial Agency and branches of the Croatian Post during the 12 months from the date of introduction of euro. After expiry of 12 months, exchange will be possible in the Croatian National Bank.
Rules for recalculating prices and other monetary value
All funds on accounts and card payments will be automatically converted into euros and all such transactions will be in euros. A fixed conversion rate is planned in the amount of 7.53450 kuna for 1 euro.
After converting prices from kuna to euro using a fixed conversion rate, prices are rounded to two decimal places. For example, the price of 10.00 kuna will be converted to 1.33 euros instead of the full amount of 1.327228084 euros.
The duration of the transitional period in which the kuna and the euro will be in circulation at the same time
The dual circulation period lasts 14 days from the date of introduction of euro, during which customers will be able to pay in cash in kuna, but recipients will have to return the change in euros.
Consumer protection measures
An important aspect of rules for recalculating prices is double pricing. From 5 September 2022 until 31 December 2023, in direct relations with consumers (trade contracts are excluded from the obligation), business entities will have to report the prices of products and services in kuna and euros so that consumers may adjust to the new currency.
Also, the Draft emphasizes the protection of consumers from unjustified price increases. Although the criteria for assessing (un)justification isn’t clear at the moment, the intention of the proponents of the Act is to encourage businesses to operate reliably and transparently when introducing euro. One of the planned mechanisms is the accession of business entities to the Code of Ethics, members of which will gain the right to publicly display their membership with a special logo, which should signal transparency and respect for the principle of prohibiting unjustified increases in prices of goods or services towards consumers.
The Coordination Committee for Economic Adjustment and Consumer Protection has developed Guidelines for Economic Adjustment in the Process of Replacing Croatian Kuna with Euro. The guidelines provide a summary of the Draft’s requirements for business entities describing the adjustment of accounting and financial management, the adjustment of information systems, cash management, information and training of workers, customer relations and double pricing.
It is advisable that all businesses review the Guidelines and adjust their systems and educate employees in a timely manner, especially considering that the Draft provides for as many as 48 misdemeanor provisions for legal entities, responsible persons and natural persons who are self-employed, with penalties for non-compliance ranging from 2,600.00 to 13,300.00 euros.
Sebastian Krčmar
