As of January 1, 2023, the euro is the official currency and legal tender in the Republic of Croatia. On that day, the Republic of Croatia becomes the twentieth member state of the euro area, and the euro becomes the official monetary unit and legal tender in the Republic of Croatia.

Fixed conversion rate

In accordance with the Law on the introduction of the euro as the official currency in the Republic of Croatia, monetary amounts that must be paid or calculated are converted using a fixed conversion rate in accordance with the rules for conversion and rounding. The conversion is performed by applying the full numerical amount of the fixed conversion rate and rounding the obtained amount in accordance with the mathematical rules of rounding. The fixed conversion rate is determined at the level of 1 euro=7.53450 HRK, and the result is rounded to two decimal places, based on the third decimal place; if the third decimal place is less than five, the second decimal place remains unchanged, and if the third decimal place is equal to or greater than five, the second decimal place is increased by one.

The period of dual circulation

On January 1, 2023, the period of dual circulation begins, which will last 14 days from the day of the introduction of the euro, i.e. from 1 January 2023 at 00:00 to 14 January 2023 at 24:00. During this period, in case of cash transactions, in addition to the euro, it will be possible to use kuna cash as a legal tender. The recipient of the payment will be obliged to return the balance in cash in euros for payment in cash in HRK. If the payee is not objectively able to return the rest of the amount in euro cash, they can return the remainder in kuna cash or kuna cash and euro cash.

A legal or natural person performing a registered activity in the Republic of Croatia may not receive a charge or make a payment in cash in the amount of EUR 10,000.00 or more. In such cases, the charge and payment in cash must be made by payment or transfer to a payment transaction account opened with a credit institution .

Adjustment of accounting

The accounting document, based on which business events are entered in the business books, must be expressed in the official currency. In the period until 31 December 2022, the accounting document is presented in kuna, and in the period from 1 January 2023, it is expressed in euros. Also, all invoices from 1 January 2023 are paid in euros, while only during the period of dual circulation, i.e. the first 14 days after the introduction of the euro, cash kuna can be used as a legal means of payment when paying in cash.

The JOPPD form, which regulates income taxation according to special regulations, and has the report code 22xxx, is submitted in kuna, and the JOPPD form which has the report code 23xxx, is submitted in euros. The same will be applied to all other forms submitted in 2023, which refer to the period of the previous year (PO-SD, PO-SD-Z, DOH, GFI POD, ZPP-DOH, PD, PD-IPO, etc.). Public authorities that issue administrative, judicial and other individual acts in the period of double reporting have the obligation of double reporting. Tax returns for 2022 and earlier years are submitted in kuna, and for 2023 and onwards in euros.

Preparation of annual financial statements

Business books are opened at the beginning of the business year on the basis of the final balance sheet drawn up at the end of the previous business year or on the basis of the list of assets and liabilities of newly established entrepreneurs or on the basis of an accounting document. Business entities whose business year is the same as the calendar year, balance as of 12/31/2022, are converted into euros using a fixed exchange rate and in accordance with the rules for conversion and rounding. For those business entities whose business year is different from the calendar year, it is suggested to draw up a technical balance as of 12/31/2022.

Business subjects, obliged to submit annual financial statements, in accordance with the provisions of the Accounting Act whose business year is equal to the calendar year, prepare and submit annual financial statements in accordance with the deadlines in 2023 for 2022 in kuna. Entrepreneurs who prepare annual financial statements in accordance with Croatian financial reporting standards, where the data are first presented in euros, comparative data from previous reporting periods in kuna are recalculated and presented in euros with the application of a fixed conversion rate.

ATM operation

On the other hand, from 1 Janaury 2023, ATMs and other self-service devices in banking operations will only pay out cash in euros. Until the end of December 2022, part of the ATMs have been gradually and temporarily shut down in order to adapt them for cash withdrawals in euros from 1 January 2023. According to the adjustment plan, from 1 January 2023, 2,700 ATMs will withdraw cash in euros, and it is expected that all 4,000 ATMs will be adapted and operational no later than January 15, 2023. A map of active ATMs is available on the website of the Croatian Association of Banks at the link.

Recalculation of funds on accounts and application of the principle of continuity of legal instruments

Amounts on deposit, savings and transaction accounts, other payment accounts, payment instruments and other records will be converted automatically from kuna to euro, without charge, with the application of a fixed conversion rate and in accordance with the rules for conversion and without changing the unique account number. The procedure for introducing the euro does not affect the validity of existing legal instruments in which the kuna is mentioned. According to the principle of continuity of legal instruments, existing contracts and other legal instruments that contain references to the kuna will continue to be valid. Amounts specified in kuna in legal instruments will be considered amounts in euro with the application of a fixed conversion rate and in accordance with the rules for conversion and rounding from the Act on the introduction of the euro.

The exchange of kuna into euros will be possible throughout 2023 at banks and branches of the Financial Agency and HP-Hrvatska pošta d.d., and from 2024 at the Croatian National Bank. As of 1 January 2024, kuna cash can be exchanged for euro cash in the Croatian National Bank. Specifically, banknotes can be exchanged without a time limit, and coins until the end of 2025, i.e. until three years have passed since the introduction of the euro. You can find the text of the Guidelines for the adjustment of economies in the process of replacing the Croatian kuna with the euro at the link. For any inquiries or more information, please contact our local experts.

Data Source: Ministry of Finance