PUBLISHED: 26/08/2022

Croatia is introducing the euro as the official currency on January 1, 2023. Hrvatska kuna (Croatian kuna) goes into the history books and will no longer be used. Croatia will be the 20th member of the euro area.

Using the euro as the official currency is expected to prevent currency risk and security in times of crisis. The goal is for the economy to become more resistant and to increase the Croatian living standard in the long term.

The euro will provide more accessibility for Croatian residents to move within the European Union as transaction costs will be lower. However, some are concerned that introducing the euro may result in increased prices for goods and services.

This article gathers the most important information that Croatian residents should know about introducing the euro in Croatia. In this article, we present the essentials for Croatian business owners.

In this post, we cover:

• Phases of introducing euro
• Dual reporting of prices
• Fixed conversion rate
• Crucial about the exchange
• Crucial about the shopping
• Impact on the Croatian economy
• How residents can prepare

The facts are these…

What Croatian residents must know about introducing the euro as the official currency in Croatia

Phases of the euro introduction

By entering the European Union in 2013, Croatia became obliged to implement the euro as its official currency in the future. To introduce the euro, Croatia first had to meet all the essential requirements defined by the EU.

The Council of the European Union brought the final official decision on the use of the euro in Croatia on July 12, 2022. Euro will be the official Croatian currency instead of the Croatian kuna as of January 1, 2023.

The transition from kuna to euro covers 3 phases:

• Preparation period
• Dual circulation period
• Period after the completion of the dual circulation

The preparation period started right after the EU Council brought the official decision on introducing the euro. It will last until the date of the euro introduction. The obligation of dual reporting of currencies begins in this period.

This means that entrepreneurs must point out prices of their goods and services and other monetary values both in euro and kuna. In addition, pre-supply, indirect pre-supply, and simplified pre-supply with euro cash also begin.

In short, the mandatory dual reporting period begins on September 5, 2022, and ends on December 31, 2023. However, entrepreneurs can start with dual reporting from the day the EU Council brought the final official decision (July 12, 2022).

The dual circulation period starts on January 1, 2023, and lasts for only 2 weeks. Both euro and kuna will be used as legal currencies in cash transactions during this period. This means that both currencies will be in circulation at the same time.

Dual reporting of prices in euro and kuna

As we already mentioned, the mandatory dual reporting of prices in both euro and kuna begins on September 5, 2022, and ends on December 31, 2023. The goal of dual reporting is to prevent the manipulation of prices during the recalculation. This refers to unjustified increases in prices and incorrect recalculations.

Dual reporting of prices should make it easier to spot entrepreneurs who incorrectly recalculate the prices. In addition, the dual reporting period should help Croatian residents adapt to the euro.

Dual reporting of values must be unambiguous, easily visible, and legible. The unique full amount of the fixed conversion rate must be used for recalculation. In addition to the euro and kuna, other currencies may also be pointed out.

Dual reporting is mandatory for all forms of sales including:

• Total amounts of offered goods and services, advances, and consumer contracts
• Business premises – on goods, points of sale, or price lists of services
  • Stores
  • Cafes
  • Restaurants
  • Hotels
  • Beauty salons
  • Banks and other financial institutions
• Online stores
• Outside of business premises and distance contracts
• Phone sales
• Implementation of promotional and marketing activities.

However, there are some exceptions for which dual reporting of prices is not required. For these exemptions, prices can be expressed in kuna until December 31, 2022. After this period, they must be expressed in euros as of January 1, 2023.

Exemption from dual reporting applies to:

• Commercial contracts, accounts between business entities, internal company accounts, and records, reports, and bills issued to public bodies
• Gas station totems (columns with displayed prices and derivatives), aggregates, and electric vehicle charging stations
• Vending machines
• Cash register screens and self-service devices for selling goods and services
• Return fee on packaging
• Packaging return machines and packaging return fees visible on automated devices for collecting waste packaging
• Coupons for discounts and coupons in the value of returned goods
• Tickets
• TV interfaces for the purpose of selling services
• Price checkers in stores
• Retail trade on stands and benches at markets and outside markets, inside shopping centers, and institutions
• Booths (for example, Tisak)
• Mobile sales
• Production facilities of family farms
• Production facilities of legal or natural persons with the privilege of aquaculture or breeding fish and other marine organisms
• Warehouses selling agricultural planting material
• Occasional sales including fairs and exhibitions
• Cultural, sacred, educational-pedagogical, sports, scientific, and other public institutions and areas declared protected nature areas
• Prices printed on books and other periodicals
• Games of chance and fun games
• Amounts on weighing machines and labels with weighed barcodes and prices
• Amounts on shipments and money orders
• Prepaid vouchers
• Cards for public payphones
• SIM card packages
• Gift cards
• Postage stamps, franked stamps, and tax stamps
• Customs declarations
• Taximeters

Entrepreneurs do hold the right to change the prices of their goods and services during the dual reporting period and by the end of 2023. However, changes in prices must not be related to introducing the euro.

Fixed conversion rate of kuna into euros

The Council of the European Union has defined a fixed conversion rate that will be used for the conversion of kuna into euros. This unique rate must be used for all calculations.

1 euro = 7,53450 kuna

During the calculation, the result must be rounded to two decimals based on the third decimal place. If the third decimal is less than 5, the second decimal remains the same. If the third decimal is equal to or higher than 5, the second decimal increases for one.

Here are appropriate examples:

69,99 kuna / 7,53450 kuna = 9,289269360 € = 9,29 €

189,99 kuna /  7,53450 kuna = 25,2016006370 € = 25,20 €

10 kuna / 7,53450 kuna = 1,327228084 € = 1,33 €

0,03 kuna / 7,53450 kuna = 0,00398168 € = 0,00 €

0,04 kuna / 7,53450 kuna = 0,00530891 € = 0,01 €

What Croatian residents should know about the exchange

Croatian bank account holders who use separate accounts for kuna and euro within the same bank can close one or more accounts free of charge within 60 days from January 1, 2023. In addition, they can transfer funds to only one account within the same bank. This way they should avoid additional costs including account management fees, i.e. they would pay the fee for only one account.

[Read: Croatia’s biggest banks: Comparison of fees and services]

On January 1, 2023, banks will automatically convert kuna held in all bank accounts to euros. If you save kuna outside of the bank, i.e. at home, you should deposit the money in their bank.

The money exchange will be possible in Croatian banks during 2023. It will also be possible in FINA and Hrvatska pošta until the end of June 2023. These institutions will not charge transactional fees regardless of the amount of kuna you want to exchange.

After this period, you can exchange an unlimited amount of money kuna at HNB, also free of charge. However, HNB will not exchange the money during 2023.

Overall, there is no deadline for the exchange of kuna banknotes. As of 2024, Croatian residents can exchange banknotes in HNB whenever they like. However, kuna and lipa coins can be exchanged for only 3 years from the day of the introduction of euro (until 2026).

Credits and deposits approved in kuna will be automatically recalculated in euros. Clients will not have to pay any fees. Credit and deposit contracts with banks do not have to change.

What residents should know about shopping in euro

Shops may encourage buyers to pay with credit/debit cards or pay the exact price in euros whenever possible.

Consumers will be able to pay for goods and services in cash in both euro and kuna during the dual circulation. This may put pressure on traders and service providers since they will be obliged to return euros whenever possible. They are allowed to accept up to 50 kuna coins in one transaction and the appropriate number of kuna banknotes at the time of collection.

If traders and service providers cannot return the rest of the money to the consumer in euros, they can return it in kuna or a combination of euros and kuna. This may often be the case in rural areas where shops and service providers have limited access to banks.

Croatian residents are concerned that the euro’s introduction may lead to an increase in prices. However, there is an initiative called Etički kodeks (Ethical codex) that should prevent the growth of prices. View more information about it here.

Croatian companies who join this codex and correctly calculate the prices will get a recognizable logo. This logo can be pointed out at their selling points and during promotional activities so that residents know the calculation is correct.

How introducing the euro will impact the Croatian economy

To start, 70% of Croatian revenue comes from tourists from countries whose currency is the euro, and 60% of trade also relates to these countries. 70% of term savings and 60% of loans of Croatian residents are related to the euro. These are significant indicators that the introduction of the euro could bring many advantages to the Croatian economy.

Here are the expected advantages:

• Higher financial stability
• Higher macroeconomic stability
• Lower interest rates
• Lower transaction costs
• Positive effect on financing conditions
• Acceleration of economy’s growth
• Strengthening the resilience of the economy
• Elimination of currency risk for residents, businesses, and the state
• Elimination of currency crisis
• Reduction of the risk of potentially costly banking
• Balance of payments crises

The reduction of the regulatory cost for banks will have a favorable effect on the level of interest rates. The elimination of the currency risk should directly attract international investors to Croatia. Lower interests should increase the competitiveness of Croatian companies and stimulate additional investment and employment.

The good news is that Croatian residents and companies will save money on foreign exchange transactions and fees for cross-border euro payments.

Regarding the prices, the introduction of the euro should not significantly affect them since conversions will be monitored. However, certain increases may occur for lower-cost goods and services including:

• Cafes
• Restaurants
• Cleaning, repair, and clothing rental services
• Beauty and hair salon services
• IT, audiovisual, and photography equipment

In addition, prices of certain products may increase as a result of rounding the price to a higher decimal, such as bakery products and newspapers.

It is estimated that the introduction of the euro will result in an increased inflation rate of less than 10%. Other effects will come from other sources, such as imported energy prices.

How Croatian residents can prepare for the euro, in short

Here is a high-level checklist of all the things Croatian residents should do to prepare:

• Inform about the transition to euro (which you’re doing by reading this post)
• Enroll in HNB online training
• Track dual reporting of prices to adjust to euro
• Pay in cash in kuna and euro during dual reporting
• Close extra bank accounts
• Exchange kuna in Croatian banks during 2023
• Exchange kuna in FINA and Hrvatska pošta until July 2023
• Exchange kuna banknotes in HNB from 2024
• Exchange kuna and lipa coins until 2026

[Read: Croatian transition from kuna to euro: Guide for business owners in Croatia]

View our other financial posts

• Croatia’s banks that offer mortgages and who they will consider for a loan
• Croatia’s biggest banks: fees and services
• Do I need to open a bank account in Croatia?
• Government grants and loans for entrepreneurs in Croatia
• How credit works in Croatia
• How to show proof of financial means
• How to pay bills in Croatia
• How to transfer money to Croatia from abroad
• What is fiscalization and why does it matter to business owners
• What to know about cryptocurrency in Croatia including trends, access, and taxes

Sources:
Croatian government
Euro.hr
HNB – Croatia is introducing euro
HNB – National training program
Law on the introduction of the euro as the official currency in the Republic of Croatia
The Ministry of the Economy and Sustainable Development
What you need to know about introducing euro