Croatia will join the Euro area in January 2023

The European Central Bank approved the access of Croatia to the Euro area.

The European Central Bank approved on 12 July 2022 the access of Croatia to the Euro area in January 2023. The agreed conversion rate of Kuna is fixed at 7.53450 = EUR 1. Tax point rules should be monitored to make sure that your VAT returns are completed correctly after these changes are introduced.

The European Central Bank together with the Croatian Central Bank, also known as Hrvatska narodna banka, are closely monitoring the development of the Kuna currency and supervising the most important bank institutions in the country as per a cooperation agreement that started on 1 October 2020.

The fixed conversion rate of the kuna is introduced by way of amendment to the Regulation (EC) No 2866/98 on the conversion rates between the euro and the currencies of the Member States adopting the euro, which will become effective on 1 January 2023.

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Marosa can help you meeting your VAT compliance obligations in Croatia.


Will Croatian VAT compliance be impacted by this change?

We can expect changes on the VAT compliance system in Croatia following the change of currency to Euro. VAT return, ESL and Intrastat forms will probably be updated.

When currency changes, there are some areas of risk that you should take into account. Advanced payments, continuous supplies, or credit notes often trigger questions about the correct currency and exchange rate to be used on your invoice. If credit notes are issued, you should also consider the correct rules to ensure that transactions spanning periods on which different rates apply are treated correctly.

These type of changes are often announced with little time before implementation. In these cases, businesses struggle to get their ERP systems updated in such short notice. Moreover, rules on credit notes on invoices issued before the currency change make it complicated from a VAT compliance perspective. Marosa can help assessing the impact of currency changes on your system and tax reporting function.

When currency changes, there are some areas of risk that you should take into account. Marosa can help you ensure that your invoices are issued correctly according to local tax point rules. We will also help you to make sure you are declaring and paying the right amount of VAT.

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