A summary of the introduction of euro for business entities is provided below:
Financial reports – currency – they are prepared in kuna or euro, depending on the period
- Business entities whose business year is equal to the calendar year
- Annual financial report for 2022 is submitted in kuna regardless of the fact that the deadline for submission is in 2023.
- Annual financial report for 2023 (including the comparative period of 2022) is submitted in euro.
- Business entities whose business year is different from the calendar year:
- Annual financial report for the business year ending in 2022 is submitted in kuna
- Annual financial report for the business year ending in 2023 is submitted in euro
- Other cases in which the last day of the business year occurs after the introduction of euro submit their financial statements in euro
Subsequent corrections of financial reports
- The (new) corrected financial reports are submitted in the currency in which the given report was originally submitted, regardless of the date of submission of the new report
- Correction of an accounting error from a previous period – according to the accounting standards, accounting errors (significant according to CFRS) from previous periods are corrected retrospectively and in the first financial report after the error had been discovered
Bookkeeping in the transition period
- The balance in company accounts on 31st December 2022 – the balance is stated in kuna and converted into euro according to the prescribed fixed conversion rate and the conversion and rounding rules.
- The opening balance on 1st January 2023 is stated in euro
Bookkeeping from 1st January 2023
- Business transactions are recorded in euro, but, if necessary, in other currencies as well
Conversion of assets and liabilities
- Each item in the trial balance is converted into euro on 1st January 2023 according to the prescribed fixed conversion rate.
- The lowest value of an item that can be converted into euro is 0.04 HRK – 0.01 EUR
Conversion of equity
- The closing balance on 31st December 2022 stated in kuna is converted into euro according to the prescribed fixed conversion rate.
- A change in equity items (share capital) will occur only after the change had been recorded in the commercial register.
Dual display on the invoice
- The obligation of dual display on the invoice (only for invoices issued to consumers) – the total amount on the invoice is stated in both kuna and euro.
- Display until and on 31st December 2022 – the prices of items on the invoice are stated in kuna, while the total amount is stated in euro and kuna according to the conversion rate.
- Display from 1st January 2023 on – the prices of items on the invoice are stated in euro, while the total amount is stated in euro and kuna according to the conversion rate.
Preparation of the CIT form for 2022
- The CIT form for 2022 and earlier – it is prepared and submitted in kuna, as well as all the other forms submitted with it.
- The CIT form for 2023 and later – it is prepared and submitted in euro, as well as all the other forms submitted with it.
Exception: business entities subject to corporate income tax whose taxation period begins before the introduction of euro and ends after the date of the introduction of euro – the PD form and all the other forms are submitted in euro.
The corporate income tax liability for 2022 is stated in kuna on the PD form, but the payment of that liability in 2023 must be made in euro.
Preparation of the VAT form for the last taxation period in 2022
- The VAT form for December 2022 in submitted by 20th January 2023 in kuna because the business transactions stated in the form refer to the 2022 calculation period, the same applies to the entities subject to quarterly VAT.
- The VAT liability for the last taxation period in 2022 is paid in euro (the right to return is paid out in euro as well).
- Incoming and outgoing invoices books (U-RA and I-RA books) are stated in kuna for the 2022 accounting period and earlier, but in euro for the calculation period from 1st January 2023 on.
- The balance of unpaid outgoing and incoming invoices books on 31st December 2022 for business entities subject to VAT calculation according to collected fees – it must be transferred into 2023 in euro by applying the fixed conversion rate and the conversion and rounding rules.
Corrections of tax returns
- Corrections of tax returns are submitted in the currency in which they were originally submitted.
- Calculation and payment of salaries and other benefits during 2022, including the salary for November 2022 which is paid out in December 2022, are done in kuna.
- Salaries and other benefits for December 2022 are paid out in euro from 1st January 2023.
- The liability for the calculated salary for December 2022 is recorded in the company accounts in kuna.
- Corrections and additions to the JOPPD form are submitted in the currency in which the original form was submitted
- During the transition period, the employer is obligated to state the total amount paid out to the employee’s account in both kuna and euro
Please keep in mind that legislation is subject to frequent change. This newsletter is therefore necessarily based on our understanding and correct interpretation of the law and practice at the time of publication of this newsletter. This newsletter will not be updated due to changes in legislation that occur after the issuance of this letter.