Croatia to Adopt Euro as the Official Currency in January 2023
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January 1, 2023 won’t only be the beginning of a new year for the Croatians: this date will also mark the adoption of the euro as the country’s official currency.
We’re sharing all there is to know about this currency change and how Deel can help handle the transition with ease.
Croatia: the 20th member of the euro area
After almost a decade in the European Union, Croatia is switching from kuna to euro single currency next year, as the EU Council gave its final approval of the three required legislations on July 12, 2022. The Croatian National Bank anticipated the introduction of the euro years ago, but the financial crisis delayed the process.
Croatia will finally enter the eurozone in 2023, putting an end to many years of no new member states. For comparison, the last country to join the bloc was Lithuania in 2015.
By abandoning the Croatian kuna, the former Yugoslav republic will become the 20th member of the euro area, leaving behind the few EU countries still using their own currency: Romania, Sweden, Bulgaria, Poland, Denmark, Hungary, and the Czech Republic.
Both Croatia and the eurozone will benefit from Croatia joining the bloc
Deeper ties with other euro area members and the authority of the European Central Bank (ECB) will benefit Croatia’s economy. The adoption of the euro will also facilitate the situation for many tourists and workers regularly traveling to this country, who won’t have to exchange their money for the HRK anymore.
“It’s a big day for Croatia, I dare say historic,” said the Croatian Finance Minister Zdravko Maric in Brussels, where the EU Council gave the green light for adopting Europe's shared currency, after Zagreb fulfilled very strict economic conditions to make it happen.
“Croatia has successfully completed all the required economic criteria and they will pay in euros as of 1 January 2023,” confirmed Zbyněk Stanjura, President of Economic and Financial Affairs Council (Ecofin) and Minister of Finance of Czech Republic.
Christine Lagarde, the head of the European Central Bank agreed that the introduction of the euro in Croatia is a reason to celebrate. "The whole of Croatia decided and was convinced of the value of joining the euro and the euro area," said Lagarde.
The European Commission Executive Vice-President Valdis Dombrovskis also said after the official ceremony that Croatian adoption of the euro has benefits both for this country and the whole euro area. “It is helping to widen the foundation for Europe’s future economic resilience and strength,” said Dombrovskis.
Croatia led the way for another EU member country to express plans to adopt the euro in 2024—Bulgaria. The Bulgarian economy needs to reach a higher level of stability and meet the convergence criteria before the EU approves their adoption of the euro, to avoid a potential debt crisis, like the one that happened after Greece joined the eurozone.
What’s the HRK to EUR exchange rate?
When it comes to the conversion rate between the Croatian kuna and the new official currency—euro, a legal act approved by the Council of the European Union sets it at 7.53450 kuna per 1 euro. This rate is aligned with the currently effective central rate of kuna in the ERM II (Exchange Rate Mechanism).
Minting of Croatian euro coins officially started on July 18, 2022.
What does this change mean if you pay your workers via Deel?
If you have employees or contractors in Croatia, you might be wondering how this switch to the euro affects the payments you make toward your workers. Deel has been doing due diligence to prepare for this change and continue operating in compliance with the law.
As of September, 2022, all payslips will contain payments expressed in two currencies (EU and HRK). All contracts submitted from September will include gross monthly salary in both currencies: HRK and EUR.
Later on, as of January, 2023, all payments towards employees will be paid in euros, including all statutory benefits, contributions, and taxes.
Hire and pay workers in EU hassle-free
Deel’s team of legal experts ensures each and every contract signed with employees from over 150 countries is locally compliant and you don’t run any misclassification risks. Our platform allows you to manage these contracts and other relevant documentation for your whole workforce in one place. With one-click payments, you can fund your whole payroll in seconds and pay your workers in the required currency, on time, every time.
Care to learn more? Book a demo with our team and ask away!