The biggest story in Croatia, according to Kovacevic Prpic Simeunovic Partner Martina Prpic, is the preparatory work for the upcoming switch to EUR as the official currency, complemented by EU-driven updates impacting consumer protection, agriculture, and the upcoming tourist season.
"2023 will see Croatia become part of the eurozone and, leading up to it, there is a lot of buzz around the surrounding preparatory work and the transition period," Prpic begins. "The most exposed businesses are those that deal with consumers directly – retail businesses, webshops, service providers, and the like," she says. There will be a requirement of "prices transparency" under which, starting with September 2022, prices will have to be shown in both HRK and EUR until the final switch.
"The first two weeks of 2023 will be a period in which citizens will be allowed to make payments in HRK while getting change in EUR – but the prices transparency regime will remain in place until 2024," Prpic reports. "The idea is to have consumers prepared for the final switch in time while, at the same time, preventing unjust price hikes." All this work requires a lot of structural solutions, Prpic says, all of which are requiring EU approval – which is set to be given this year before the summer. "In practice, this means that businesses will have a year packed with adjustments."
Furthermore, Prpic reports changes to the consumer protection framework, in an effort to ensure further harmonization with EU law. "Certain aspects of retail are being amended – some rules regulating prices and sales – all of which are a part of the recently passed EU directive package seeking to protect consumers more," she says. "The same package also updated contract law provisions, mostly having to do with goods and services defects and the like."
Additionally, there has been an overhaul of the rules having to do with unfair market practices in agriculture. "This too is an adjustment seeking to harmonize Croatian and EU law," Prpic reports. "The law is quite complex on this matter, introduces high fines and penalties, and will force businesses to adjust a lot."
Lastly, Prpic tackles the outlook for the upcoming tourist season. "The transport, hospitality, and tourism sectors have been hit hard by the pandemic, even with 2021 being a very strong tourist season. With the EU establishing safety criteria based on the vaccination rate in each member state, Croatian safety status could be hit – given the fact that the country has lower vaccination rates than some of the other member states. We’ll just have to wait and see how it all plays out," Prpic concludes.
