Through several past articles, Confida Croatia introduced you to the euro’s arrival as the official currency in the Republic of Croatia. The changes are numerous, and the legislative framework needs to be adjusted. Today, we are introducing you to the Final Proposal of the Act on Amendments to the Accounting Act, which will enter into force on January 1, 2023.

Adoption of this Law was proposed under an urgent procedure. The amendments mostly concern the replacement of sums expressed in kuna, which will have to be expressed in euros. Below is an overview of the most important changes.

Change related to the division of entrepreneurs

In Article 5 of the Accounting Act, items 2 to 4 concerning the division of entrepreneurs are amended. Entrepreneurs are classified into micro, small, medium and large depending on the indicators determined on the last day of the business year preceding the business year for which the financial statements are drawn up. In the mentioned items, the amounts in kunas are converted into euros and read as follows:

  • Micro entrepreneurs are those who do not exceed the threshold indicators in two of the following three conditions:
  • total active EUR 350.000,00
  • income EUR 700.000,00
  • the average number of employees during the business year – 10 employees
  • Small entrepreneurs are those who are not micro-entrepreneurs and do not exceed the threshold indicators in two of the following three conditions:
  • total assets of EUR 4.000,000,00
  • income of EUR 8.000,000,00
  • the average number of employees during the business year – 50 employees
  • Medium-sized entrepreneurs are those who are neither micro nor small entrepreneurs and do not exceed the threshold indicators in two of the following three conditions:
  • total assets EUR 20.000.000,00
  • income EUR 40.000.000,00
  • the average number of employees during the business year – 250 employees

Change in the part of the auditor and related amounts

The obligation to audit annual financial statements is subject to the annual financial statement and consolidated financial statements of public interest entities and large and medium-sized enterprises that are not entities of public interest.

In the Accounting Act, in the part related to auditing, amounts in kuna are converted into euros, and Article 20, paragraph 4 therefore reads:

  • If they are not subject to an audit in accordance with paragraphs 1 and 2 of this article, the annual financial statements and annual consolidated financial statements of joint-stock companies, limited partnerships and limited liability companies whose individual or consolidated data in the year preceding the audit exceed the indicators are also subject to the audit obligation in at least two of the following three conditions:
  • the amount of total assets EUR 1,990,842.13
  • amount of income EUR 3,981,684.25
  • the average number of employees during the business year is at least 25

Other changes

Most of the changes in the Accounting Act concern amounts in kuna that have been converted into euros, and the word “kuna” is changed to the word “euro”. Here are some examples:

  • In Article 26, paragraph 2, the word “kunas” is replaced by the word: “euros”
  • In Article 27, paragraph 3, in two places, the words “750,000.00 kunas” are replaced by the words: “100,000.00 euros”
  • In Article 42, paragraph 1, the words: “HRK 10,000.00 to HRK 100,000.00” are replaced by the words: “EUR 1,320.00 to EUR 13,270.00”
  • In paragraph 2, the words: “HRK 5,000.00 to HRK 20,000.00” are replaced by the words: EUR 660.00 to EUR 2,650.00.

The new Accounting Act will be published in the Official Gazette and will enter into force on the day of the euro’s introduction as the official currency in the Republic of Croatia.