The preparatory period begins 6 months before the Euro introduction and includes a dual price display. What exactly does this mean for businesses?
Every business entity must identify its own needs and adjustments regarding currency change and prepare on time to face the inevitable challenges as easily as possible. Timely preparation aims at an unhindered and fast currency exchange, with maximum efficiency and minimal business disruptions.
A necessary step is to access the impact of the change in the Euro currency on one’s own business. Upon the initial assessment completion, it is recommendable to develop an action plan with a specific time frame.
Since business entities will have to bear the cost of adjustment themselves, it is recommendable to keep records of the adjusting costs to be able to calculate the total cost of the Euro introduction. It is also very important to stick to the set deadlines and the mentioned plan of activities. Only in this way entities can anticipate potential difficulties and come up with unpleasant surprises.
In the third article in a series of euro articles, we will look more closely at the topic of the dual price display. Who is obliged to dual price display, how long will the dual price display last, and what are the conduct rules?
Who is obliged to dual price display?
The obligors of the dual price display are business entities, employers, public authorities, the Croatian Pension Insurance Fund, and institutions in the financial sector.
Businesses will have to double display their prices. Employers will also have to double display the total amount paid to the employee for wages and other payments based on an employment contract. Public authorities are obliged to state double prices on acts they pass. Clients will have to double display the amounts in the employment contracts and copyright agreements. The Croatian Pension Insurance Fund, as well as other entities, will display all information on pension income in double currency. Institutions in the financial sector will double display all relevant information which are most important to consumers.
There are some transactions that are exempted from the dual price display. Namely, dual price display does not include trade agreements, i.e., transactions between business entities (B2B), internal transactions within the same company, and various records and reports that will need to be sent to the public authorities. Also, business entities in the process of issuing invoices to government institutions (B2G) are not obliged to double disclose the prices.
How long will the dual price display last?
The dual price display is a key measure to prevent incorrect recalculation and unjustified price increases. The dual price display obligation refers only to the relationship with consumers to protect them. The dual price display is the presentation of prices of goods, services, and all monetary statements of value in such a way that they are simultaneously denominated in HRK and EUR, with the application of a fixed conversion rate, under the rules for conversion and rounding.
We distinguish two types of dual price display. Voluntary and mandatory display. The voluntary double display will take effect on the publication of the EU Council’s decision day on a fixed conversion rate. The mandatory double display will take effect no later than the first Monday of the month following the 30th day since the EU Council regulation will be adopted.
The EU Council Regulation will, inter alia, set a fixed conversion rate under Art. 140, paragraph 3 of the Treaty on the Functioning of the European Union. Mandatory dual price display will end 12 months after the Euro will be introduced as the official Croatia currency.
Where and how will businesses display dual prices?
In approximately 16 months, which will be the double display period of prices and other monetary values, the business entities are obliged to report prices/services/other monetary values and a fixed conversion rate in a clear, legible, visible, and easily noticeable way in Euro and Kuna.
Business entities will thus double display prices, services, and other monetary amounts:
- in the branch office and at the point of sale,
- on the price list if it is a service,
- in an offer or contract,
- on websites,
- in any form of advertising,
- when concluding a distance contract with a consumer,
- and other price presentation forms.
Dual price display when issuing an invoice to a customer
A fiscalized invoice must be issued to the customer where the total amount of the invoice is displayed in dual prices with a stated fixed conversion rate. This applies to business entities, the Croatian Bank for Reconstruction and Development, public authorities, credit institutions, credit unions, payment institutions, electronic money institutions, and all other creditors following the regulations governing consumer lending and financial services.
Exchange offices are not required to dual price display or display a fixed conversion rate.
Dual price display when paying a salary to an employee
In the period of dual price display, all employers are required to double disclose:
- the total amount paid to the employee within payroll,
- salary compensation,
- severance pay,
- and other substantive rights
arising from labor regulations, employment contracts, collective agreements, etc. with a presentation of a fixed conversion rate.
A travel order is exempted from the obligation of the dual price display.
Dual price display in enforcement decisions
In the service contract and copyright agreement, entities are obliged to dual price display the total amount paid to the executor with the presentation of a fixed conversion rate. This also applies to student contracts, notices of retirement benefits, and enforcement decisions issued by a notary public, court, and other authorities.
Are there exceptions to the dual price display?
There are three exceptions for situations where dual price display is not applicable for practical reasons or would cause disproportionate costs to businesses. Despite the exceptions, when issuing an invoice to the consumer, the total amount will have to be stated twice on the invoice with a fixed conversion rate.
- Business entities that sell goods in a specific way and in specific locations (markets, stands, benches, mobile sales, etc.)
- Expression forms that are exempt from the obligation due to disproportionate costs that would be incurred (fixed panels, self-service devices, prices on scales, totems of gas stations, etc.)
- Situations, where the price in Kuna is highlighted on the goods and reprinting, would result in unnecessary and excessive costs.
The double display will be carried out following the Law on the Introduction of the Euro, the Law on Consumer Protection, and the Ordinance on the manner of displaying the retail price and the unit price of products and services.
In the next article in a series of articles on the introduction of the euro, we will explain more detail the recalculation of monetary values.
