NF-2010-01 - New Amendments to the Croatian Foreign Currency Law 

The Amendments were announced in the National Gazette, edition 153/09, and entered into force on 31 December 2009.

We set out below an overview of the most important changes which apply as of 1 January 2010, as well as the amendments which further postpone the liberalisation of foreign transactions.

As of 1 January 2010, the following limitations/prohibitions have been abolished:

·         Limitations on the amounts of gifts and aid that can be transferred to abroad;

·         Limitations for performing compound financial instrument transactions (which were not applicable for banks, brokerages, investment funds, pension funds and other financial institutions whose operations are regulated by specific legislation);

·         Limitations on the amounts, reporting obligations and terms for the import and export of cash in foreign and domestic currency and cheques;

·         Limitations on transfers of securities held by Croatian residents to abroad and receipt of the same from abroad; and

·         Prohibition of sale and purchase of foreign currency abroad for Croatian residents.

In addition, payments between residents and non-residents in cash and cheques have been liberalised.

As of 1 July 2010 the following will be abolished:

·         Prohibition for residents, excluding banks, to grant short-term loans (with a repayment period of less than three months) to non-residents, except within direct foreign investments.

Please note that prior to the introduction of the most recent amendments, it was prohibited for residents to grant short term loans with a repayment period of less than one year to non-residents.

The aforementioned limitation should have been abolished as of 1 February 2010.  The possibility of cross border cash pooling has therefore been postponed yet again, this time until 1 July 2010.

As of 1 January 2011 the following will be abolished:

·         Requirements for funds borrowed from abroad to be transferred to a bank resident in Croatia or, under certain prescribed conditions, to a foreign bank account; and

·         Requirements under which residents, with the exception of banks, may open an account and maintain funds in a foreign account.

For further information please contact Paul Suchar, Partner, Taxation and Regulatory Services or Tomislav Leko, Manager, Taxation Services.

Tel:  +385 1 5390 006
Fax: +385 1 5390 111

tax@kpmg.hr
kpmg.hr