September the 6th, 2022 - Croatian public procurement issues and disputes will be settled solely in euros when we enter 2023, even if they were initially concluded and contracted in Croatian kuna.
As Poslovni Dnevnik/Marija Brnic writes, on the first day when officially all prices must be expressed in euros in addition to Croatian kuna, many were surprised that in the very recently announced tenders of state and public bodies and institutions, as well as companies, the highest prices willing to be paid for a particular job were not stated in the new currency (euros) at all.
In all contracts on the Electronic Croatian Public Procurement Bulletin, absolutely all the latest offers are displayed exclusively in kuna.
Evaluations carried out in euros
For the private sector, a large fine of up to 100,000 kuna is foreseen for non-compliance with the obligation to properly display prices in both kuna and euros until the end of 2022. What we're seeing with the failure to display prices in both euros and kuna in this sense is (rather surprisingly) nothing to do with the classic sluggishness of Croatian state bureaucracy, but about the use of an opportunity provided by legislation.
The so-called guideline for adjusting Croatian public procurement procedures to the process of replacing the Croatian kuna with the euro, which was prepared in July by the Directorate for Trade and Public Procurement Policy of the Ministry of Economy and Sustainable Development, discussed this in depth. That official document provides details on how the introduction of the euro will be treated in Croatian public procurement procedures, and the starting point is that in public procurement, there is actually no obligation to display prices in both kuna and euros.
This also applies to the preparatory period, which began on July the 15th 2022, as well as the dual pricing circulation period, which began on September the 5th.
Over the past month or two, some legal experts have pointed out to their clients the situation in which they may find themselves when engaged in these procedures, especially in cases where bids are submitted this year and evaluations are due to be performed only in 2023. They advised them to be guided by the official kuna-euro ratio immediately when forming their offers, regardless of whether the tender for a specific job provides for it or not.
As stipulated in the guidelines, in cases where the bids are submitted by December the 31st of this year, and the evaluation is carried out the following year, companies should display their prices in kuna amounts, and the evaluation will be performed in euros. This takes into account the fact that the conversion will take place automatically, at a fixed conversion rate, and in the full amount, not rounded to two decimal places, i.e. in the amount of 7.53450 kuna for one euro.
The guidelines specifically emphasise that the conversion of currencies must not under any circumstances result in an increase in the price or value of goods and services.
Concluded contracts in kuna
In all Croatian public procurement procedures started this year, for which the appeal procedures within the State Commission for the Control of Public Procurement Procedures are set to be resolved after the New Year, and the selected bidder is rejected, the most economically advantageous offer will have to be made solely in euros.
In Croatian public procurement cases initiated this year, but with their bid submission deadlines marked out in 2023, the value of the work will be assessed only in kuna, and the currency will be the euro during the selection process which follows. As far as already concluded contracts are concerned, for all issued purchase orders until the end of this year, invoices will need to be issued in kuna, and after that in euros.
For the executed parts of contracts this year, for which invoices were issued this year, but the company is set to pay it in 2023, they will be carried out in euros. For framework agreements of a longer duration, invoices will be issued in kuna until the end of the year, and thereafter in euros. After the New Year, the only currency for Croatian public procurement procedures of any type will be the euro.
For more, make sure to check out our dedicated business section.
