Dobrodošli u EU, Hrvatska! – How the EU got richer by over a thousand islands overnight

On Monday 1 July 2013 Croatia became the 28th Member State of the European Union. From that day on, several changes came into life, making our business with the Mediterranean trading partner smoother. Let us look at some of those from a customs and indirect tax perspective.

One of the most visible effects of Croatia’s accession will be the end of customs controls at internal EU borders. Becoming an EU Member State does not; however, mean that the country will automatically join the so-called Schengen Area. The Accession Treaty envisages establishing Schengen instrument as a temporary instrument in order to help Croatia to apply measures on new outer EU borders and surveillance system as a part of Schengen acquis. At the moment, it is likely to expect that it will take Croatia a couple of years to prepare for joining the “full Schengen”. Therefore border controls have not been automatically abolished on 1 July 2013. Police control will stay, but the customs control will no longer be there.

The EU’s free trade agreements and other trade agreements with non-EU countries, like Partnership and Cooperation Agreements, are being adapted, where necessary. Sometimes, this only requires a technical adjustment such as adding Croatia’s name to the list of EU Member States. In certain cases, however, it may involve some more substantial steps, such as renegotiating the tariff rate quotas so they take into account the additional amount resulting from Croatian trade.

The principle of the free movement of goods equally implies to Croatia resulting in products being traded freely from one part of the Union to another. Croatia will adhere to the same principles regarding intra-Community movement of goods in terms of their VAT and excise duty treatment. It is also important to note that Croatia is free to set the general level of the VAT rate and that of excise duties, bearing in mind the minimum standard rates.

Apart from the apparent customs and trade benefits, Croatia adds another official language, over 4 million new EU citizens, rich historical and cultural heritage, innovative spirit, an over 6’000 km long coastline (mainland and islands) and 1’246 islands (the exact number varies according to different measurements) to the EU. Indeed a significant asset worth being acknowledged and relied on while in business.  Welcome to the EU or as it says in the new official language: Dobrodošli u EU, Hrvatska!

See further details on the enlargement process at:
http://ec.europa.eu/enlargement/countries/detailed-country-information/croatia/

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