Entrepreneur testimony
EUROINFORMATION - Euroinformation - Entrepreneur testimony
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ENTREPRENEUR TESTIMONY |
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(source: Slovak banking Association)
- Euro will become Slovakia's official currency on January 1, 2009. As of this date, only Euro will be used for both non-cash transactions and in cash circulation. Euro banknotes and coins will become Slovakia's only legal tender, and Euro the only valid currency. Adoption of Euro will be executed according to the so-called 'Big-Bang' scenario, when the new currency is being introduced without a transition period into both cash and non-cash circulation at the same time. From January 1 to 16, 2009, it will be possible to pay in both currencies - Slovak korunas and Euro - this will be the so-called dual circulation period. During this period, businesses must be prepared to accept payments in both currencies. During the dual circulation period, change will be returned only in Euro. "Slovak" Euros will be valid in Slovakia, as well as in any other Eurozone country, just like Euros issued in other Eurozone countries will be valid in Slovakia.
- No later than one month after the conversion rate is set and until the end of 2009, the business sector will have to display prices of goods and services in a dual way - both in Slovak korunas and in Euro. The exchange rate - which will be used from January 1, 2009 for recalculation of all Slovak koruna values to Euro, and prior and after the adoption of Euro for informative recalculation of SKK to EUR (and vice-versa) - will be determined by the Council of EU most probably sometime in the middle of 2008. This conversion rate will be determined as a coefficient with six valid digits, which will express the equivalent of 1 Euro in Slovak korunas (1 EUR = 30,126 SKK). Once the conversion rate is determined, only this rate can be used for recalculation of Slovak korunas to Euro (and later during the actual conversion). The conversion rate must not be rounded or otherwise modified, and its number of decimal digits must not be reduced. No later than one month after the conversion rate is set and until the end of 2009, you will have to show prices in both Slovak korunas and Euro. During this period, prices of goods and services will be shown in the following order: SKK/EUR, where SKK is the legal tender and EUR the informative currency. Starting on January 1, 2009 and throughout the entire year 2009, you will also have to show both prices, but in the reversed order: EUR/SKK. Euro will become the legal tender, and the value in Slovak korunas only reference information. No deadline has been set for the end of voluntary dual display of prices of goods and services.
- Adoption of Euro will not affect validity of contracts that were signed before its adoption; such contracts remain valid also after January 1, 2009. Values in contracts shown in Slovak korunas are automatically recalculated to Euro by using the conversion rate. During the currency changeover period, contract continuity will be retained meticulously. This means that all contracts continue to be valid without any change. It will not be possible to unilaterally terminate any agreement due to adoption of Euro. For example: In the case of financial products with a fixed interest rate, adoption of Euro will not change the nominal interest value. In the case of products with floating interest rate, the nominal interest rate will change according to conditions defined in the contract.
- During the dual display of prices period, the prices of goods and services that are shown in Slovak korunas but which will be paid or billed in Euro will be rounded to ne nearest Eurocent. Rounding will be made only after the price has been recalculated to Euro by using the determined conversion rate, and will be made to the nearest Eurocent, i.e. to two decimal digits. Under special circumstances determined by the General Act, rounding will be made with even greater precision. Unit prices, rate tables and tariffs that are used for partial or final calculation of values do not need to be rounded after being recalculated to Euro. They generally have one more decimal digit than the original unit prices in Slovak korunas (meaning at least three decimal digits).
- Business entities will be able to create their Euro cash supply as early as towards the end of 2008. Careful preparation is necessary in order to tackle the Euro changeover process successfully. You should make your first steps already prior to the start of the dual circulation - by creating a sufficient supply of Euro banknotes and coins. Creating cash supply is important in order for you to be able to secure your operation from the very first day the new currency is valid. We recommend that you look back at the volumes of your cash flows in SKK at the turn of the years in the past, and prepare a strategy for creation of Euro cash supply for the first days of January 2009.
- Implementation costs and expenses related to adoption of Euro will be born by each business subject individually. Adoption of Euro must not become the reason for increasing prices (including unit prices and fees), not even due to one-time expenses that have been incurred for the purpose of successful implementation of Euro.
- Information systems must be prepared for Euro in such a way that they are able to display dual (EUR and SKK) values no later than one month after the exchange rate is determined, and fully work in Euro environment as early as since January 1, 2009 - this means that as of this date, they must be able to convert necessary data to Euro and continue in dual (SKK/EUR) display of prices. If your information systems are not ready for Euro on January 1, 2009, you might not be able to execute your business transactions. Adoption of Euro will affect all information systems that operate with financial information in Slovak korunas.
- Accounting books and financial statements for 2008 will be prepared in Slovak korunas. As of January 1, 2009, any accounting will be performed only in Euro. In order to secure comparability of all accounting data recorded until 2008 in Slovak korunas with those recorded since 2009 in Euro, all values will be recalculated using the official conversion rate. This is required by the General Act on Euro changeover. Recalculation of all assets and liabilities to Euro will also include conversion of basic capital, stock and shares. With regard to Euro changeover, businesses will convert their basic capital and equity deposits by using the bottom up method, rounding up or down to the nearest Euro as necessary. The difference that is created as a result of rounding will be covered from or deposited to the Reserves Fund.
- Accounting entities using the calendar year as their accounting period will record all accounting information in SKK.
- Accounting entities using the economic year (not the calendar year) as their accounting period will record their temporary Financial Statements as of December 31, 2008 in SKK, and regular Financial Statements as of after January 1, 2009 in EUR.
- Income-tax return for 2008 will be prepared in SKK, and tax arrears and overpayments will be paid in the currently valid currency, i.e. in Euro. For taxation purposes, it is necessary to note which currency is valid at the time of recording an event in the accounting books, and which currency is valid at the time when the tax or other obligations need to be fulfilled. Income-tax return for 2008 will be prepared in Slovak korunas. However, tax arrears or overpayments arising from this tax return will be paid in Euro, with the value being recalculated according to the conversion rate. All tax obligations due in 2009, even though related to 2008, will be paid in Euro.
- Educating your employees regarding the adoption of Euro on all organisation levels will prevent possible mistakes and complications during the process of Euro changeover. Sufficient information and knowledge of the rules and processes related to the adoption of Euro will make easier not only your actual preparation for Euro, but also its execution. Your employees should be informed about all measures and changes related to the Euro changeover, especially if you work with clients whom you should provide with timely and professional information. For this reason, an employee training plan should be incorporated into your Euro-plans. This part of preparation should not be underestimated, since successful preparation and actual adoption of Euro may depend on it.
