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I am a South African citizen flying from South Africa to Italy. I then board a cruise ship departing from Italy to Croatia and then back to Italy again.

Do I need a single or multiple entry Visa? Croatia is now part of the European Union BUT NOT part of the Schengen agreement.

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You will need a multi entry visa. The first entry to the Schengen area is when you arrive to Italy from South Africa, the second entry is when you get back from Croatia. When you leave to Croatia this is considered as leaving the Schengen area.

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