Lithuania will begin the New Year by joining the euro zone. The transfer to the euro from Lithuanian litas should not incur any major inconvenience for business, though will require at least some preparation. For example, traders are required to follow certain obligations with respect to display of prices, maintaining dual pricing.
On 23 July 2014 the Council of the European Union gave its green light to adoption of the euro by Lithuania on 1 January 2015. Euro notes and coins will be issued in Lithuania on 1 January 2015.
The conversion rate has been set at 3.45280 Lithuanian litas to the euro. The main principles for transition to the euro are set out in the Law on Euro Adoption in the Republic of Lithuania, adopted on 17 April 2014.
Display of prices
Traders must maintain dual pricing (in euros and litas) for a certain period. Under the Law on Euro Adoption in the Republic of Lithuania, the period of dual price display began on 22 August 2014 and continues until 30 June 2015 (for at least six months following the Euro adoption date).
The obligations in relation to pricing are mandatory regardless of how and where goods or services are offered and how they are paid for (online, e-money, etc.). Dual pricing in both currencies (euros and litas) should be displayed throughout all stages of the purchase process.
Where display of dual pricing in euros and in litas is in different formats (eg price in euros is shown in brackets), the format of the display will need to change after 1 January 2015. In this regard, to save time and cost, it is advisable to display dual pricing in the same format for both currencies (without giving the impression that litas is the main currency and euros subsidiary and vice versa).
In addition, prices displayed in euros and in litas should be easy to understand, and should not be misleading. For example, display of prices in euros in advertising or promotional material in significantly larger font than prices in litas may be misleading because showing prices in significantly larger font in euros rather than litas may encourage consumers to visit the trader’s store.
Conversion and rounding
The main principle of conversion is to divide the amount in litas by the fixed conversion rate (EUR 1 = LTL 3.45280) and round the value obtained to the nearest cent (to two decimals).
Rounding must follow the mathematical rounding rules: if the digit after the last digit to which rounding is performed is 5 or above 5, add one to the last digit; if the digit after the last digit to which rounding is performed is under 5, the last digit remains unchanged.
For example, after conversion a price of LTL 965.00 should become EUR 279.48 (965.00/3.45280=279,483....=279.48). And after conversion a price of LTL 469.99 should become EUR 136.12 (469.99/3.45280=136,118....=136.12)
Post transition management
As of 1 January 2015 traders must not make payments to customers in litas (other than cash settlements where litas may be used for a limited 15 calendar days after the Euro adoption date (until 15 January 2015)). This means that a trader must make refunds and returns in euros. The exchange rate is the fixed conversion rate (EUR 1 = LTL 3.45280). Our advice would be to ensure that the display of amounts of refunds and returns is in both currencies.
Generally, euro introduction by itself will not impact the effectiveness of commercial contracts. All commercial contracts in litas remain valid for their original term but values in litas (eg prices, outstanding payments) will mean the value in euro converted in line with the fixed conversion rate. Therefore, the switch to euro cannot itself necessitate revising or terminating any commercial contracts, unless a contract specifically indicates that a change of currency is a ground for revision or termination.
Supervision of implementation
In Lithuania, fulfilment of provisions related to display of pricing is supervised by several institutions. For consumer claims the State Consumer Rights Protection Authority (SCRPA) has jurisdiction and investigates breaches or assigns the investigation to another institution.
Under the Law on Euro Adoption in the Republic of Lithuania, if prices are not displayed both in euros and litas, the SCRPA (or other responsible institution) may issue a warning or a fine of up to LTL 1,000 (EUR 289.62). For repeated breaches, the SCRPA (or other responsible institution) may impose an administrative fine from LTL 1,000 (EUR 289.62) to LTL 10,000 (EUR 2,896.20).
According to publicly available information, to date mostly warnings and occasionally minimum fines have been imposed. On every occasion when a breach was found and communicated to a trader the non-compliance was remedied.