The Law on Euro adoption in the Republic of Lithuania
Lithuanian Parliament has recently voted in favour of acceptance of the Law on Euro adoption in the Republic of Lithuania (hereinafter – the Law). The Law will establish the procedure for the preparation to adopt the euro, exchange of the national currency (the litas) to the euro, conversion of values denominated in litas to values denominated in euro after the euro adoption in Lithuania and withdrawal of the litas from circulation.
The euro adoption date will be the date established in the European Council Decision to abrogate a derogation of the Lithuania under Article 140(2) of the Treaty on the Functioning of the European Union when the Republic of Lithuania fulfils the necessary conditions for the euro adoption. It is planned to adopt the euro on January 1, 2015.
According to the Art. 5 of the Law, the Bank of Lithuania will exchange the litas to the euro free of charge without a time limit and without any limitation on the amount. Banks will exchange the litas to the euro for twelve months following the euro adoption date free of charge and without any limitation on the amount. Public limited company Lietuvos paštas (the Lithuanian Post Office) and the credit unions shall exchange the litas to the euro for 60 calendar days following the euro adoption date free of charge at the units of the Lithuanian Post Office and branches of the credit unions.
In the Art. 7 of the Law rules of conversion and rounding of the Litas (Euro) to the Euro (Litas) are established. When cash amounts in litas are converted to the euro or cash amounts in euro are converted to the litas, the conversion rate shall apply and rounding shall be performed in accordance with the mathematical rounding rules. In conversion of the price for the unit of goods (services), the value in euro shall be denominated to the same number of decimals as the price for the unit in litas.
According to the Art. 17 of the Law, the traders selling goods (services) shall start displaying the prices of goods (services) at their publication sites in litas and in euro by applying the conversion rate and the rounding rules no later than within 30 calendar days following the conversion rate establishment date and shall do this for at least six months following the euro adoption date. The prices displayed in euro and in litas shall be easy to understand and shall not be misleading.
The Law establishes maximum protection of the employees’ interests. Following the euro adoption date the wage rates set in litas in labour contracts shall be converted to the euro to the employee’s benefit by rounding to the nearest euro cent. If the digit following the last digit, up to which rounding is performed, is above 0, one unit shall be added to the last digit or a new amount shall be set, which is not lower than the previous amount in litas converted to the euro. The same rules are applied to payment and conversion of pensions and other social benefits.
According to the Art. 10 and Art. 11 of the Law on the euro adoption date the amounts in litas in all accounts of credit institutions and other financial and payment institutions shall be converted to the euro free of charge by applying the conversion rate. Non-cash payments made or to be made before the euro adoption date after the euro adoption date will be made in euro. The Art. 28 provides that withdrawal of the litas from circulation shall not change any terms and conditions of contracts or other legal instruments and shall not exempt from the obligation to fulfil contracts (legal instruments). Also withdrawal of the litas shall not give the right to the party to unilaterally amend the contract (legal instrument) or terminate its legal validity, unless the terms and conditions of contracts (legal instruments) establish otherwise.
It shall be noted that according to the Art. 12 of the Law, all references to VILIBOR in contracts or other legal instruments following the euro adoption date will be treated as references to EURIBOR, except for overnight VILIBOR, and references to overnight VILIBOR shall be treated as references to EONIA. Contracts may contain other provisions at the agreement of the parties. In case a reference to VILIBOR in legal instruments refers to a period that starts before the euro adoption date and ends after the euro adoption date, this interest rate shall be used till the end of the period for which it has been established, unless otherwise agreed by the parties.
The Art. 21 of the Law provides that following the euro adoption date accounting records shall be filed and the data, if related to the reporting period starting with the euro adoption date, shall be entered into accounting registers in euro, and, where necessary, both in euro and in foreign currency. The data of accounting registers, which were included into accounting by the day preceding the euro adoption date, shall be converted to the euro by applying the conversion rate and the rounding rules. According to the Art. 22 of the Law, entities, the financial year of which coincides with the calendar year, shall prepare the sets of financial statements and reports on implementation of the budget for the last year before the euro adoption date providing the data in litas. Entities, the financial year of which does not coincide with the calendar year, and the final day of the financial year of which is subsequent to the euro adoption date, shall provide the data in the sets of financial statements and reports on implementation of the budget in euro. In the set of financial statements and reports on implementation of the budget, where the data is presented in euro for the first time, the comparative data of the previous reporting periods in litas shall be converted and displayed in euro by applying the conversion rate and the rounding rules established in the Law.
Jovita Valatkaite, lawyer of the Gencs Valters Law Firm in Vilnius.
Practising in fields of Advertising and Marketing Law in Latvia.
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