Final cash payments will be rounded in cash transactions

Press release, 28 March 2024

The Seimas adopted the Law on the rounding of cash payments and amendments to the accompanying legislation, which, from 1 May 2025, will make it obligatory to round the final amounts paid for goods and services in cash.

Rounding will occur to the nearest five or ten eurocents. If the total final cash payment amount ends in one or two eurocents, it will be rounded down to zero. If it ends in three, four, six or seven eurocents, it will be rounded up to the nearest five, and if it ends with eight or nine eurocents, it will be rounded up to the nearest ten eurocents. This approach minimises the need for one and two eurocent coins, reducing the minting and circulation of these denominations. Nevertheless, as stated by Mindaugas Lingė, Chair of the Committee on Budget and Finance, one and two eurocent coins will continue to be accepted as legal tender and will be available for settlement at all trading venues.

Mr Lingė emphasises that the advantages of rounding are mutual, contingent upon the total final amount payable in cash. He highlights that this strategy has been thoroughly examined in jurisdictions where it had been implemented, revealing a neutral impact. Notably, this approach is currently employed by several eurozone countries, including Ireland, Belgium, Finland, Italy, the Netherlands, and Slovakia.

Under the newly adopted legislation, rounding up will not be applicable to non-cash transactions, gift vouchers  such as cheques or cards, balances accrued on loyalty cards and social cards, wages and other employment-related benefits, pensions and social security benefits, currency exchanges, taxes, and similar transactions.

According to data from the Bank of Lithuania, Lithuanian residents have collectively lost EUR 2.4 million worth of one and two eurocent coins since the introduction of the euro. The Bank’s cash statistics show that only about a third of one and two eurocent coins are recirculated and actively participate in the economy’s circulation. Given the necessity of these coins for facilitating change during transactions at the points of sale, the Bank of Lithuania is compelled to constantly mint or procure them from other countries in order to maintain their circulation.

The proponents of the proposal elucidate that minting, transporting and administering one and two eurocent coins incur costs, contribute to pollution, and elevate CO2 emissions due to the packaging materials involved, notably plastic in which the coins are packed. Since the introduction of the euro, the Bank of Lithuania has allocated EUR 4.8 million towards the minting or procurement of these coins from abroad, averaging over EUR 0.5 million annually.

The business sector additionally shoulders the burden of administering these coins, encompassing expenses for cash collection and the time invested on their transactions and calculation at the end of the day. According to expert assessment, EUR 2.9 million is spent on that annually.

The Law on the rounding of cash payments was passed by a total of 65 votes in favour, with 20 votes against and 31 abstentions.

Rimas Rudaitis, Adviser, Press Office, Information and Communication Department, tel. +370 5 209 6132, e-mail: [email protected]