Interest and late-payment penalties in Lithuania: what the law allows

If your debtor pays late, you can claim interest and, where they have been agreed or set by law, late-payment penalties (delspinigiai), but they rest on different grounds. Late-payment penalties are a form of penalty (netesybos), so you can claim them if a law or a written agreement provides for them (Article 6.258(1) of the Civil Code (CK); CK Article 6.72). Interest is due even when the contract says nothing: the law sets annual interest on the overdue sum (CK Article 6.210(1) and (2)), and under commercial contracts covered by the Law on the Prevention of Late Payments in Commercial Contracts (MĮSVAĮ), the creditor is entitled to interest calculated under that law (MĮSVAĮ Article 3(2)). The court may reduce penalties that are unreasonably high (CK Article 6.258(3)). Claims for penalties are subject to a shortened six-month limitation period (CK Article 1.125(5)).

How to claim contractual penalties together with the debt, and why you do not need to terminate the contract to do so, is covered in Debtor not paying under a contract: what to claim and who is liable. This article covers how much you can claim for late payment and on what basis.

Late-payment penalties under the Civil Code: what they are and how they are set

A penalty (netesybos) is a sum of money set by law, contract or court that the debtor must pay the creditor if an obligation is not performed or is performed improperly. The CK names two forms: a fine (bauda) and late-payment penalties (delspinigiai) (CK Article 6.71(1)). Penalties may be stated as a specific sum or as a percentage of the secured obligation (CK Article 6.71(2)). For a missed deadline they may be calculated for each day, week or month of delay (CK Article 6.71(3)).

An agreement on penalties must be in writing (CK Article 6.72). Under a consumer credit agreement, penalties charged to the consumer for late payment may not exceed 0.05 per cent of the overdue sum for each day of delay and may not be charged for a period longer than 180 days (Article 11(8) of the Law on Consumer Credit (VKĮ); from 20 November 2026, VKĮ Article 19(8)). So before you claim penalties, check that the rate appears in the signed contract or in another written document both parties agreed to.

Penalties and interest are not the same thing. Interest may be set by law or by agreement of the parties (CK Article 6.37(1)). Where the law sets the interest rate, the parties may agree in writing on higher interest, provided the agreement does not contradict the law or the principles of good faith and reasonableness. If the written form is not observed, the statutory rate applies (CK Article 6.37(3)). Interest is not charged on accrued interest, except for exceptions set by law or by agreement of the parties, provided such an agreement does not breach the requirements of good faith, reasonableness and fairness (CK Article 6.37(4)).

When the court reduces penalties

The CK allows the court to reduce penalties in two cases: when they are unreasonably high, and when the debtor has performed part of the obligation (CK Article 6.258(3)). In the rules on securing the performance of obligations, the same rule uses the words “clearly excessive” (CK Article 6.73(2)). In both cases there are two limits:

  • reduced penalties may not be lower than the loss caused by the non-performance or improper performance;
  • penalties already paid are not reduced.

So, if you have evidence of the loss the delay caused you, attach it to the claim: that amount is the floor below which the court cannot reduce the penalties.

You will not receive penalties and damages twice. When damages are claimed, the penalties are set off against the damages (CK Article 6.258(2)). Interest set by contract or law for a missed money-payment deadline counts as minimum damages (CK Article 6.261). So compensatory interest and penalties are not both charged for the same period of delay: where both are claimed, only the larger sum, which covers the smaller, is awarded (Supreme Court of Lithuania, ruling of 8 May 2019 in civil case No e3K-3-110-219/2019, para. 72).

Interest when the contract says nothing

The Civil Code rule. A debtor who misses the deadline for a money obligation must pay annual interest of five per cent on the overdue sum (CK Article 6.210(1)). Where both parties to the contract are business persons or private legal entities, annual interest of six per cent is payable (CK Article 6.210(2)). Both rules apply unless a law or the contract sets a different rate.

The MĮSVAĮ rule. For commercial contracts, the MĮSVAĮ sets a different rate: if the contract sets no interest or no rate, the creditor is entitled to interest calculated under that law (MĮSVAĮ Article 3(2)). The MĮSVAĮ applies to commercial contracts between business entities, or between business entities and public entities, under which goods are supplied, services provided or works performed for payment (MĮSVAĮ Article 1(2)). Among other exceptions, it does not apply to transactions with consumers (MĮSVAĮ Article 1(3)(1)) or to payments where bankruptcy or restructuring proceedings have been opened against the debtor or an out-of-court bankruptcy is under way (MĮSVAĮ Article 1(3)(4)). Where both parties are business persons or private legal entities but the contract falls outside the MĮSVAĮ, the CK Article 6.210(2) interest applies. If insolvency proceedings have been opened against a debtor that is a legal entity, penalties and interest on obligations that arose before the order opening the proceedings became final may not be calculated from that day until an order approving a restructuring plan or terminating the insolvency proceedings becomes final (Article 28(1)(4) of the Law on the Insolvency of Legal Entities (JANĮ)).

The MĮSVAĮ rate is the interest rate applied to the latest main refinancing operation of the European Central Bank, increased by 8 percentage points (MĮSVAĮ Article 2(5)). The rate in force in the half-year in which the duty to pay interest arose applies, and interest is calculated for each day of delay on the unpaid sum (MĮSVAĮ Article 3(2)). In the first half-year the rate in force on 1 January applies, in the second the rate in force on 1 July (MĮSVAĮ Article 3(2)). A term of a commercial contract that makes it impossible to establish interest is unfair towards the creditor (MĮSVAĮ Article 9(3)).

From when MĮSVAĮ interest runs

The right to interest arises, without any warning, when the periods in MĮSVAĮ Article 4 and Article 5(1), (3) or (4) have ended, provided the creditor has performed its own duties and has not received the sum due on time, unless the debtor is not responsible for the delay (MĮSVAĮ Article 3(1)).

  • Between business entities. The payment period set in the contract may not exceed 60 calendar days from the date the goods were received, the services provided or the works performed, unless the contract expressly provides otherwise and this is not unfair towards the creditor (MĮSVAĮ Article 4(1)). If the contract sets no payment date or period, interest runs after 30 calendar days from receipt of the invoice or equivalent document. If the date the invoice was received is uncertain, or the invoice arrived before the goods, services or works, interest runs after 30 calendar days from the date the goods were received, the services provided or the works performed. If a law or the contract sets an acceptance or inspection procedure and the invoice arrived earlier or on the day of acceptance or inspection, interest runs after 30 calendar days from the day of acceptance or inspection (MĮSVAĮ Article 4(2)). The acceptance or inspection procedure may not last longer than 30 calendar days from the date the goods were received, the services provided or the works performed, unless the contract expressly provides otherwise and this is not unfair towards the creditor (MĮSVAĮ Article 6).
  • Where a public entity must pay. Payment must be made within 30 calendar days of receipt of the invoice or equivalent document at the latest, and in the other cases listed in MĮSVAĮ Article 5(1), from the date the goods were received, the services provided, the works performed, or their acceptance or inspection (MĮSVAĮ Article 5(1)). A longer period is allowed only if expressly agreed in the contract, objectively justified and no longer than 60 calendar days from the date the goods were received, the services provided or the works performed (MĮSVAĮ Article 5(3)). A term setting a period longer than 60 calendar days is treated as invalid, and the Article 5(1) periods then apply (MĮSVAĮ Article 5(4)).
  • Payment in instalments. If an instalment is not paid on its due date, interest is calculated on the sums not paid on time (MĮSVAĮ Article 8).

Together with the right to interest, the creditor acquires, without any warning, the right to fixed compensation for recovery costs in the amount set by the law (MĮSVAĮ Article 7(1)).

Sending invoices electronically gives you a clearer start date: the date of receipt is treated as uncertain if the invoice was issued and sent without using electronic means (MĮSVAĮ Article 4(2)(2)).

Procedural interest

Once a claim is filed, another kind of interest is added to the debt. The debtor must pay interest at the statutory rate on the sum awarded, from the day the case is opened in court until the judgment is fully performed (CK Article 6.37(2)). Claim it as a separate item in your statement of claim (ieškinys) or application.

Time limits and how payments are allocated

Claims for the recovery of penalties (fines, late-payment penalties) are subject to a shortened six-month limitation period (CK Article 1.125(5)). Claims for the recovery of interest and other periodic payments are subject to a shortened five-year period (CK Article 1.125(10)). Practical step: if the contract calls a charge that runs for each day of delay “interest”, do not wait. Count the shorter, six-month period and bring the claim as early as you can. The principal debt is subject to the general ten-year limitation period (CK Article 1.125(1)), unless the CK or another law sets a shortened period for that kind of claim (CK Article 1.125(2)). How to calculate all three periods in one debt is explained in How long do you have to recover a debt in court, and what documents do you need?.

If the debtor pays only part, the CK sets what the payment goes to, unless the parties agreed otherwise (CK Article 6.54(1)–(4)):

  • first, to the creditor’s costs of making the demand for performance;
  • second, to interest;
  • third, to penalties;
  • fourth, to the principal obligation.

If the debtor specifies a different allocation, the creditor has the right to refuse the payment (CK Article 6.54(5)). Apply this order when calculating the balance for your claim.

Late-payment penalties in court order proceedings

An application is not examined under the court order (teismo įsakymas) procedure if the late-payment penalties claimed exceed the late-payment interest rate set in the MĮSVAĮ (Article 431(2)(6) of the Code of Civil Procedure (CPK)). Before choosing this route, compare your contractual penalty rate with the MĮSVAĮ Article 2(5) rate over the same unit of time: penalties may be calculated for each day, week or month (CK Article 6.71(3)). The application must state the interest or penalty rate, the amount and the calculation period (CPK Article 433(1)(4)). When a court order fits and what follows it is covered in Court order, court fee and bailiff in Lithuania: what happens next.

More on debt recovery

How to start

Send us the contract, the unpaid invoices with the dates they were sent, and a statement of payments received. We will calculate interest and penalties on the correct basis and check which part is not yet lost to limitation.

Phone +370 5 212 1506, email info@linden.lt

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