VAT in Lithuania: Everything you need to know26 January 2017
The standard VAT rate in Lithuania is 21%.
A reduced 9% VAT rate is applicable for:
- books (excluding periodical informational publications);
- newspapers, magazines and periodicals. Periodicals of an erotic or violent nature, or publications that do not comply with professional ethical requirements, are excluded;
- passenger transportation services by regular routes as well as transportation of passenger luggage;
- accommodation services;
- heating energy supplied for housing heating and for hot water supplied for housing (extended until 31 December 2016).
A reduced 5% VAT rate is applicable for:
- technical aids for disabled persons and for the repair of those technical aids;
- supply of pharmaceuticals and medical aids to persons who have the right to the total or partial reimbursement of the acquisition expenses of these goods in accordance with the Law on Health Insurance.
Payers of VAT
Taxable persons engaged in the provision of goods or services in Lithuania must register as VAT payers and calculate and pay VAT to the state budget. However, a taxable person of the Republic of Lithuania does not have to register as a VAT payer and does not have to calculate or pay VAT on the goods and/or services supplied (except for new vehicles supplied to other EU Member States), provided that the aggregate amount received from the goods and/or services supplied as part of routine business activities does not exceed €45,000 during the last twelve months.
VAT registration must be obtained by taxable persons who are not, and must not be, registered as VAT payers due to the supply of goods/services in the territory of Lithuania and also by legal persons who are not taxable persons and acquire goods in Lithuania from another EU Member State. Registration as a VAT payer is not mandatory where the aggregate value of all goods purchased from other EU Member States (except for new vehicles or goods subject to excise duty) does not exceed €14,000 (excluding VAT) in the previous calendar year. It is not expected that this limit will be exceeded in the current calendar year.
An opportunity for voluntary registration as a VAT payer has also been provided in cases where these limits are not exceeded.
The tax period
The tax period is one calendar month, however, in some cases it can be a calendar half-year period or another period. If one calendar month has been set as the tax period, VAT returns for the tax period must be filed and the VAT amount payable must be paid by the 25th day of the subsequent month.
Lithuanian law on VAT also establishes cases where supply of goods or services and acquisition of goods from another EU Member State are not subject to VAT and cases where imported goods are not subject to import VAT. The law establishes procedures for the application of special VAT taxation schemes (compensatory VAT rate for farmers, tourism services, second-hand goods, works of art, collectors’ articles and antiques, investment gold and special schemes for non-established taxable persons supplying telecommunications, broadcasting or electronic services to non-taxable persons).
Regulation in the European Union
Council Directive of 28 November 2006 No. 2006/112/EB on the common system of value added tax is the main document governing VAT taxation on the EU scale. The scope of the directive covers practically all aspects of VAT application.
VAT taxation in the European Union is strictly regulated, owing to the fact that VAT as consumption tax has substantial impact on the development of the internal market without borders.
However, there are a number of directives for specific VAT areas such as:
- cases of, and procedures for the application of reliefs from import VAT - Council Directive of 5 October 2006 No. 2006/79/EC on the exemption from taxes of imports of small consignments of goods of a non-commercial character from third countries and Council Directive 2009/132/EC of 19 October 2009 determining the scope of Article 143(b) and (c) of Directive 2006/112/EC as regards exemption from value added tax on the final importation of certain goods;
- refunding of VAT to taxable persons - Council Directive 2008/9/EC of 12 February 2008 laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State and Council Directive 2010/66/EU of 14 October 2010 amending Directive 2008/9/EC, also Thirteenth Council Directive of 17 November 1986 No.86/560/EEC on the harmonization of the laws of the Member States relating to turnover taxes - Arrangements for the refund of value added tax to taxable persons not established in community territory.
Regulation in Lithuania
VAT was introduced in Lithuania on 1 May 1994, when the Law on Value Added Tax No. I-345 was enacted. This law remained in force until 30 June 2002. From 1 July 2002, a new version of Law on Value Added Tax No. IX-751 came into effect. This new law implemented all the key provisions of the EU legislation governing VAT taxation; however those requirements — the application of which was subject to Lithuania‘s joining the EU and the common market — were not transposed to the law. On 15 January 2004, the Law on Amending and Supplementing the Law on Value Added Tax No. IX-1960 was adopted; it took effect on 1 May 2004. This law represents the final transposition of provisions of the EU legal acts governing VAT taxation into Lithuanian law.
Clarification of provisions of the law on VAT
Summarised clarifications of the law on Value Added Tax are provided and published by State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania.
Taxpayers looking for consultations regarding VAT payment, or information about the application of the Law on Value Added Tax and relevant bylaws, should approach the State Tax Inspectorate as provided for in the Law on Tax Administration.
i.SAF – electronic invoicing
Since 1 October 2016 we have electronic invoicing subsystem (i.SAF). Taxpayers are obliged to file data on received and issued invoices using software in a standardised data format by electronic means to a tax administrator.