Official translation
REPUBLIC OF LITHUANIA
LAW ON VALUE ADDED TAX
5 March 2002 No IX-751
Vilnius
CHAPTER ONE
GENERAL PROVISIONS
Article 1. Purpose of the Law
This Law establishes the imposition of the value added tax (hereinafter referred to as VAT) and the obligations of taxable persons, VAT payers and other persons incidental to the payment of the tax.
Article 2. Definitions
For the purposes of this Law:
2. "Consideration" shall mean everything which has been or is to be obtained in money or in any other form as payment for the supply of goods and services from the purchasers/customers and/or third party. Subscription fees and/or donated funds received by non-profit-making legal persons shall not be treated as consideration provided the receipt thereof cannot be linked to the supply for the benefit of a specific person of specific goods or services, i.e. the above-mentioned funds are obtained for financing the general activities of the non-profit-making legal person, linked to representation of the interests of its members and for their benefit.
3. "Disclosed agent" shall mean a taxable person acting as an intermediary in the transaction for the supply of goods or services in the name and for the account of another person.
4. "Employment" shall mean work carried out under the employment contract, also any other activity performed on the basis of legal ties creating the relationship of employer and employee (by agreement as regards remuneration for work , workplace and functions, work discipline, etc), corresponding to those created under the employment contract.
5. "Economic activities" shall mean activities (including all activities of producers, traders and persons supplying services, agricultural activities, fishing activities, mining, activities of the professions, exploitation of tangible and/or intangible property or property rights) seeking to obtain any income (regardless of whether or not the activity is aimed at making a profit). The following activities, however, shall not be considered as economic activities:
2) activities of state and local government authorities as they are defined in paragraph 30 of the Article, even where they collect dues, fees or payments in connection with these activities;
3) holding of shares (interests, member shares) and other securities, even though income (interest, dividends, etc) is obtained therefrom on a continuing basis. The said exception shall not cover sale or any other transfer of shares (interests, member shares) even though income accrued from the holding thereof is obtained due to such sale or transfer;
4) keeping of a bank deposit, bank account or bank card account, even though income is obtained therefrom on a continuing basis;
5) transactions carried out on an occasional basis, i.e. not inter-connected transactions giving no grounds to believe that they are or will be carried out on a continuing basis. Where the transactions which are carried out are not uniform, this fact by itself does not give ground to treat them as being carried out on an occasional basis, where other circumstances give grounds to believe otherwise.
6. "Capital assets" shall mean tangible property and other objects of the right of ownership which are used in the economic activities of the taxable person (with the exception of natural persons) for a period exceeding one year and the price of acquisition whereof is not less than the price fixed by the taxable person (according to the groups of capital assets listed in Annex 1 to the Law on Profit Tax). Capital assets acquisition price shall be included in the costs gradually in portions during the period of depreciation or amortisation. For the purposes of this Law, tangible capital assets of a natural person shall be tangible property of the types listed by the Government of the Republic of Lithuania or an institution authorised by it, which are used in the economic activities of the natural person for a period exceeding one year.
7. "Import VAT " shall mean the amount of VAT which is calculated or must be calculated in the manner established by this Law and other legal acts on the imported goods due to which according to the Customs Code of the Republic of Lithuania customs debt on importation is incurred.
8. "Derivative " shall mean a financial instrument (future contract, forward contract, etc.) the value or price whereof is linked to the value or price of the goods on which the instrument is based as well as a financial instrument (future contract, forward contract, etc.) the value or price whereof is linked to the price of securities, exchange rate, interest rate, stock exchange index, determination of creditworthiness or any other variable.
10. "Controlling person" shall mean any person controlling the taxable person if he:
1) directly or indirectly holds over 50% of shares (interests, member shares) in the taxable person or other rights to distributable profit or pre-emptive rights to the acquisition thereof;
2) himself being the holder of not less than 10% of shares (interests, member shares) in the taxable person or other rights to a share of distributable profit or pre-emptive rights to the acquisition thereof, holds over 50% thereof together with the related persons, or
11. "Transport of cargo" shall mean transport of tangible property (mail including) by all forms of transport, also transport of goods by stationary transport installations (pipelines, electricity lines, etc.).
12. "Reduced rate of the VAT" shall mean the rate of VAT fixed in this Law below the standard rate, except for the zero-rate.
13. "Taxable person of the Republic of Lithuania" shall mean a legal or natural person of the Republic of Lithuania who/which carries out economic activities of any type.
14. "Undisclosed agent" shall mean a taxable person acting as an intermediary in the transaction for the supply of goods or services in his own name but for the account of another person.
15. "Property immovable by nature" shall mean property which is immovable by nature, i.e., land or other property, that cannot be removed from one place to another without the change of its purpose and a material reduction of its value.
16. "Place where the person has his permanent address or usually resides" shall mean the country where he usually resides or, in the absence of such place, the country where he has a place of personal, social and economic interests.
17. "Subdivision" shall mean a branch or a representative office of the taxable person set up according to the established procedure, also the permanent establishment of the foreign taxable person through which the foreign taxable person is operating in the Republic of Lithuania. For the purposes of this Law the term "permanent establishment" shall be used as it is defined in the legislation on profit (income) taxation.
18. "Output VAT " shall mean the amount of VAT that has been or is due to be calculated on the supply of goods and/or services.
19. "Material improvement of the building/structure" shall mean construction works the value whereof exceeds 50% of the value of the building or structure before the completion of the works.
20. "Non-profit-making legal persons" shall mean legal persons established for other than profit-making purposes, whose generated profit under the legal acts regulating their activities shall not be distributable to their founders and/or members.
21. "Input VAT" shall mean the amount of VAT paid or payable on purchases of goods and/or services, also the amount of VAT calculated on the tangible capital assets specified in Article 6 of this Law, manufactured by the taxable person himself.
22. "A good" shall mean any thing (including notes and coins of numismatic interest), also electricity, gas, heat and other types of energy.
23. "VAT deduction" shall mean the proportion of input and/or import VAT , deductible under the provisions of this Law.
25. "Open market value" shall mean the amount of consideration which a purchaser would have to pay for the goods or services to a supplier thereof at arm's length where each one of them is seeking maximum economic benefit for himself.
26. "Related persons" shall mean:
2) a natural person and persons connected to him by blood relationship (up to the fourth degree) or by marriage (a natural person and the relatives of his spouse (up to the fourth degree), also natural person and the relatives (up to the second degree) of the relatives of his spouse (up to the second degree);
4) a taxable person and a person who holds an interest in the latter (shareholder, holder of member share, etc.);
7) a taxable person and a natural person who is related to the person holding an interest in the taxable entity or is a member of the taxable entity's management body by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph;
13) a taxable parent entity and a natural person connected to a person holding an interest in its taxable subsidiary or to a member of the management body of its taxable subsidiary company by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph;
14) a taxable subsidiary and a natural person connected to a person holding an interest in its taxable parent entity or to a member of its management body by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph;
15) two taxable persons if one of them directly or indirectly (through one or several intermediaries) controls over 25% of shares (interest, member shares) or has a right to over 25% of decisive votes in the other person or has undertaken to co-ordinate his business decisions with that other person or has assumed liability for the performance of obligations of that other person to third persons or has undertaken to transfer to that other person all or part of the profit or has granted that other person the right to use over 25% of its assets;
16) two taxable persons if the same persons holding an interest in them (alone or together with persons connected with them by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph) directly or indirectly hold over 25% of shares (interest, member shares) in each one of them;
28. "Territory of the country" shall mean the territory of the Republic of Lithuania and the area adjacent to the territorial waters of the Republic of Lithuania where, under the laws of the Republic of Lithuania and international law, the Republic of Lithuania has the right to carry out exploration and to exploit the sea-bed and underground natural resources.
29. "Foreign taxable person" shall mean any of the following persons engaged in any form of economic activity:
1) a legal person or organisation of a foreign state, having its seat in a foreign state and incorporated or otherwise organised in accordance with the legal acts of the foreign state, or
30. "Activities of the state and municipalities" shall mean the activities of the state, municipalities, state or municipal institutions and offices and, in the cases specified by laws, also the activities of other public legal persons, which the said persons are obligated under laws to engage in. For the purposes of this Law the following activities engaged in by the said persons shall not be considered as state and municipality functions:
1) supply of new goods (except for the supply of seized, ownerless goods (or goods recognised as ownerless property), or goods acquired by inheritance by the state or goods or treasure taken or transferred to state income), which are or may be in competition with goods supplied by taxable persons;
31. Other concepts used in this Law shall be interpreted as they are defined in the Law of the Republic of Lithuania on Tax Administration (hereafter - the Law on Tax Administration), the Customs Code of the Republic of Lithuania (hereafter - the Customs Code), as well as the Civil Code of the Republic of Lithuania (hereafter - the Civil Code) to the extent this is in conformity with this Law (with the exception of the cases authoritative under the Civil Code).
Article 3. Scope of VAT
1. The supply of goods or services shall be subject to VAT provided the following conditions are satisfied:
2) the supply of goods and/or services according to the provisions of this Law is considered to be effected within the territory of the country;
3) the goods and/or services are supplied by a taxable person in the performance of his/its economic activities, i.e. acting as such. A natural person shall not be considered a taxable person in respect of the supply of goods and/or services if the transactions concluded by the natural person are not related to the economic activities carried out by him.
Article 4. Supply of Goods
1. Supply of goods shall mean the transfer of goods to another person where under the conditions of the transaction this person or a third party is transferred the right to dispose of the goods as their owner.
2. The actual handing over of goods, pursuant to a contract for the sale of goods on deferred terms or under a contract of payment in instalments, if under the terms of the transaction ownership shall pass to the person to whom the goods have been handed or to the third party upon payment of the final instalment shall also constitute supply of goods for the purposes of this Law. For the purposes of this Law, the handing over of goods, if under the terms of the transaction ownership of goods may (but not necessarily shall) pass upon the payment of the final instalment, shall be treated as supply of services (lease).
3. For the purposes of this Law, the establishment or transfer of the rights in rem over the property immovable by its nature (easement, usufruct, right of development, long-term lease) shall also be considered as supply of goods (of the property immovable by its nature in respect whereof they have been established). The transfer of interest or a share, where the transfer of the interest or share gives the holder thereof the right to dispose of the property immovable by its nature (or part thereof) as its owner shall also be considered supply of goods (property immovable by its nature) within the meaning of this Law.
Article 5. Private use of goods by a VAT payer
1. For the purposes of this Law private use of goods by a VAT payer, as it is defined in paragraph 2 of this Article, shall also constitute supply of goods for consideration.
2. Unless otherwise provided by this Article, private use of goods by VAT payer shall be considered to have occurred where goods at the disposal of the VAT payer, input and/or import VAT on which (if the goods are manufactured by the VAT payer itself/himself - on other goods and/or services used for the manufacture of the said goods) was wholly or partly deductible by the VAT payer, are subsequently :
1) transferred free of charge, whereas the person to whom the goods are transferred or the third party acquires the right to dispose of the goods as their owner , or
3. In derogation from provisions of paragraph 2 of this Article, the transfer or use of goods shall not be treated as private use of goods by the VAT payer, where the goods are transferred or used as samples, i.e. goods forming part of the VAT payer's regular business are transferred or used for examination, analysis or test. In this case goods may be transferred or used in the amount required in order to ensure the quality of the examination, analysis or test, having regard to the nature of the goods and character of the examination, analysis or test, as well as pursuant to relevant provisions of the legal acts regulating the above (provided it is regulated by legal acts).
4. In derogation from provisions of paragraph 2 of this Article, the transfer or use of goods shall not be treated as private use of goods by the VAT payer, where the goods are transferred or used for the making of gifts of small value (for advertising, representation, charity and/or support purposes). The Government of the Republic of Lithuania or an institution authorised by it shall establish the conditions and limitations of the application of the provisions of this paragraph, including the limitations relating to the value of goods transferred or used for the purposes specified herein.
5. In derogation from provisions of paragraph 2 of this Article, the loss of goods shall not be treated as their private use by the VAT payer.
6. Where a natural person who is a VAT payer attributes part of the acquired tangible capital assets to his/her economic activities pursuant to the provisions of this Law, the provisions of this Article shall apply only to the part of the assets attributed in the said manner. The provisions of this Article shall not be applicable to any transfer or use of the remaining part of the assets regardless of the fact that input and/or import VAT on the property became partly deductible.
Article 6. Manufacture of Tangible Capital Assets by a VAT Payer himself
1. For the purposes of this Law, supply of goods for consideration shall include manufacture of tangible capital assets by a VAT payer himself. In this Law, manufacture of tangible capital assets by the VAT payer himself shall mean the entirety of operations of processing of acquired and/or imported raw materials and materials, manufacturing and other operations performed by the VAT payer himself and/or services acquired by the VAT payer, the result whereof is a new unit of tangible capital assets. Material improvement of the building/structure used in the economic activities of the VAT payer shall also be treated as manufacture of tangible capital assets by the VAT payer himself, regardless of whether or not the VAT payer is the owner of the building/structure or uses it on other grounds, unless otherwise provided in Article 9 of this Law, and regardless of whether the VAT payer made improvements in the building/structure by himself or by acquiring services from other taxable persons.
Article 7. Supply of Services
Unless otherwise established in this Law, supply of services shall mean any transaction in respect of any civil rights object, provided this transaction is not treated as supply of goods within the meaning of this Law. Such transactions shall include, inter alia:
3) assignment of intangible property and title, except for the cases provided in Article 4 (3) of this Law;
4) construction works, including the handing over of a constructed new building or structure to the client/contractor;
Article 8. Private use of Services by a VAT Payer
1. For the purposes of this Law, private use of services by a VAT payer, as it is defined in paragraph 2 of this Article, shall also constitute supply of services for consideration.
2. The following shall be treated as private use of services by a VAT payer:
1) giving another person the right to use for a certain time free of charge the object of the right of ownership of the VAT payer. The above provision shall apply only where input and/or import VAT on the object of the right of ownership (where it is manufactured by the VAT payer himself - on the goods and/or services used for the manufacture thereof) was wholly or partly deductible by the VAT payer, or
2) the object of the VAT payer's right of ownership which is not considered as a good within the meaning of this Law, is transferred or used in the ways specified in Article 5(2) of this Law. The provision shall be applicable only where input and / or import VAT on the object of the right of ownership (where it is manufactured by the VAT payer himself - on the goods and/or services used for the manufacture thereof) was wholly or partly deductible by the VAT payer.
3. Where a natural person who is a VAT payer attributes part of the acquired tangible capital assets to his/her economic activities pursuant to the provisions of this Law, the provisions of this Article shall apply only to the portion of the assets attributed in the said manner. The provisions of this Article shall not be applicable with respect to the use of any other part of the assets regardless of the fact that the input and/or import VAT on the assets became partly deductible.
Article 9. Special Rules Applied in respect of Certain Transactions
1. For the purposes of this Law the transfer of an undertaking into the ownership of another person where the undertaking is transferred into the ownership of one person as a complex shall not be treated as supplies of either goods or services. The provisions of this paragraph shall not apply with respect to the sale or any other transfer of shares (interests, member shares) in the undertaking.
2. If a natural person who has carried out economic activities in accordance with the procedure laid down by legal acts without having established an undertaking (registered a farmer's farm, etc.), later transfers the activities as a complex (i.e. the entirety of the objects of the right of ownership, acquired and used for the activities, also other property and non-property rights, debts and other obligations related to the said activities) to another taxable person who continues the activities that are transferred to him/it, for the purposes of this Law such transfer of activities shall not be considered as supplies of either goods or services.
3. Any transfer of an object of the right of ownership, where it is transferred as a property contribution to a company and the input and/or import VAT on the object of the ownership right (and in case of manufacture thereof by the VAT payer himself - on the goods and/or services used for the manufacture) was wholly or partly deductible by the VAT payer, shall be treated for the purposes of this Law as supply of goods for consideration (in case of transfer of an object considered as a good within the meaning of this Law) or as supply of services for consideration (where the transferred object is not treated as a good for the purposes of this Law).
4. Transfer of any object of the right of ownership due to the winding up of the legal person-VAT payer by way of reorganisation, where input and/or import VAT on the object of the ownership right (and in case of manufacture thereof by the VAT payer himself - on the goods and/or services used for the manufacture) was wholly or partly deductible by the VAT payer being wound up shall be treated for the purposes of this Law as supply of goods for consideration ((in case of transfer of an object considered as a good within the meaning of this Law) or as supply of services for consideration (where the transferred object is not treated as a good for the purposes of this Law)).
5. Return to the owner of a building/structure materially improved by the VAT payer who/which used it on the grounds other than the right of ownership prior to the expiry of the period of adjustment of VAT deductions fixed in this Law shall be treated as supply of goods for consideration provided that the input and /or import VAT on goods and/or services used for the improvement was wholly or partly deductible by the VAT payer. The parties shall have the right to make an agreement that material improvement of the building/structure shall be considered to be supplied to the owner of the building/structure not at the moment of return thereof, but right after the completion of the improvement works and in such case the provisions of this Law related to the manufacture of tangible capital assets by the taxable person himself shall not be applied to the VAT payer who carried out the improvement with respect to this building/structure.
Article 10. Barter
Where consideration for the supplied goods and/or services is given (wholly or in part) in goods and/or services, each party to the transaction shall be considered as supplying goods and/or services.
Article 11. Agency
1. For the purposes of this Law, a disclosed agent shall be considered as supplying the service of agency (agent's service) to the person in whose name and for whose account he is taking part in the transaction.
2. Where an undisclosed agent takes part in the transaction, it shall be considered that the goods or services were at first supplied to the undisclosed agent and later by the undisclosed agent, even in the case where the same goods or services are in fact supplied directly to the final purchaser/customer.
Article 12. Criteria for Determination of the Place of Supply of Goods
1. If the supplied goods have to be transported, the place of supply of goods shall be deemed to be the place where the goods are at the time when transport of the goods begins regardless of who is transporting the goods (supplier, purchaser of the goods or the third party).
Article 13. Criteria for Determination of the Place of Supply of Services
1. Unless otherwise established in this Article, the place where a service is supplied shall be deemed to be the place where the supplier has established his business, i.e. where the supplier of service has its seat (if it is not a natural person) or the place where he has his permanent address or usually resides (if he is a natural person), however, when services are performed through the subdivision of the taxable person established in the country other than that where the taxable person himself has established his business, the place of supply of service shall be deemed to be the place where the specified subdivision is located.
2. In derogation from the provisions of paragraph 1 of this Article, the place of the supply of services connected with property immovable by its nature shall be the place where the property with which the services are connected is situated or will be constructed. For the purposes of this provision, services connected with the property immovable by its nature shall include:
3. By way of derogation from the provisions of paragraph 1 above, the place of the supply of services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities, and where appropriate, the supply of ancillary services shall be the place where the services are physically carried out.
4. By way of derogation from the provisions of paragraph 1 above, ancillary transport services (loading, unloading, handling of cargo, driving of empty wagons and/or containers, arranging transportation of goods by stationary transport installations and other ancillary services connected with the transportation of cargo by certain means of transport or stationary transport installations) shall be considered supplied in the place where the services are physically carried out.
5. By way of derogation from the provisions of paragraph 1 above, the services of valuation of movable property, also work thereon (repair, maintenance, adjustment, etc.) shall be deemed supplied in the place where the services are physically carried out.
6. By way of derogation from the provisions of paragraph 1 above, the services listed in this paragraph shall be considered supplied in the place where the purchaser of services (customer) is established , i.e. where the seat of the purchaser is located (if the purchaser is not a natural person) or where the purchaser has his permanent address or usually resides (if the purchaser is a natural person), however, in the cases where the services are supplied to a subdivision of a taxable person located in a country other than that in which the taxable person himself has his seat, the services shall be considered supplied in the place where the specified subdivision is located. The above provisions shall apply to:
1) transfers and assignments of copyrights and related rights, patents, industrial design, semiconductor topography, trade marks, firm names, secret processes and formulae, transfer of rights under the franchise agreement and other similar rights;
2) services of consultants, lawyers, auditors, accountants, engineers (not referred to in this Article, paragraph 2, subparagraph 3), technical control and analysis, market survey, public opinion polling and other similar services;
4) insurance and financial services (with the exception of the hire of safes), when supplied by insurance companies, banks, other credit institutions, pension funds, collective investment entities or intermediaries of public trading in securities;
8) obligation to refrain from performing the activities specified in this paragraph, subparagraphs 1-7 or from exercising any of the rights specified in the said subparagraphs;
7. By way of derogation from the provisions of paragraph 1 above, in the case of lease of movable tangible property, the place of supply of the service shall be the place of actual utilisation of the leased property. The property shall be considered utilised in the territory of the country if the supplier of the service or the purchaser/customer is unable to submit evidence confirming that the leased property has been exported from the territory of the country.
8. By way of derogation from the provisions of paragraph 1 above, the place where transport services are supplied shall be the place where transport takes pace. If the transport services are carried out both inside and outside of territory of the country, it shall be considered that the share of the service supplied within the territory of the country is proportionate to the part of the route running through the country's territory.
Article 14. Chargeable Event
1. Unless otherwise provided in this Article, VAT on the good or service supplied shall become chargeable upon the issue, in the manner established in this Law, of the VAT invoice or any other accounting document serving under this Law as invoice for the supply of goods or services.
2. Where a VAT invoice or other document serving as an invoice for the supply of goods or services is not issued, VAT shall become chargeable upon the occurrence of that of the specified events, which occurs first, when:
3. Where, in accordance with the provisions of this Law, obligation to calculate and pay VAT on the good delivered or service supplied by a foreign taxable person lies with the purchaser/customer, VAT on said good or service shall become chargeable upon the occurrence of that specified event, which occurs first:
4. By way of derogation from the provisions of paragraphs 1, 2 and 3 of this Article, where payment for the goods or services is made in full or in part before the delivery of goods or supply of services, VAT shall become chargeable upon the receipt of the above-mentioned full or partial consideration on the amount received, provided that according to the terms of the contract the goods will be delivered or all services will be supplied not earlier than 12 months after the date of conclusion of the contract (hereinafter in the Law full or partial consideration payable before the delivery of the good or supply of the service shall be referred to as payments on account ). The provisions of this paragraph shall not be applicable in the cases where the taxable amount is the margin calculated in the manner laid down in Articles 102 and 107 of this Law.
5. By way of derogation from other provisions of this Article, in the cases where goods are supplied as specified in Article 4 (2) of this Law , VAT shall become chargeable upon the issue, in the manner laid down in this Law, of the VAT invoice or any other accounting document serving as invoice for full or partial consideration for the goods supplied, whereas in the cases where the invoice or any other accounting document serving as invoice is not issued - upon the receipt of the consideration, however, in the cases where payment on account is received for the good supplied in the above manner, the provisions of paragraph 4 of this Article shall apply.
6. By way of derogation from other provisions of this Article, in the case where long-term services are supplied (i.e. services which are supplied for a certain continuous period (telecommunications, lease, etc.), also in the case of long-term supply of electricity, gas, heat, and other types of energy VAT shall become chargeable not later than upon the issue, in accordance with the procedure laid down in this Law, of the VAT invoice or any other accounting document serving as invoice for the supply of goods or services during the accounting period, and in case the invoice or any other accounting document serving as invoice for the supply of goods or services is not issued - upon the receipt of the consideration for the amount of goods or services supplied during the accounting period. If, upon the expiry of the time period fixed in the legal acts regulating accounting, neither the invoice or any other accounting document serving as invoice for the supply of goods or services during the accounting period has been issued, nor the consideration has been received, the obligation to calculate VAT shall arise on the day following the expiry of the said time period within which the document had to be issued. Where under the contract of lease the leased property is to be delivered to the lessee not earlier than after 12 months from the date of conclusion of the contract and the payment on account is received, the provisions of paragraph 4 of this Article shall apply. If the services or goods specified in this Article are supplied by a foreign taxable person and, according to the provisions of this Law, the obligation to calculate and pay VAT on the good delivered or service supplied by a foreign taxable person lies with the purchaser/customer, VAT on said good or service shall become chargeable upon the occurrence of that of the below-specified events, which occurs first:
1) upon receipt by the purchaser/customer of the invoice for the amount of goods or services supplied during the relevant accounting period;
2) upon payment of the consideration by the purchaser/customer for the amount of goods or services supplied during the relevant accounting period (including the payments on account payable under the contract of lease providing for the transfer of the leased property to the lessee not earlier than 12 months after the date of conclusion of the contract);
7. VAT on private use of goods and/or services by the VAT payer shall become chargeable at the moment of such use of the good or of the service.
8. The VAT shall become chargeable on the tangible capital assets manufactured by the VAT payer himself when the VAT payer starts to use the assets in his economic activities (in case of material improvement of a building/structure - upon the completion of the improvement works).
Article 15. Taxable Amount
1. The taxable amount which is the base for calculation of VAT shall comprise the consideration (excluding the VAT itself) which has been or is to be obtained by the supplier of goods or services (hereinafter in this Article - the seller) or, on his behalf, a third party. Where other goods and/or services are obtained in payment for the goods or services supplied, the consideration that would have been obtained if obtained in money shall constitute the taxable amount which is the base for calculation of VAT.
2. In the cases specified in Article 5 (2) or subparagraph 2 of Article 8 (2) of this Law the acquisition price of the transferred or used object of the right of ownership, i.e. the purchase price (excluding the VAT itself) or the cost price of manufacture by the VAT payer himself (excluding the VAT itself) shall constitute the taxable amount. Where the transferred or used object of the right of ownership was the VAT payer's capital assets, the taxable amount shall be equal to the non-depreciated/non-amortised share of the assets' value at the time the tax becomes chargeable, calculated in accordance with the laws regulating the taxation of profit (income).
3. In the case specified in subparagraph 1 of Article 8 (2) of this Law, the taxable amount shall be the expenses of the VAT payer (excluding the VAT itself) incurred upon giving the object of the right of ownership for use. When the object of the right of ownership given for use is the VAT payer's capital assets, the amount of depreciation of the assets, which would be calculated under the laws regulating the taxation of profit (income) for the period during which the assets were given for use in the said manner, shall be attributable, inter alia, to the expenses incurred by the VAT payer.
4. In the case specified in Article 6 of this Law the taxable amount shall be the cost price of the capital asset manufactured by the taxable person himself (in case of material improvement of the building/structure - the value of the said works) (excluding the VAT itself).
5. The taxable amount shall in all cases include:
2) expenses incidental to the supply of a good or service and charged to the purchaser (such as packing, transport, insurance costs, etc.);
6. A subsidy or grant shall be considered as directly linked to the final price of the good/service provided all the following conditions are met:
7. The taxable amount shall not include:
2) the amounts received by the seller as repayment for expenses paid out for the third persons in the name, for the benefit and on the account of the purchaser. The amount of the repayment in this case must be equal to the actual amount of the seller's expenditure in the above transactions;
8. Where, after the occurrence of the chargeable event, the good or service is refused or returned or the seller allows discounts or rebates (upon compliance with certain additional terms and conditions or for other reasons), the taxable amount in respect of the good or service shall be reduced accordingly.
9. The value of packing in which the goods are supplied (bottles, crates, containers or other packing necessary for keeping the goods) shall be excluded from the taxable amount of the supplied good only in the case where there is an agreement between the seller and purchaser to return the packing to the seller; however, if the packing is not returned within 12 months, the taxable amount in respect of the goods calculated by the seller must be increased by the amount equal to the value of the unreturned packing. Where the value of the returned packing are lower than the amount specified in the agreement, the taxable amount calculated by the seller must be increased by the amount equal to the difference in the values of packing. Where there is no agreement regarding the return of the packing, the value of the packing shall be included in the taxable amount of the goods supplied. Where the packing, the costs whereof have been included in the taxable amount of the goods supplied, is later returned, whereas the person returning the packing is refunded or is due to be refunded the amount equal to the value of the packing, the taxable amount of the goods shall be reduced by the amount equal to the value of the returned packing.
10. Where in case of the supply of goods or services it is provided that the purchaser must pay interest (for the deferred time of payment, also in case of financial lease (leasing), etc.) the amount whereof is specified in the contract, the sum of interest shall not be included in the taxable amount of the goods or services supplied. In such case it shall be considered for the purposes of this Law that two transactions have been effected - the principal transaction of supply of goods or services and the ancillary transaction - that of granting of credit, the taxable amount whereof comprises the above-specified interest.
11. Where the natural person who is the VAT payer transfers the property to another person and the person or the third party acquires the right to dispose of the property as its owner, whereas the property has been the person's tangible capital asset and he/she has attributed a part thereof for the performance of his economic activities in accordance with the provisions of this Law, the taxable amount shall be the part of the consideration (excluding the VAT itself) corresponding to the part of the asset attributed for the performance of economic activities.
12. The provisions of this Article shall not be applied in the cases specified in Chapter XII of this Law where the taxable amount in respect of supplies of goods and services shall be that which constitutes the margin calculated according to the procedure laid down in the Chapter.
13. The taxable amount in respect of imported goods on which the VAT on importation is levied shall be calculated by adding the following amounts (insofar as they are not already included in the customs value of the goods) to the customs value determined on the basis of the Customs Code and the legal acts regulating the application thereof:
1) the paid or payable duties, taxes and other charges due outside the Republic of Lithuania and duties and taxes on the products due in the Republic of Lithuania by reason of importation (excluding the VAT itself);
2) costs of transportation of goods, also ancillary transport services and insurance, costs of paid or due commission for agency services and packing costs, incidental to transportation of goods up to the first place of destination within the customs territory of the Republic of Lithuania. For the purposes of this Article, first place of destination within the customs territory of the Republic of Lithuania shall mean the place of delivery of goods indicated on the consignment notes or, in the absence of such an indication, the first place of transfer of goods into the customs territory of the Republic of Lithuania;
14. For the purposes of Article 9 (3) and (4) of this Law, the taxable amount shall be the value of the object of the right of ownership which is transferred.
15. For the purposes of Article 9 (5) of this Law the taxable amount shall be the total costs of the works of material improvement of the building/structure (where the material improvement of the building/structure is handed over to the owner thereof immediately after the completion of the works) or a portion thereof corresponding to the number of years remaining until the expiry of adjustment period for VAT deductions, fixed in the this Law (where the material improvement of the building/structure is handed over to the owner at a later date).
Article 16. Taxable Amount in Case of Agency Services
1. The taxable amount in respect of the services supplied by the disclosed agent shall be the amount of consideration for agency (commission) calculated according to the procedure laid down in Article 15 of this Law.
Article 17. Calculation of the Taxable Amount on the Decision of the Tax Administrator
1. In the cases where the tax administrator has grounds to suspect that the taxable amount of the supplied good or service has been artificially increased or reduced, it shall have the right to calculate the taxable amount . The taxable amount of the supplied good or service may be considered artificially reduced or increased in the case where upon giving due consideration to all conditions of the transaction the taxable amount does not correspond to the open market value of the good or service (it has been fixed having regard to an individual purchaser - related person, etc.).
2. The taxable amount shall be calculated, on the decision of the tax administrator, on the basis of the open market value determined in accordance with the methods approved by the Government of the Republic of Lithuania or an institution authorised by it and following the procedure of their application.
Article 18. Application of the Rate of VAT
The rate of VAT applicable to the supply of goods or services and the importation of goods shall be that rate of VAT fixed in this Law which was in force the at the time when VAT became chargeable on the goods or services supplied or customs debt on importation was incurred.
Article 19. Rates of VAT
1. In the cases of supply of goods and services, which are not provided in paragraphs 3,4 and 5 of this Article and Chapter IV of this Law, standard rate of VAT shall be applied.
2. Standard rate of VAT shall apply to imports of goods which are not indicated in paragraph 3 of this Article and in Chapter V of this Law.
3. The reduced rate of VAT of 5% shall be applied to:
1) passenger transport by regular routes determined by the Ministry of Transport and Communications or an institution authorised by it, passenger transport by passenger trains as well as transportation of passenger luggage referred to in this subparagraph;
2) books, newspapers and magazines, except for publications publicising eroticism and violence, which have been recognised as such by an institution authorised by legal acts;
3) pharmaceuticals and medicinal products (special purpose food products for children, special medicinal purpose food products and special medicinal body and dental care products, pharmaceutical products, medical devices, compensatory equipment, medical aid devices and articles of personal hygiene). The list of medicinal products indicated in this subparagraph, on which VAT is chargeable at the reduced rate of 5%, shall be approved by the Government of the Republic of Lithuania;
4) accommodation at hotels and other special accommodation services supplied according to the procedure laid down in the legal acts regulating tourist activities;
5) organic food products (the requirements for organic food products shall be laid down by the Government of the Republic of Lithuania);
6) chilled meat and edible offal (with the exception of meat and edible offal of poultry) if it conforms to the standards approved by the Department of Standardisation under the Ministry of the Environment of the Republic of Lithuania;
4. Reduced 9% rate of VAT shall be applied to supplies of services relating to construction, renovation, insulation and design of residential houses, engineering network building and territorial management, which are financed with state and municipal budget resources as well as with soft credits granted by the state and resources of state special funds.
Article 20. Goods and Services Related to Health Care
1. Personal and public health care services provided by health care institutions within the meaning of relevant laws, as well as natural persons who have acquired, according to the procedure established by legal acts, the right to provide the above services shall be exempt from VAT.
2. Supplies of goods by the persons specified in paragraph 1 of this Article as well as supplies by the said persons of services other than those referred to in paragraph 1 of this Article shall be exempt from VAT provided all the following conditions are met:
1) the goods and services are supplied to the users of services referred to in paragraph 1 of this Article;
3. The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article.
4. Therapeutic substances of human origin and human milk, also dental prostheses supplied by dentists and dental technicians shall be exempt from VAT.
Article 21. Social Services and Connected Goods
1. Exempt from VAT shall be the supply of social services by children and young people care institutions, by old people's homes and/or by the care/guardianship institutions for the disabled or by other non-profit making legal persons.
2. The supplies of goods and services other than those specified in paragraph 1 of this Article by the persons referred to in paragraph 1 of this Article shall be exempt from VAT provided the following conditions are met:
1) the goods and services are supplied for the users of services specified in paragraph 1 of this Article;
Article 22. Education and Training Services
1. Pre-school education, primary, general, secondary, tertiary and higher education, additional training of children and young people (in art, music, other spheres), studies at higher educational establishments, vocational training shall be exempt from VAT if provided by legal persons who are qualified under laws to provide the above services, also exempted shall be in-service training and retraining, where the services are supplied by non-profit making legal persons who have acquired the right to supply the services according to the procedure prescribed by legal acts.
2. Supplies of goods by the persons specified in paragraph 1 of this Article as well as supplies by the said persons of services other than those referred to in paragraph 1 of this Article shall be exempt from VAT provided all the following conditions are met:
1) the goods and services are supplied to the users of services referred to in paragraph 1 of this Article;
3. The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article.
4. Scientific research carried out by the institutions of science and studies referred to the paragraph 1 of this Article, the type whereof is linked to the supplied services of higher education and/or studies shall be exempt from VAT.
Article 23. Cultural and Sports Services
1. Cultural services supplied by non-profit making legal persons shall be exempt from VAT. For the purposes of this Article, the following shall be considered as cultural services:
2) various cultural events (theatre performances, choreographic performances, cultural events for children and young people, art exhibitions and exhibitions of folk art, etc.), film production (including ancillary activities - dubbing, subtitling, etc.), film rent and demonstration;
2. Supplies of goods by the persons specified in paragraph 1 of this Article as well as supplies by the said persons of services other than those referred to in paragraph 1 of this Article shall be exempt from VAT provided all the following conditions are met:
1) the goods and services are supplied to the users of services referred to in paragraph 1 of this Article;
3. The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article.
4. Supply of services linked to physical education and sport by non-profit making legal persons shall be exempt from VAT. For the purposes of this Law, the following services shall be considered linked to physical education and sport:
1) granting of the right to participate in a cultural or sport event. The provisions of the subparagraph shall not be applicable to the sale of tickets to physical education or sporting events;
2) supply of services to the participants in physical education or sporting events directly linked to their participation, i.e. the granting of the right to use special premises, territories and/or inventory for physical education and sport, the services of training of participants and other similar services. The services relating to provision of accommodation, catering and transport shall not be attributable to the above-mentioned services.
Article 24. Activities of Non-profit Making Legal Persons, not Specified in Articles 20, 21, 22 and 23
1. Services supplied to their member by political parties, trade unions and other non-profit making legal persons set up and operating on the membership basis shall be exempt from VAT provided that the services conform to the aims of the legal person determined in the bylaws/regulations thereof and no consideration is obtained for the above services in addition to membership fees. The provisions of this paragraph shall be applied to the activities of non-profit making legal persons only where the payment of members' fee may be linked to the specific service supplied for the benefit of a specific member.
2. Supply of services by religious communities, societies and centres for the benefit of their members if the services conform to the aims provided in the cannons, statutes and other norms of the said persons and, save for donations, no additional consideration is received for the services, shall be exempt from VAT. The provisions of this paragraph shall be applied to the activities of the above-mentioned legal persons only where the donations may be linked to a specific service supplied for the benefit of a specific member.
3. Supply of services by a non-profit making legal person whose regulations (bylaws, statutes, cannons and other norms) provide for the activities indicated in Articles 20, 21 or 22 of this Law shall be exempt from VAT if the non-profit making legal person supplies another person with staff, required for the supply of certain services indicated in Articles 20, 21 or 22 of this Law.
4. Supplies of goods and/or services by non-profit making legal persons during charitable and sponsorship events organised by the said persons (including sale of tickets to the events) shall be exempt from VAT if the balance of the collected funds remaining after covering the expenses related to the organisation of the event are to be allotted only for charity and/or community service engaged in by the above persons. The provisions shall be applicable to not more than 12 charitable and sponsorship events organised by a specific legal person in the course of a calendar year. If more than 12 events are organised during a calendar year, each subsequent event and related supplies of goods and/or services shall be subject to VAT according to the procedure laid down in this Law. For the purposes of this Law, a cultural event (theatrical, musical, choreographic, etc.), a fair or a similar event shall be considered a charitable or sponsorship event provided it is indicated during the preparatory stage of the event (on the tickets, posters or otherwise) that after covering the organisational expenses, the total balance of the funds collected during the event will be allotted for charity and/or community service performed by the legal person organising the event. For the purposes of this Law, charity and community service shall be interpreted in accordance with the definition of the terms in the Law of the Republic of Lithuania on Charity and Sponsorship.
5. If it is established that due to the application of provisions of paragraph 4 of this Article the goods and/or services supplied by non-profit making legal persons have gained unjustified competitive advantage over the goods and/or services supplied by other taxable persons which are or may be competitive, the Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish limitations of the value and types of goods and services supplied at charitable and sponsorship events, to which the provisions of paragraph 4 of this Article are applicable.
Article 25. Postal Services
1. Universal postal services and other postal services supplied by the suppliers of postal services shall be exempt from VAT.
2. The list of postal services referred to in paragraph 1 of this Article which are exempt from VAT shall be approved by the Government of the Republic of Lithuania or an institution authorised by it.
Article 26. Radio and Television
1. Supply to the public of public information services by non-profit making legal persons - radio and/or television broadcasters shall be exempt from VAT.
Article 27. Insurance Services
All types of insurance and re-insurance services, except for those indicated in Article 46 of this Law, shall be exempt from VAT.
Article 28. Financial Services
1. Granting of credit, also management of the granted credit by the taxable person granting it shall be exempt from VAT.
2. Unless otherwise provided in Article 46, the granting of financial guarantee or other security for money, also management of the granted guarantee or security shall be exempt from VAT if performed by the taxable person granting the guarantee or security.
3. The services of taking and managing of deposits and other repayable funds, clearing services between banks and/or other credit institutions, also other services connected with the arrangement of settlements, money transfer, organisation of non-cash settlement (including issue of bank cards or other payment instruments, servicing of the holders thereof and performance of transactions related thereto), issue of letters of credit and transactions related thereto, also transactions related to debts and debt obligations shall be exempt from VAT. The provisions of this paragraph shall not be applicable to debt collection services, also to the factor's services supplied under the factoring agreement.
4. Currency transactions (including currency exchange), also accepting contributions in cash and disbursing payments, cash management and other services directly connected with bank notes and coins of any currency shall be exempt from VAT.
5. Transactions in securities, derivatives, also agency services in the above-mentioned transactions (organisation, making, registration, etc. of the issue) shall be exempt from VAT. The provisions of this paragraph shall not be applicable with respect to:
2) transactions in securities (except for those specified in Article 111 of this Law) establishing title to goods not specified in subparagraph 1 of this paragraph,;
3) transactions in securities establishing the right or obligation to acquire or assign securities specified in subparagraph 2 of this paragraph;
6. Management of assets of special investment variable capital companies, investment funds and pension funds as well as management of funds of pension programmes shall be exempt from VAT.
7. Where the purchaser/customer is a VAT payer, the taxable person who grants credit shall have a right of option to calculate VAT on the interest in the manner prescribed by this Law.
Article 29. Special Marks
Exemption from VAT shall be granted to postal prepayment impressions and other special marks specified in the list approved by the Government or an institution authorised by it, which are sold at face value. The above provision shall be applicable only to those postal prepayment impressions which may be used in the Republic of Lithuania for confirming payment for a supplied postal service.
Article 30. Betting, Gambling and Lotteries
Exemption from VAT shall be granted to collection of payments from the participants in the lottery in the amount of nominal value of lottery tickets/cards, also collection of payments from the participants in the betting or gambling irrespective of whether or not the payment in of the amount has to be confirmed by issuing the participant in the game with a chip, card, etc.
Article 31. Letting and Leasing of Property Immovable by its Nature
1. Exemption from VAT shall be granted to the letting or leasing of residential premises, with the exception of:
1) the provision of accommodation in hotels, motels, camping sites or in sectors with a similar function;
2) the letting or leasing of residential premises not specified in subparagraph 1 of this paragraph, for a term not exceeding 2 months;
3) the leasing of residential premises where under the conditions of the contract or several interrelated contracts the right of ownership to the leased premises may pass to the lessee or the third party not later than upon the expiry of the term of lease and/or upon the payment of the last instalment. The provisions of this subparagraph shall be applicable only in cases where the transaction/transactions have been concluded with respect to the premises which at the moment of transfer thereof for use are located in a new building or structure or in the section of a new building or structure within the meaning of Article 32.
2. Exemption from VAT shall be granted to the letting or leasing of items of property immovable by its nature other than residential premises, with the exception of:
1) the letting or leasing of premises, sites, garages for parking or keeping of any means of transport (including aircraft, ships, rolling stock) or other property with a similar function, immovable by its nature;
2) the letting or leasing of any permanently installed equipment (including safes) in keeping with the concept of property immovable by its nature;
3) the leasing of property immovable by its nature where under the conditions of the contract or several interrelated contracts the right of ownership to the leased property may pass to the lessee or the third party not later than upon the expiry of the term of lease and/or upon the payment of the last instalment. The provisions of this subparagraph shall be applicable only in cases where the transaction/transactions have been concluded with respect to the premises which at the moment of transfer thereof for use are located in a new building or structure or in the section of a new building or structure within the meaning of Article 32.
3. The taxable person shall have a right of option for calculating VAT, in the manner established in this Law, on the letting or leasing of property immovable by its nature, which is exempt from VAT under paragraph 1 or 2 of this Article, but only in the case where the property is let or leased to the VAT payer.
Article 32. Sale or Other Transfer of Property Immovable by its Nature
1. The sale or other transfer of buildings, structures or sections thereof (with the exception of new buildings and structures, new sections of buildings and structures) shall be exempt from VAT where under the conditions of the contract the person to whom the property is transferred or a third party acquires the right to dispose thereof as its owner. It shall be considered that:
1) a new building or structure is an unfinished building or structure, also a finished building or structure for a period of 24 months following its completion (after it has been found fit for use) or following its material improvement;
2. Exemption from VAT shall be granted to the sale or any other transfer of land where under the contract conditions the person to whom the land is transferred or a third party acquires the right to dispose thereof as its owner, with the exception of the land transferred together with a new buildings or structures or sections thereof as well as building land. Within the meaning of this Article, building land means a plot of land assigned for construction works regardless of whether or not any development of the plot has been undertaken.
3. A taxable person shall have the right of option to calculate VAT in the manner prescribed by this Law on the property immovable by its nature which is exempt from VAT under paragraph 1 or 2 of this Article, however, only in the case where the property is sold or otherwise transferred to the VAT payer.
Article 33. Special Cases of Exemption of Supplies of Goods or Services from VAT
1. Supply of goods shall be exempt from VAT where the VAT payer has not deducted any proportion of the input and/or import VAT on the said goods on the ground that:
1) the goods have been acquired or imported by the VAT payer for the activities, which do not provide for deduction of input and/or import VAT; or
Article 34. Importation of Goods Supply whereof in the Territory of the Country is Exempt from VAT
Imported goods shall be exempt from import VAT if under the provisions of this Law the supply thereof in the territory of the country would be in all cases exempt from VAT.
Article 35. Goods Importation whereof is Exempt from VAT under the Customs Code
Imported goods which are exempt from import taxes under the Customs Code shall be exempt from VAT on importation.
Article 36. Goods Intended for Diplomatic Missions, Consular Institutions and Representations of International Organisations as well as the Staff of the Representations and Institutions and their Family Members
1. Goods imported for use in the official activities of foreign state diplomatic missions or consular institutions shall be exempt from import VAT. Exemption from import VAT shall also be granted to imported goods intended for the personal use and/or for establishment of the place of residence of diplomatic staff members of the representations and institutions, consular officers, members of administrative technical personnel and their family members living together, where aforesaid persons are not citizens of the Republic of Lithuania and have a permanent address or usually reside outside the Republic of Lithuania.
2. In the cases determined in the international agreements to which the Republic of Lithuania is a party, exemption from import VAT shall be granted to goods imported for official activities of representations of international organisations as well as imported goods intended for the personal use and/or for establishment of the place of residence of diplomatic staff members of representations, members of administrative technical personnel and their family members living together, where aforesaid persons are not citizens of the Republic of Lithuania and have a permanent address or usually reside not the Republic of Lithuania.
Article 37. Goods Imported by Passengers
Goods imported by passengers shall be exempt from import VAT in the cases and according to the procedure established by the Government of the Republic of Lithuania, provided the quantity thereof does not exceed the quantity limits prescribed by the Government, which the passengers are allowed to import tax free.
Article 39. Goods Acquired with Technical Assistance Funds
1. Imports of goods acquired with technical assistance funds as well as funds received under the international agreement of the Republic of Lithuania, stipulating that funds granted under the agreement may not be used for the payment of VAT, shall be exempt from import VAT.
Article 40. Special Cases of Exemptions on Importation
1. The following shall be exempt form import VAT:
1) personal property of natural persons transferring their normal place of residence from another country to the territory of the Republic of Lithuania;
2) the property of natural persons transferring their normal place of residence from another country to the territory of the Republic of Lithuania by reason of marriage (trousseaux, household effects), also presents customarily given on the occasion of marriage;
4) outfits, scholastic materials and household effects representing the usual furnishings for a student's room and belonging to students coming to study;
5) agricultural products imported by agricultural producers established in the Republic of Lithuania who obtained the products from properties used by them, located in a foreign county adjoining the territory of the Republic of Lithuania;
6) seeds, fertilisers and products for the treatment of soil and crops, imported by agricultural producers, having their principal undertaking in the foreign country adjoining the Republic of Lithuania, for use on properties used by them in the Republic of Lithuania;
7) laboratory animals and biological and chemical substances intended for use in scientific research;
12) gift received in the context of international relations and articles to be offered as gifts (goods received as a gift from the institutions of the host country by persons on an official visit in that country, also goods imported by representatives of foreign state institutions or international organisations, which are to be offered as gifts and goods sent as gifts by foreign states or international organisations in token of friendship and goodwill);
13) articles intended for use by the heads of foreign states on a visit in the Republic of Lithuania;
14) goods imported for the purpose of trade promotion (samples of goods of negligible value, printed matter and advertising material, articles to be used or consumed at international fairs or similar events);
16) consignments sent to organisations protecting copyrights or industrial and commercial patent rights (documents relating to objects of industrial property, applications for the registration thereof, etc.);
22) goods for the construction, upkeep or ornamentation of memorials to and cemeteries of victims of war, genocide and occupation regimes;
2. Concrete conditions, procedure and limitations of application of provisions of paragraph 1 of this Article shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
3. Exemption from import VAT shall be granted in respect of goods imported by military units of foreign states in compliance with the provisions of the Law of the Republic of Lithuania on International Operations, Military Exercises and other Military Events.
4. Exemption from import VAT shall be granted with respect to imported ships and aircraft specified in Article 43(1) and (2) of this Law (with the exception of aircraft for private use), conventional and requisite equipment incorporated therein and spare parts.
5. Import VAT shall not be chargeable on goods sent in non-commercial consignments of negligible value (packages with documents, postal packages or postal parcels). A consignment shall be considered of negligible value if the customs value thereof is less than LTL 160. A consignment shall be treated as non-commercial if all the conditions listed below are satisfied:
2) the items of property contained in the consignment are clearly intended for personal needs, i.e. neither the quantity of goods nor their character gives grounds to presume that the items of property are intended for economic activities;
Article 41. Export of Goods
1. Unless otherwise established in this Chapter, zero-rate of VAT shall be charged on the supplies of goods, provided the goods are exported.
2. Zero-rate of VAT shall also be charged on the supplies of goods when these are:
2) intended to be exported and produced for temporary storage in places of temporary storage under customs control;
Article 42. Goods Exported by Passengers
1. Zero-rate of VAT shall be applied to goods exported by persons who have their permanent address or usually reside outside the Republic of Lithuania (hereinafter - foreign passenger), which they have acquired in the Republic of Lithuania and the value whereof exceeds the minimum amount prescribed by the Government of the Republic of Lithuania. A foreign passenger must prove that he has his permanent address or usually resides outside the Republic of Lithuania by presenting a document of the type established by the Government of the Republic of Lithuania.
2. The provisions of paragraph 1 of this Article shall be implemented by refunding the above-mentioned foreign passengers the amount of VAT they have been charged on the goods acquired by them in and exported from the Republic of Lithuania. The procedure for applying the said provisions and cases of the application thereof shall be established by the Government of the Republic of Lithuania.
Article 43. Ships and Aircraft
1. Zero-rate of VAT shall be charged on the supply, maintenance, repairs and/or modification/modernisation as well as hiring of:
1) sea-going ships used for carrying passengers and/or transport of cargo on international routes and/or for the supply of other services for reward;
2. Zero-rate of VAT shall be applied to the supply or hiring of aircraft in the case of supply or hiring of the aircraft to taxable persons who receive more than a half of their annual income from transporting for reward passengers and/or cargo on international routes, also maintenance and repairs of aircraft proceeding on international routes (except for aircraft operating on such routes, which are intended for personal needs).
3. Zero-rate of VAT shall be charged on the supply of conventional and requisite equipment to the ships and aircraft specified in paragraphs 1 and 2 of this Article and installation thereof in the ships and aircraft, maintenance and repairs of the installed equipment, also supply of spare parts for the above-mentioned ships and aircraft. The provisions of this paragraph shall not be applicable where the aircraft is used for personal needs.
4. Zero-rate of VAT shall also be applied to:
1) supply of ship maintenance services specified in paragraph 1 of this Article which are subject to port charges, also other direct ship maintenance services;
2) supply of the services of maintenance of aircraft operating on international routes, which are subject to airport or air navigation charges, also other services of direct maintenance of the aircraft. The provisions of this paragraph shall not be applicable where the aircraft is used for personal needs.
Article 44. Fuelling and Provisioning of Ships and Aircraft
1. Zero-rate of VAT shall be applied to the supply of goods for the fuelling and provisioning of ships specified in Article 43 (1) of this Law, also of war ships leaving the country's territory.
2. Zero-rate of VAT shall be applied to the supply of goods for the fuelling and provisioning of aircraft operating on international routes (with the exception of aircraft used for personal needs operating on the said routes).
3. Goods within the meaning used in paragraphs 1 and 2 of this Article shall be goods (food products, etc.) intended for use by passengers and/or crew members on board the above-specified ships or aircraft, also as fuel (motor fuel) and lubricants. The procedure of fuelling and provisioning shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
Article 45. Transport Services and Related Transactions
1. Zero-rate of VAT shall be applied to the supply of services of transport of goods which are exported or carried in transit through the territory of the Republic of Lithuania as well as to any ancillary services directly related thereto.
2. Zero-rate of VAT shall be charged on the supply of services of transport of imported goods, also on the supply of any services ancillary to transport and agency services, directly related thereto, if the specified transport and other services:
1) are related to the transportation of the imported goods to the first place of destination within the customs territory of the Republic of Lithuania within the meaning of subparagraph 2 of Article 15 (13) of this Law, and/or
3. The provisions of paragraphs 1 and 2 of this Law shall also be applicable, according to the above procedure, to the supply of transport and related ancillary services in respect of goods constituting postal consignments sent into and dispatched from the Republic of Lithuania or transported through the territory of the Republic of Lithuania in transit.
Article 46. Insurance and Financial Services Related to Export
Zero-rate of VAT shall be charged on the insurance services, also on the granting of financial guaranty and security, when the above services are supplied by insurance companies, banks or other credit institutions, whereas these insurance services or financial guaranties or securities are directly linked to the export of goods not specified in Chapter IV of this Law.
Article 47. Goods and Services Intended for Diplomatic Missions, Consular Institutions and Representations of International Organisations as well as the Staff of the Representations and Institutions and their Family Members
1. Zero-rate of VAT shall be applicable to the supply of goods and/or services included in the list approved by the Government of the Republic of Lithuania or an institution authorised by it, which are intended for use in the official activities of foreign state diplomatic missions or consular institutions. Zero-rate of VAT shall also be applied to the supply of goods and services specified in the list approved by the Government of the Republic of Lithuania or an institution authorised by it, intended for the personal use of diplomatic staff members of the representations or institutions, consular officers, members of administrative technical personnel and their family members residing together, where the above-mentioned persons are not citizens of the Republic of Lithuania and have a permanent address or usually reside outside the Republic of Lithuania.
2. The provisions of paragraph 1 of this Article shall also be applied mutatis mutandis to the representations of international organisations as well as the diplomatic staff members, members of administrative technical personnel of the representations and their family members residing together, if this is provided for in the international agreements of the Republic of Lithuania.
3. The provisions of paragraphs 1 and 2 of this Article shall be implemented by refunding the amount of VAT paid by the missions or institutions specified in paragraphs 1 and 2 as well as their diplomatic staff members, consular officers, members of administrative technical personnel and/or their family members when purchasing the goods and/or services referred to in paragraphs 1 and 2. The procedure of application of the above provisions shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
4. The provisions of paragraph 1 of this Article shall be applied on the grounds of parity. Where the procedure of refund of the VAT (or comparable tax) applied in the foreign state with respect to the diplomatic mission or consular institution of the Republic of Lithuania (list of goods for which the tax is refundable; the amount of tax subject to refund in a year's time, etc.) is less or more favourable than the procedure applied to the diplomatic mission or consular institution of that state in the Republic of Lithuania, the Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish with respect to the diplomatic mission or consular institution of that state in the Republic of Lithuania an accordingly less or more favourable procedure for the refund of the VAT.
Article 48. Supply of Gold to the Bank of Lithuania
Zero-rate of VAT shall be applied to the supply of gold to the Bank of Lithuania.
Article 49. Goods and Services Purchased with Certain Funds
1. Zero-rate of VAT shall be charged on purchases of goods and/or services that are paid for with the technical assistance funds, also funds received under the international agreement of the Republic of Lithuania where the funds received under the agreement may not be used for the payment of VAT.
Article 50. Goods Supplied to Recipients of Sponsorship
1. Zero-rate of VAT shall be applicable to the supply of goods to the recipients of sponsorship registered in the Republic of Lithuania, who are specified in the Law of the Republic of Lithuania on Charity and Sponsorship, if the goods are exported as sponsorship by the above-mentioned recipients of sponsorship to organisations functioning abroad which themselves are entitled to receive sponsorship donations under the Law of the Republic of Lithuania on Charity and Sponsorship.
2. The provisions referred to in paragraph 1 of this Article shall be implemented by refunding to the recipients of sponsorship registered in the Republic of Lithuania the amount of the VAT which they paid for the goods purchased and exported abroad. The procedure of application of the above provision shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
Article 51. Services consisting of Work on Movable Property
Zero-rate of VAT shall be charged on the supply of services consisting of work on movable property, where services are supplied to the purchaser of services/customer established abroad, provided the property declared under temporary importation for processing arrangements has been imported for the purposes of undergoing such work and later it or the property obtained after the completion of such services will be transported out of the territory of the country. Should it transpire upon the completion of temporary importation for processing arrangements that the property will not be transported out of the territory of the country, the amount of VAT on the supplied services shall be recalculated applying the standard rate of VAT or the reduced rate of VAT, where applicable .
Article 52. Agency Services in Transactions Specified in this Chapter and Transactions outside the Borders of the Republic of Lithuania
1. Zero-rate of VAT shall be applied to the services of agents who act in the name and for the account of another, taking part in:
1) the transaction of supply of goods or services, in which zero-rate of VAT is applied under Articles 41-51 of this Law;
Article 53. Supply of Goods under Customs Control inside the Territory of the Country
1. Zero-rate of VAT shall be charged on the supply of the following goods under the customs control:
4) goods which are placed under the arrangements for temporary importation or placed under inward processing or under customs warehousing or under customs-controlled processing arrangements or imported under a declaration for transit arrangements;
2. Zero-rated VAT shall be charged on the supply of the services of agents who act in the name and for the account of another when taking part in the supply of goods transactions specified in paragraph 1 of this Article.
3. Where the goods specified in paragraph 1 of this Article that have been placed under customs control arrangements are started to be used or are lost and under the Customs Code customs debt on importation will not be incurred for the goods, the taxable person who is using/has consumed or has lost the goods must calculate the amount of VAT thereon applying the standard rate of VAT or the reduced rate of VAT, where applicable, and pay the amount into the budget, except in the cases where:
1) the goods have been lost due to force majeure or criminal activities of third persons and this has been proved in the manner established by the Government of the Republic of Lithuania, or
2) goods of such type are used/have been consumed in such a manner that VAT on the purchase or importation thereof could be deductible subject to the provisions of this Law, or refunded under the provisions of Chapter XIII of this Law, if the goods were acquired or imported by the person who has started to use/has consumed them.
Article 54. Goods and Services Linked to Production of Goods Intended for Export (Re-export)
1. Zero-rate of VAT may be applied to goods supplied to the foreign taxable person who has concluded a transaction with another taxable person of the Republic of Lithuania and the latter is using the goods belonging to the foreign taxable person for the production of goods intended for export/re-export, as well as to the services supplied to the foreign taxable person when goods intended for export/re-export are produced using goods belonging to him. Should it transpire that the goods will not be exported/re-exported, the amount of VAT payable for the services supplied shall be recalculated by applying the standard rate of VAT or the reduced rate of VAT where applicable.
2. The provisions of paragraph 1 of this Article shall be applicable only in cases where the supplies of goods and services are paid for by the foreign taxable person, regardless of whether payment is effected directly or through the VAT payer who concluded a transaction with him/it relating to production of goods intended for export/re-export. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish additional conditions and restrictions for the application of provisions of paragraph 1 of this Law.
Article 55. Goods the Supply whereof in the Territory of the Country is Exempt from VAT
Zero-rate of VAT may not be applied to goods, supply whereof within the territory of the country would be in all cases exempt from VAT pursuant to the provisions of this Law.
Article 56. Furnishing Proof Justifying Application of Zero-rate of VAT
1. The VAT payer who applied zero-rate of VAT to the exported goods must possess documents proving that the exported goods have been recognised as actually removed from the customs territory of the Republic of Lithuania. The procedure and time limits of issuance or execution of the documents shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
2. The VAT payer who applied zero-rate of VAT in the cases specified in Article 41, paragraph 2 must possess the relevant customs documents proving that the goods have been produced for temporary storage in places of temporary storage under customs control, placed under free zone arrangement, placed in a free warehouse or delivered into a duty-free shop.
3. The VAT payer who applies zero rate of VAT in other cases specified in this Chapter must hold documents proving that the transaction constituting supply of goods or services referred to in this Chapter has been effected.
4. Notwithstanding other provisions of this Article, the tax administrator shall have the right to request, in the manner laid down in the Law on Tax Administration, to furnish other additional proof for ascertaining whether the application of zero-rate of VAT is justified. If the taxpayer is unable to justify the application of zero-rate of VAT to the supply of goods or services, such supply of goods or services shall be subject to the standard rate or reduced rate of VAT where applicable .
5. Notwithstanding other provisions of this Article, the tax administrator shall have the right, on his own initiative, acting by himself or through the law enforcement institutions authorised for the purpose, to gather additional proof allowing him to ascertain whether the application of zero-rate of VAT was justified. Upon receipt of proof of unjustified application of zero-rate of VAT, such supply of goods or services shall be subject to the standard rate or reduced rate of VAT where applicable .
CHAPTER VII
VAT DEDUCTIONS
Article 57. Right to VAT Deduction
Article 58. Activities, on the Goods and/or Services Intended for which VAT on Purchases and/or VAT on Importation is Deductible
1. A VAT payer shall have the right to deduct input and/or import VAT on goods and/or services, provided that the goods and/or services are intended for use in the following activities of the VAT payer:
2) supply of goods and/or services outside the territory of the country where, under the provisions of this Law, such supply of goods and/or services would not be exempt from VAT if effected within the territory of the country. The above condition shall not apply with regard to the supply outside the territory of the country of insurance services and/or financial services specified in Article 28 of this Law.
2. In order to fully or partly deduct the input and /or import VAT on goods and/or services intended for use in the activities specified in subparagraph 2 of paragraph 1 of this Article, a VAT payer must possess documents proving that the supply of goods and/or supply of services may be considered, according to the criteria determined in this Law, as having taken place outside the territory of the country. If this is not proved, the supply of goods and/or services shall be considered to have taken place within the territory of the country.
Article 59. VAT Deduction in Case of Mixed Activities
1. Where a VAT payer is engaged not only in the activities specified in Article 58 (1) of this Law, he must attribute (in so far as it is possible to do so on the basis of accounting data) total input and/or import VAT on goods and/or services among the activities specified in Article 58 ( 1) of this Law and other activities, having regard to the activities for the use in which the goods and/or services are intended. Input and/or import VAT on goods and/or services intended for use only in the activities specified in Article 58 ( 1) of this Law shall be deductible.
2. Input and/or import VAT which, on the basis of accounting data, is not directly attributable either to the activity specified in Article 58 (1) of this Law or any other activity shall be distributed between the two groups of activities proportionately, in accordance with the procedure laid down in Article 60 of this Law.
Article 60. Proportionate Distribution of Input and/or Import VAT
1. That part of input and/or import VAT specified in Article 59 (2) of this Law, which corresponds to the proportion (in percentage) of consideration (excluding the VAT itself), received or receivable by the VAT payer for the supplies of goods and services specified in Article 58 (1) of this Law, in the total amount of consideration (excluding the VAT itself) received or receivable by the VAT payer for the supplies of any goods and services shall be attributable to the activities specified in Article 58 (1) of this Law. In the cases and according to the procedure determined by the Government of the Republic of Lithuania or an institution authorised by it, when calculating the above proportion, the amounts of subsidies or grants received and used by the VAT payer shall be added to the amount of consideration received by the VAT payer for the supply of goods or services. However, in calculating the above proportion account shall not be taken of the consideration received by the VAT payer for:
2. Where, in the opinion of the VAT payer, determination of the part (in percentage) of deductible input and/or import VAT on the specific unit of tangible capital assets, according to the criterion of distribution specified in paragraph 1 of this Article would not reflect the actual application of the assets, he/it shall have the right to file an application with the local tax administrator requesting permission to apply another criterion of distribution (for buildings, structures - according to actual use of their space; for equipment - according to the use of capacity; or any other criterion which, in the opinion of the VAT payer, reflects the actual proportions of use of the said asset). Having considered the submitted request and calculation, the local tax administrator shall grant the VAT payer the right to apply the requested (or already applied) criterion of distribution, if he ascertains, that the request is justified and that the results of distribution according to the criterion specified in paragraph 1 of this Article and according to the distribution criterion requested by the VAT payer differ substantially to the disadvantage of the VAT payer, provided that the application of the criterion requested by the VAT payer will not interfere with the control of justifiability and adjustment of VAT deduction. The criterion based whereon the distribution of the input and/or import VAT on the specific unit of tangible capital asset was effected shall not be subject to any later change.
3. Input and/or import VAT on goods and/or services linked to the specific unit of tangible capital assets used for mixed activities (maintenance of the unit, etc.), shall be distributed applying the same criterion of distribution which is applied in respect of input and/or import VAT on the unit itself.
4. The local tax administrator shall have the right to compel a VAT payer, according to the procedure established and in the cases specified by the Government of the Republic of Lithuania or an institution authorised by it, to use a particular criterion of attribution of input and/or import VAT on specific goods and/or services to the activities specified in Article 58 (1) of this Law.
5. The calculation of the proportion (in percentage) of the input and/or import VAT , proportionately attributable to the activities specified in Article 58 (1) of this Law, shall be based on the relevant indicators of the previous calendar year or, in the absence of indicators of the previous calendar year - on the VAT payer's forecasts of the current calendar year indicators. The established proportion shall be used throughout the entire calendar year. At the close of the calendar year, the proportion (in percentage) of input and/or import VAT , attributable to the activities specified in Article 58 (1) of this Law, must be recalculated having regard to the actual indicators for the calendar year and adjustments of VAT deductions must be effected in accordance with the provisions of Chapter VIII of this Law.
6. Where it is established when calculating the proportion (in percentage) of the input and/or import VAT, proportionately attributable to the activities specified in Article 58 (1) of this Law, that not less than 95% of the proportionately distributable input and/or import VAT is attributable to these activities, the total amount of input and/or import VAT shall be deemed attributable only to the activities specified in Article 58 (1) of this Law.
Article 61. VAT Deduction in Respect of Tangible Capital Assets Acquired by a Natural Person
1. A natural person, who is a VAT payer, upon the acquisition or importation of tangible capital assets, shall have the right to attribute them or part thereof for the purposes of his economic activities. The attribution of tangible capital assets or part thereof for the purposes of the economic activities shall be declared in accordance with the procedure established by the central tax administrator. The deductible proportion of input and/or import VAT on the tangible capital assets attributed for the purposes of the economic activities, as well as the deductible proportion of input and/or import VAT on other goods and/or services related to these assets shall be determined in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it.
2. Tangible capital assets acquired by a natural person prior to his registration as a VAT payer, or part thereof may also be attributed for the purposes of his economic activities in accordance with the procedure established in paragraph 1 of this Article. The deductible proportion of input and/or import VAT on other goods and/or services related to such assets shall be determined in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it.
Article 62. Non-deductible Input and Import VAT, as well as Input and Import VAT the Deduction whereof shall be Limited
1. Unless otherwise provided in Chapter XII of this Law, input and/or import VAT on the goods and/or services acquired and/or imported, which is directly or proportionally attributed to the activities other than those specified in Article 58 (1) of this Law, shall not be deductible.
2. The following shall not be deductible:
1) input and/or import VAT on goods and services intended for entertainment and representation, if it is not allowed, subject to legislation regulating taxation of profit/income, to subtract from the received income, when calculating the taxable profit/income, expenses relative to their acquisition;
2) input and/or import VAT paid on behalf of another person in the cases specified in subparagraph 2 of Article 15 (7) of this Law;
3) input or import VAT on a passenger car designed for the transportation of no more than 8 persons (excluding the driver), or a motor vehicle of the said class attributed to the category of off-road vehicles, provided this car is not supplied or leased, or it is not used to provide services of passenger transport for reward or driving instruction services. The same limitations shall apply to the deduction of input VAT on the lease of cars of the specified categories. These limitations shall not apply to motor vehicles of the specified categories, provided they are attributed to special purpose motor vehicles under legal acts regulating the classification and coding of vehicles;
Article 63. Goods and/or Services Acquired and/or Imported prior to Registration as a VAT Payer
1. A VAT payer shall have the right, pursuant to the provisions of this Chapter and limitations laid down in this Article, to deduct input and/or import VAT on the goods and/or services acquired and/or imported prior to the day of his registration as a VAT payer, provided they will be used by that VAT payer for the activities specified in Article 58 (1) of this Law.
2. Only that proportion of input VAT on services acquired prior to registration as a VAT payer and constituting the VAT payer’s intangible capital assets shall be deductible, which corresponds to the non-depreciated/non-amortised share of the assets’ value before registration as a VAT payer, calculated in accordance with legal acts regulating the taxation of profit/income.
3. The proportion of input and/or import VAT on tangible capital assets other than those specified in paragraph 4 of this Article, acquired or imported prior to registration as a VAT payer, which corresponds to the of non-depreciated/non-amortised share of the assets’ value before registration as a VAT payer and calculated in accordance with legal acts regulating the taxation of profit/income, shall be deductible.
4. The proportion of input and/or import VAT on tangible capital assets specified in Article 67 of this Law and acquired or imported prior to registration as a VAT payer, which corresponds to the number of years, on the day of registration as a VAT payer remaining to the end of the 10-year or 5-year period specified in Article 67 (2) of this Law (the beginning of this term shall be the calendar month when assets have been acquired or imported), shall be deductible.
5. The provisions of this Article shall not apply to the acquired and/or imported goods and/or services consumed for the capital assets manufactured by the VAT payer himself prior to registration as a VAT payer (including material improvements of buildings/structures prior to registration as a VAT payer), as well as the capital assets acquired by the natural person prior to his registration as a VAT payer.
6. A taxable person who has been registered as a VAT payer late through his fault (i.e. a person should have filed an application to be registered as a VAT payer but he has failed to do so in accordance with the prescribed procedure or has done it late, or a person has filed an application to be registered as a VAT payer but he has not been registered as such on the decision of the tax administrator, on the grounds provided in this Law and legal acts implementing it) shall have no right to deduct any proportion of input and/or import VAT on the goods and/or services acquired and/or imported prior to the day of registration.
Article 64. Documents the Amounts of VAT Specified wherein shall be Deductible
1. Input VAT shall be deductible only in the case where a VAT payer holds a VAT invoice or any other accounting document specified in this Law, which, in accordance with the prescribed procedure, may or must serve as an invoice for the supply of goods and/or services or payment on account (except for a cash-register receipt the VAT on purchases specified wherein shall be deductible under the provisions of paragraph 3 of this Article). This amount of VAT shall be specified in the accounting document held, and the VAT payer shall be indicated as the purchaser of goods and/or services, unless otherwise provided in this Article. The accounting document shall have all the requisite details prescribed by this Law and other legal acts, and the blank of this document shall be acquired by the supplier of goods/services in accordance with the procedure established by legal acts and shall conform to the requirements laid down by legal acts in respect of this blank. The input VAT calculated in accordance with the procedure established in Article 95 of this Law in respect of the goods and/or services acquired from foreign taxable persons shall be deductible on the basis of the document specified in that Article. Where the VAT payer has deducted input VAT on the payments on account made to the supplier of goods and/or services, the amount of input VAT that is deductible on the basis of the VAT invoice or any other accounting document specified in this Law, which serves as an invoice for such a supply of goods and/or services shall be respectively reduced by the amount (amounts) of VAT previously deducted.
2. Unless otherwise provided in this Article, where accounting documents specified in paragraph 1 of this Article are issued in several copies, the amount of input VAT shall be deductible only where the VAT payer has the original copy of this document, while in the case when the original copy is lost – the copy certified by the parties to the transaction or in accordance with the procedure established legal acts.
3. The amounts of VAT specified in cash-register receipts shall be deductible in accordance with the procedure and limitations laid down by the Government of the Republic of Lithuania or an institution authorised by it. Where a VAT payer is also issued by the supplier of goods and/or services a VAT invoice or any other document serving as an invoice, input VAT shall be deductible only on the basis of the VAT invoice or the other document serving as an invoice; however, the VAT payer must hold both the cash-register receipt and the VAT invoice or the other document serving as an invoice.
4. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to determine cases when the amount of VAT specified in a VAT invoice or any other document serving as an invoice shall be deductible in proportions by several VAT payers, as well as the procedure pursuant to which such amounts of VAT shall be deductible.
5. The amount of import VAT shall be deductible, provided it is specified in the customs declaration for importation of the prescribed form or any other document serving as a customs declaration for importation, and the VAT payer holds documents supporting the payment of import VAT. Documents supporting the payment of import VAT shall not be required, provided import VAT may be included in output VAT the procedure established in Article 94 of this Law.
6. The amount of input VAT in respect of the tangible capital assets manufactured by the VAT payer himself shall be deductible on the basis of the document specified in this Law, invoicing such a supply of goods.
7. Amounts of input VAT on objects of the right of ownership that are taken over as contribution to the company or as a result of the reorganisation of another VAT payer, as well as amounts of input VAT on the material improvement of the immovable property by nature taken over by the owner of this property in accordance with the procedure established in Article 9 (5) of this Law shall be deductible on the basis of documents invoicing such a supply of goods and/or services.
8. No VAT payer shall have the right to deduct the amounts of VAT calculated and specified in documents invoicing the private use of goods and/or services by the VAT payer.
9. On the grounds established by the Law on Tax Administration, the amounts of input VAT specified in accounting documents held by the VAT payer:
1) shall not be deductible without taking into account that this document conforms to all the requirements laid down in this Article;
Article 65. General Rules of Adjustment of VAT Deductions
1. If, after filing of the VAT return for a tax period, a VAT payer cancelled purchase of a certain amount of the acquired goods, additional price reductions were obtained from the supplier of goods or services, or the VAT amount payable to the supplier of goods or services has decreased for any other reason, also if a refund of the import VAT was made to the VAT payer and the above amounts of the input and/or import VAT were deducted, the VAT deductions shall be adjusted, by increasing accordingly in the VAT return for the tax period in which the above circumstances became known, the VAT amount payable into the budget/reducing the refundable VAT amount from the budget.
2. In the event of deduction by mistake of a higher input and/or import VAT , the VAT deductions must be adjusted, by increasing accordingly in the VAT return for the tax period in which the above mentioned mistake was made, the VAT amount payable into the budget/reducing the VAT amount refundable from the budget.
3. In the event of deduction by mistake of a lower input and/or import VAT, the VAT deduction may be adjusted in the tax period in which the above circumstances became known , by reducing accordingly in the VAT return the VAT amount payable into the budget/increasing the VAT amount refundable from the budget.
Article 66. Adjustment of Deductions of the Input and/or Import VAT on Goods and/or Services
1. If following the end of a calendar year and after calculation, in accordance with the procedure laid down in Article 60 of this Law, on the basis of the actual indicators of that calendar year, of the portion/percentage of the input and/or import VAT on goods and services attributable to the activities specified in Article 58 (1)of this Law, it is established that during that calendar year the amount of the input and/or import VAT, deducted according to the rate used that calendar year, was too high, the deduction shall be adjusted by increasing accordingly in the annual VAT return the VAT amount payable into the budget/decreasing the VAT amount refundable from the budget; where it is found that that deduction was too low - by decreasing accordingly the VAT amount payable into the budget/ increasing the amount of the VAT refundable from the budget. If the difference between the sum actually deducted and the sum deductible in accordance with the actual indicators of the calendar year is not higher than 5 per cent, the VAT deduction need not be adjusted.
2. When it becomes known that goods and/or services the input and /or import VAT whereon (and where they were manufactured by the person himself - the input and/or import VAT on goods and/or services used for manufacturing) was wholly or partly deducted, will not be used by the VAT payer for the activities specified in Article 58 (1)of this Law, the VAT deduction shall be adjusted in the VAT return for the tax period in which the above circumstances became known by increasing accordingly the amount of the VAT payable into the budget/reducing the amount of the VAT refundable from the budget. Deduction of the Vat shall not be adjusted:
1) in the case of a lost amount of goods, which is not in excess of the established norms of natural loss also in the case of an amount of lost goods during technological processes, the amount of the loss is taken into account when determining consideration for the goods and services supplied;
2) if an object of property right is transferred in accordance with the procedure specified in Article 68 (2) of this Law;
3) if it is proved, following the procedure established by the Government of the Republic of Lithuania or an institution authorised by it, that the goods have been lost as a result of force majeure or a criminal activity of third persons;
Article 67. Adjustment of VAT Deductions due to Change in the Use of Tangible Capital Assets
1. Provisions of this Article shall apply to the following:
2. VAT deductions must be adjusted in accordance with the procedure established in this Article - in respect of property immovable by its nature - for 10 years, and in respect of property specified in subparagraph 2 of paragraphs 1 of this Article - for 5 years starting from the tax period in which input and/or import VAT on that property was wholly or partly deducted (in the case of material improvement of a building/structure - deduction of the input VAT on purchase of tangible capital assets manufactured by the person himself shall be adjusted for 10 years from the tax period in which improvement works were completed). If the assets were acquired or imported before registration as a VAT payer, deduction of the VAT shall be adjusted for as many years as the portion of the VAT was deducted.
3. The amount of the input or import VAT on a given unit of tangible capital assets, including material improvement of a building/construction, shall be divided by the number of years of adjustment of VAT deductions. Following the end of each calendar year, taking account of the actual use of that property in the course of activities specified in this Law, Article 58, paragraph 1, during that calendar year, the deductible portion of the VAT on purchase and/or importation attributable to that calendar year must be calculated in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it, and the VAT deduction must be adjusted in the annual VAT return.
4. If the deductible portion of the VAT on purchase and/or importation of property calculated according to the actual indicators attributable to that calendar year differs from the actually deducted portion of the VAT on purchase and/or importation attributable to that calendar year by not more than 5 per cent, the VAT deduction need not be adjusted.
5. Where the tangible capital assets referred to in paragraph 1 of this Article will not be used by the VAT payer for the activities specified in Article 58 (1) of this Law, the VAT deduction must be adjusted in the VAT return for the tax period when the above circumstances become known, by increasing accordingly the amount of the VAT payable into the budget/reducing the VAT amount refundable from the budget by the deducted portion of the input or import VAT attributable to the period remaining until the end of the time set for adjustment of VAT deduction. VAT deduction shall not be adjusted:
1) where the assets are transferred in accordance with the procedure laid down in Article 68 (2) of this Law;
Article 68. Special Regulations in Respect of Adjustment of VAT in Cases of Certain Transactions
1. After the VAT payer carried out material improvement of a building/structure which he uses on grounds other than the right of ownership, the obligations of adjustment of VAT deductions for him and for the owner of the building/structure shall be distributed as follows:
1) all the obligations relating to the adjustment of VAT deduction shall be met only by the owner of the building/structure, immediately after the VAT payer, having completed its material improvement, transfers the improvement to the owner of the building/structure by calculating the relevant output VAT and issuing an appropriate document to the owner, or
2) obligations relating to the adjustment of VAT deduction shall be met, first of all, by the VAT payer who carried out material improvement of the building/structure and deducted the VAT on purchase of tangible capital assets manufactured by himself in such a way. When the building/structure is returned to the owner and the improvement is transferred in accordance with the procedure set forth in this Law, by calculating for it the output VAT and by issuing to the owner of the item an appropriate document, the obligation of adjustment of VAT deduction. The owner of the building/structure shall adjust VAT deduction for as many years as are left to the end of the 10 year period starting from the tax period in which the improvement was completed and the input VAT on such assets was deducted by the VAT payer who improved the building/structure.
2. When economic activity carried out by a natural person who is a VAT payer in the manner prescribed by legal acts, without establishing an enterprise (by registering a farmer's farm etc.) is transferred in its entirety (by inheritance or in any other way) to another taxable person who is a VAT payer, VAT deduction need not be adjusted. It shall be regarded in this case that the person taking over the objects of ownership rights related to the above has wholly or partly deducted the input and/or import VAT on the objects of ownership rights (where the objects were manufactured by himself - on goods and/or services used in manufacturing them) himself and the obligation of adjustment of VAT deduction following the procedure set forth in this Chapter shall be met by him.
Article 69. Adjustment of VAT Deduction Due to Removal from the Register of VAT Payers or Liquidation
1. When removing a taxable person from the register of VAT payers or when he is being wound up due to liquidation, VAT deduction shall be adjusted in the VAT return of the person who is being removed from the register of VAT payers or who is in liquidation, in accordance with the procedure established in Articles 66 and 67 of this Law, and the deducted input and/or import VAT on goods and/or services, capital assets included, which will be no longer used for the activities specified in Article 58 (1), shall be returned to the budget.
2. VAT deduction need not be adjusted when the VAT payer, the owner of an individual/personal enterprise in liquidation intends to carry out activities referred to in Article 58 (1) of this Law, without establishing an enterprise, and the goods and/or services acquired and/or imported by the enterprise, capital assets included, will be used for these activities. It shall be regarded in this case that the input and/or import VAT on goods and/or services (and where they were manufactured by himself - the input and/or import VAT on goods and/or services used for manufacturing) was wholly or partly deducted by the owner of the enterprise and he/she is liable meet the obligation of adjustment of VAT deduction following the procedure established in this Chapter.
Article 70. Adjustment of VAT Deduction due to the Change in the Use of Tangible Capital Assets of a Natural Person
The procedure for adjustment of VAT deduction on tangible capital assets of a natural person VAT payer, a share whereof has been assigned, following the procedure laid down in this Law, for carrying out economic activities by this person, shall be determined by the Government of the Republic of Lithuania or an institution authorised by it.
CHAPTER IX
OBLIGATION TO CALCULATE VAT AND PAY IT INTO THE BUDGET. REGISTRATION OF VAT PAYERS AND THEIR OBLIGATIONS
Article 71. Obligation to Calculate and/or Pay VAT into the Budget and Compulsory Registration as a VAT Payer
1. A taxable person of the Republic of Lithuania, where the total amount of the consideration for goods and/or services supplied in the course of his economic activities during a year (in the last twelve months) exceeded LTL 100,000, starting with the month when the above threshold was exceeded, must calculate, in accordance with the procedure provided by this Law, VAT on supply of goods and/or services and pay it into the budget. VAT shall not be calculated on the goods/or services supplied where the consideration for them amounted to the above sum - LTL 100, 000. The taxable person must file, in accordance with the prescribed procedure, an application to be registered as a VAT payer. When calculating the above LTL 100, 000 threshold, the following shall be excluded from the amount:
1) consideration for supply of goods and/or services in respect of which no input and/or import VAT on should be deductible pursuant to provisions of Article 62 (1) of this Law if the taxable person were a VAT payer;
2) consideration for supply of capital assets used by the taxable person in the course of his economic activities;
2. The subdivision of a foreign taxable person located in the territory of the country where that foreign taxable person supplies goods and/or services within the territory of the country must calculate the VAT on the goods and/or services supplied by the foreign taxable person within the territory of that country and pay the VAT into the budget. The subdivision must, following the prescribed procedure, file an application to register the foreign taxable person as a VAT payer, without regard to the exceptions indicated in paragraph 1 of this Article in respect of the LTL 100,000 threshold; however, filing of such an application shall not be mandatory where the taxable person carries out within the territory of the country only the following activities:
3) supplies goods and/or services in respect of which, under this Law, a zero rate of VAT would be applied ;
3. A foreign taxable person who supplies goods and/or services within the territory of the country where he has no subdivision in the territory of the country must appoint a fiscal representative who must calculate VAT on supply of goods and/or services by the foreign taxable person within the territory of the country and pay it into the budget. The fiscal representative must file an application according to the established procedure to register the foreign taxable person as a VAT payer. If the foreign taxable person carries out, within the territory of the country, only the activities specified in 1-4 subparagraphs of paragrapf 2 of this Article, a fiscal representative need not be appointed. In other cases a fiscal representative must be appointed without regard to the exceptions in respect of the LTL 100,000 threshold specified in paragraph 1 of this Article.
4. Failure to file an application for registration as a VAT payer or rejection of the application to register a taxable person as a VAT payer shall not relieve him from the obligation to calculate the VAT on supply of goods and/or services by him and pay it into the budget where this is obligatory pursuant to the provisions of paragraphs 1-3 of this Article.
5. The subdivision of a foreign taxable person or the fiscal representative appointed by him shall bear joint and several liability with the foreign taxable person for his performance of tax obligations in respect of VAT. The procedure of appointing the fiscal representative of a foreign taxable person and the requirements for a person who could become a fiscal representative of a foreign taxable person shall be approved by the Government of the Republic of Lithuania or a body authorised by it.
6. Any person who has specified the VAT in the document recording the supply of goods and/or services on which VAT was not chargeable must pay the specified amount of VAT into the budget.
7. Where the same person (either by himself or together with other persons who, under this Law, are related persons) controls several legal persons, all the legal persons under his control and he himself (where he himself conducts economic activities) must file applications for registration of them as VAT payers if the total amount of consideration received by them or payable to them for supplied goods and/or services while carrying out economic activities during a year (the last twelve months) exceeded the threshold specified in paragraph 1 of this Article, irrespective of the fact that the amount of the consideration received by each such person or part of them or payable to them is lower than the prescribed threshold.
Article 72. Voluntary Registration as VAT Payers
1. A person who is carrying out or intends to carry out an economic activity is entitled to file an application for registration as a VAT payer, with the exception of the case when he is carrying out or intends to carry out only such an activity where, under the provisions of Article 62 (1) of this Law, input and/or import VAT would not be deductible unless otherwise provided by Chapter XII of this Law.
Article 73. Security or Guarantee for Discharge of Tax Obligations by a Taxable Person Who is Registered as a VAT Payer
1. In cases determined by the Government of the Republic of Lithuania or a body authorised by it, when it is necessary to ensure the discharge of tax obligations, including justification of carrying over and refund of the excess amount of VAT, the local tax administrator must require that, when registering a taxable person as a VAT payer either compulsorily or voluntarily, a security y or guarantee for up to one year, issued by an appropriately licensed banking or insurance institution established and operating in the Republic of Lithuania be submitted under which the person offering a security or the guarantor undertake to discharge tax obligations relating to VAT of the taxable person who is being registered as a VAT payer if he fails to discharge these obligations or if discharges unsatisfactorily.
Article 74. VAT Payer's Identification Number
A taxable person who has been registered as a VAT payer shall be issued a VAT payer's identification number. The procedure for setting a VAT payer's identification number shall be determined by the Government of the Republic of Lithuania or a body authorised by it.
Article 75. Removal of VAT Payers from the Register
1.A taxable person of the Republic of Lithuania registered as a VAT payer shall be entitled to the removal from the register of VAT payers where:
1) the total amount of consideration for the goods and services supplied during a year (in the last twelve months) did not come up to the threshold established in Article 71(1) of this Law, or
2. A foreign taxable person registered as a VAT payer shall be entitled to the removal from the register of VAT payers where:
3. At the initiative of the local tax administrator, the following VAT payers may be removed from the register of VAT payers:
2) those who declared in their returns during a period of 12 successive months only the activities where input and/or import VAT on goods and/or services used is not deductible under the provisions of Article 62 (1) of this Law;
3) those who declared in their VAT returns during a period of 12 successive months that they did not receive any income from their economic activities. This provision shall not apply to VAT payers who are creating/building tangible capital assets and who have declared about this to the local tax administrator in accordance with the procedure established by the central tax administrator.
4. Legal persons shall also be removed from the register of VAT payers at the initiative of the local tax administrator if it comes to light that they were instituted not for carrying out the economic activities specified in the articles of association but for the purpose of serving their selfish interests hostile to society and/or for the purpose of serving as a front for some other activity, other than the one specified in the articles of association, or if it comes to light that the VAT payer was established or registered a VAT payer on the basis of lost, missing, stolen or forged documents, or if the person on the basis of whose documents the VAT payer was established or registered, denies in writing that he has ever established or registered the legal person.
5. At the initiative of the local tax administrator VAT payers who have not filed a single VAT return shall be removed from the register of VAT payers where the tax administrator has evidence that during the period for which the VAT payer has not filed a VAT return he supplied goods and/or services or if it comes to light that blank forms of accounting documents acquired in the name of this VAT payer are being used by other persons.
Article 76. Procedure of Registration of VAT Payers
VAT payers shall be registered in accordance with the procedure prescribed by the Law on Tax Administration and other legal acts.
Article 77. Obligations of a VAT Payer
A VAT payer must:
2) comply with the requirements of this Law and other legal acts in respect of invoicing supply of goods and services;
Article 78. Accounts
1. VAT payers must keep accounts in accordance with the procedure prescribed by legal acts and in such a manner that it would be possible to determine correctly from them the obligations of the VAT payer relating to the VAT.
2. The accounts for the activities indicated in Article 58 (1) of this Law, and of any other activities must be kept separately.
Article 79. Documenting Supply of Goods and Services in the VAT Invoice
1. Supply of goods or services must be documented by a VAT payer in a VAT invoice of a prescribed form, with the exception of cases when supply of goods or services may or must be documented in other accounting documents in accordance with the procedure specified in Article 81 of this Law.
2. Following the procedure and in cases established by the Government of the Republic of Lithuania or an institution authorised by it, one VAT invoice may document goods or services supplied jointly by several VAT payers.
Article 80. Details to be Specified in the Invoice
1. A VAT invoice must contain all the obligatory details of an accounting document prescribed by the legislation regulating accounting.
2. Unless otherwise provided by this Law, apart from the details referred to in paragraph 1 of this Article, a VAT invoice must contain the following details:
1) the identification number of a supplier of goods or services or the personal number if the supplier is a natural person;
3) the name, identification number of the purchaser/customer of goods or services or the name, surname and the personal number if the purchaser is a natural person;
3. If one VAT invoice records, following the procedure established in Article 79 (2) of this Law, the goods and/or services supplied jointly by several VAT payers, instead of the identification number (the personal number) of the supplier of goods and/or services and the number under which the supplier is registered as a VAT payer, the VAT invoice shall specify other details established by the Government of the Republic of Lithuania or an institution authorised by it. If one VAT invoice records goods and/or services supplied jointly to several purchasers, instead of the identification number (the personal number) of the purchaser/customer, the VAT invoice shall specify other details established by the Government of the Republic of Lithuania or an institution authorised by it.
Article 81. Recording Supply of Goods or Services in Other Accounting Documents. Recording of an Payment on Account
1. A VAT payer shall be entitled not to use a VAT invoice when recording supply of services or goods supplied on a mass scale which are on the list approved by the Government of the Republic of Lithuania or an institution authorised by it. In such a case an accounting document of a free form having all the requisite details of a VAT invoice shall be used instead of a VAT invoice.
2. In the cases and following the procedure established by the Bank of Lithuania, banks and other credit institutions instead of using VAT invoice shall have the right to use accounting documents of a free form having all the requisite details a VAT invoice.
3. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to determine which documents may be used by a VAT payer recording the supply of goods or services where:
4. Unless the Government of the Republic of Lithuania or an institution authorised by it establishes otherwise, in those cases where the VAT payer who is processing agricultural products obtains them from agricultural producers, the supply of goods shall be recorded in a receipt of purchase of agricultural products of the prescribed form issued by the purchaser. The receipt of purchase of agricultural products must have all the requisite details of an accounting document as well as any other additional details established by the Government of the Republic of Lithuania or an institution authorised by it.
5. Chapter XII of this Law shall set forth the procedure of documenting supplies of agricultural products and agricultural services by the farmers to whom the compensatory rate of VAT is applied.
7. Supply of the goods indicated in Articles 5 and 6, supply of the services specified in Article 8, supply of goods and services specified in Article 9 (3), (4) and (5) of this Law, , , as well as payments on acount must be recorded in the documents established by the Government of the Republic of Lithuania or an institution authorised by it.
8. In cases and according to the procedure set forth in legal acts, supply of goods or services shall be recorded by a cash register receipt which must have all the particulars determined by the Government of the Republic of Lithuania or an institution authorised by it. At the request of a purchaser/customer, the VAT payer must also issue a VAT invoice or any other documents serving as invoices, specified in this Article.
Article 82. Requirements for Blank Forms of Documents
A VAT payer must use the blank forms of VAT invoices and documents recording purchase of agricultural products produced and obtained by the VAT payer in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it unless the Government of the Republic of Lithuania or an institution authorised by it establishes otherwise. If a VAT payer is a foreign taxable person the above requirement shall apply to his subdivision or his fiscal representative.
Article 83. Credit and Debit Notes
1. Where after documenting supply of goods or services, the taxable amount and/or quantity of the goods or services subject to taxation changes, various price reductions are granted, the goods or part thereof are returned, goods or part thereof or services are refused or where the consideration due to be paid by the purchaser/customer changes, the supplier of goods or services must issue to the purchaser/customer a credit note documenting the above changes of the circumstances. By agreement of the parties, return of the goods or refusal of services may be documented not by a credit note issued by the supplier of goods or the supplier of services but by a debit note issued by the purchaser/customer where the purchaser/customer is a VAT payer.
2. Provisions of paragraph 1 of this Article shall not apply where an accounting document recording the supply of goods or services has been issued, in accordance with the provisions of this Law and other legal acts, by the purchaser/customer. In such a case, if circumstances change a credit note shall also be issued only by the purchaser/customer.
3. Any changes recorded in credit or debit notes must be entered in the VAT accounts of both the supplier of goods or services and the purchaser/customer.
Article 84. Tax Period
2. If all the income of a VAT payer from his economic activities during the preceding calendar year did not exceed LTL 200,000, such a VAT payer shall be entitled to file an application with the tax administrator to regard a calendar half-year as the tax period. The right to file an application with a request to regard a calendar half-year as the tax period shall also be granted to newly established VAT payers who estimate that during the current calendar year the income from their economic activities is not going to exceed the threshold established in this paragraph.
3. If a calendar half-year is chosen as the tax period, the tax period may be changed at the request of a VAT payer but not before the expiry of the calendar half- year.
5. A legal person or a foreign taxable person VAT payer shall be entitled to apply to the local tax administrator, in accordance with the procedure established by the central tax administrator, with a request to establish a tax period other than a half-year if such a tax period is more convenient for the tax payer owing to the specifics of the financial accounting established by the foreign taxable parent company or a foreign taxable VAT payer. A different tax period shall be fixed subject to the following provisions:
6. In the cases determined by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to ensure performance of tax obligations, including justifiability of carrying over and refund of the excess amount of VAT, the tax administrator shall have the right to establish that the tax period of the VAT payer shall be the period specified in paragraph 1 of this Article even though the VAT payer applied for a different tax period, according to paragraphs 2 and 5 of this Article, and/or a different tax period has been established for him.
Article 85. Interval for Submitting a VAT Return for the Tax Period
1. If a tax period is a calendar month, the VAT return for the tax period must be submitted not later than by the 25th day of the next month.
2. If a tax period is a calendar half-year, the VAT return shall be submitted not later than by the 25th day of the first month of the next half-year.
Article 86. The VAT Return for the Tax Period
The form of the VAT return for the tax period, the particulars to be stated therein and the procedure of filling it in shall be determined by the central tax administrator.
Article 87. The Annual VAT Return and the Interval for Submitting It
1. If following the end of a calendar year and after the actual indicators have been established, the VAT deductions have to be adjusted following the procedure set forth in Chapter VIII of this Law, the VAT payer must submit, not later than by the 1st day of October of the next calendar year, the annual VAT return in which the amounts adjusting the VAT deduction must be stated.
Article 88. VAT Return of a Person Who Is Being Removed from the Register of the VAT Payers or Entity Which is in Liquidation
1. If a taxable person was removed from the register of the VAT payers either at his own request or at the initiative of the tax administrator, he must submit, within 20 days after his removal, a special VAT return of a person who is being removed from the register of the VAT payers or of an entity in liquidation and declare in it, following the procedure set forth in this Law, all his remaining obligations relating to the calculation and payment of VAT. If a VAT payer is in liquidation he must submit, before the liquidation, a special VAT return of a person who is being removed from the register of the VAT payers or of an entity in liquidation and declare in it, following the procedure set forth in this Law, all his remaining obligations relating to the calculation and payment of VAT.
2. The form of the VAT return of a person who is being removed from the register of the VAT payers or of an entity in liquidation, the particulars to be stated therein and the procedure of filling it , and if the VAT return is submitted by VAT payers in liquidation - the interval for submitting the return, shall be determined by the central tax administrator.
Article 89. Calculation of the Amount of VAT due for the Tax Period
1. When calculating the amount of VAT due for the tax period , the deductible amount of input and/or import VAT shall be subtracted from the amount of output VAT on goods and/or services supplied, calculated during the tax period (with the exception of VAT which, subject to the procedure set forth in this Law, must be withheld and paid by the purchaser/customer of goods and/or services), also from the amount of VAT payable into the budget on the acquired goods and/or services if, under this Law, following the procedure set forth in Chapter XI, the VAT payer is obligated to calculate or to withhold and pay this VAT, as well as from import VAT that is subject to the procedure of inclusion into output VAT established in Article 94 of this Law.
2. If the taxable amount and/or VAT deduction had to be adjusted during the tax period, the VAT amount due calculated subject to the procedure laid down in paragraph 1 of this Article shall be increased or reduced by the amounts as appropriate, adjusting the taxable amount and/or VAT deduction.
3. If output VAT chargeable during the tax period for goods and/or services for which during the previous tax period/s payments on account were received on which output VAT was charged and declared, the amount of output VAT on charged on payments on account and declared shall be also subtracted from the VAT amount due .
Article 90. Payment of the Amount of VAT Payable to the Budget
1. The VAT amount payable into the budget for a tax period, calculated subject to Article 89 of this Law must be paid into the budget no later than by the end of the interval for submitting the VAT return for the tax period as provided for in Article 85 of this Law.
2. The Government of the Republic of Lithuania or an institution authorised by it may determine that VAT payers whose average of VAT amount payable into the budget per calendar month (in the case of VAT payers indicated in this Law, Article 84, paragraph 5 - per tax period) for three successive months exceeded the threshold fixed by the Government of the Republic of Lithuania or an institution authorised by it, shall pay into the budget, starting with the calendar month (in the case of VAT payers indicated in this Law, Article 84, paragraph 5 - with the tax period) following the month or the period when the above circumstances were disclosed, advance VAT in the amount fixed by the Government of the Republic of Lithuania or an institution authorised by it. The amount of advance VAT payments, the procedure and intervals for their payment shall be established by the Government or an institution authorised by it.
3. If advance VAT payments were made during the tax period, the difference of the VAT amount due for the tax period and of VAT advance payments made during this tax period must be paid into the budget by the end of the term specified in paragraph 1 of this Article.
4. If an additional VAT amount due is calculated in the annual VAT return, the amount must be paid no later than by the end of the interval for submitting a VAT return as laid down in Article 87 of this Law.
5. If an additional VAT amount due is calculated in the VAT return of a person who is being removed from the register of VAT payers or of an entity in liquidation, it must be paid no later than on the same day when the return of a person who is being removed from the register of VAT payers or an entity in liquidation is being submitted but not later than by the end of the set interval for submitting this VAT return if it was not submitted within the set time period.
6. When the services and energy supplied are paid for with the resources from the state budget of the Republic of Lithuania or local budgets, the Privatisation Fund and the Road Fund (Road Maintenance and Development Programmes) as well as with the resources of soft credits allocated from the General and Municipal Funds for the Construction or Purchasing of Housing and Apartments, the interval for paying the output VAT for these services or energy shall be postponed until the 5th work day following the day of actual payment for these services or energy.
7. In the cases determined by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to ensure adequate performance of tax obligations, the local tax administrator must require that, before the interval for submitting a VAT return for the tax period or for paying VAT, a VAT payer submits a security or guarantee instrument issued by a banking or an insurance company established in and operating in the Republic of Lithuania under which the security or guarantor obligate themselves to discharge tax obligations of the VAT payer relating to VAT unless the VAT payer pays the VAT due by the interval established in this Article. The procedure of determining and adjustment of the amount of security or guarantee referred to in this Article and of the submitting and cancellation of a security or guarantee documents shall be established by the Government of the Republic of Lithuania or a body authorised by it.
Article 91. Carrying Forward and Refund of the Refundable VAT Amount
1. The excess of VAT amount arising for a tax period will be first of all carried forward in accordance with the procedure and time period laid down in the Law on Tax Administration.
2. If after carrying forward the excess amount referred to in paragraph 1 of this Article a portion of it is left, a certain part of it may be refunded to the VAT payer where the following conditions are met:
1) he has paid into the budget and funds all the taxes, default interest, penalties, interest for overdue tax or the payment of the above taxes, default interest, penalties has been deferred for him or he has filed an application for deferral following the procedure established by the legal acts of the Republic of Lithuania, or a tax dispute is going on in respect of the above taxes, default interest and penalties, or the VAT payer has applied, following the procedure prescribed by the Government of the Republic of Lithuania, to the Commission for Reviewing Applications of Tax Payers in Respect for Making Settlement in Shares and Property for making a settlement for these taxes, default interest and penalties in shares and property after submitting all the requisite tax returns or accounts. In cases where a tax dispute is going on in respect of the request for refund of the excess VAT amount or its portion it shall be regarded that the VAT payer does not meet the requirements of this subparagraph;
3. The portion of the balance of the refundable excess amount of VAT specified in paragraph 2 of this Article may not exceed the amount specified in subparagraphs 1-4 below:
1) the provisional 18% VAT amount calculated on the taxable amount of goods and services in respect of which the zero VAT rate is applicable declared in the VAT return for the tax period;
2) the provisional 18% VAT amount calculated on the taxable amount of goods and services specified in the second subparagraph 2 of Article 58 (1) of this Law, declared in the VAT return for the tax period;
3) the VAT amount deducted during the tax period on acquired capital assets, with the exception of the amount of import VAT that was subject to the procedure of inclusion into output VAT established in Article 94 of this Law as well as the amount of input VAT on for the tangible capital assets goods manufactured by the taxable person himself;
4) the VAT amount deducted during the tax period on acquired and/or imported materials, raw materials and/or services intended for the production of capital assets and/or on unfinished construction, with the exception of the amount of imoprt VAT that was subject to the procedure of inclusion into output VAT established in Article 94 of this Law.
4. The balance of the excess amount of the VAT which, subject to paragraphs 1-3 of this Article, has not been carried forward or refunded by the end of the calendar half-year may be refunded to the VAT payer after the end of the half-year provided the VAT payer meets the set conditions and was registered as a VAT payer no later than 3 months before the end of the calendar period.
5. Where the VAT payer is in liquidation or he is being removed from the register of VAT payers, the balance of the excess amount of the VAT which has not been carried forward or refunded shall be refunded in accordance with the procedure of the Law on Tax Administration, without regard to the restrictions set forth in paragraphs 2-4 of this Article.
6. A VAT payer who wishes to be refunded the balance of the excess amount of the VAT must file an application of the form prescribed by the central tax administrator, and other documents at the request of the local tax administrator without which the local tax administrator shall not review the application and sets the time period for filing the documents. Where the required documents are not filed within the prescribed time period, the application shall not be receivable and shall be sent back to the VAT payer.
7. The time period for refunding the balance of the excess amount of the VAT or its portion shall be determined by the Law on Tax Administration.
8. In cases established by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to justify carrying forward or refunding of the excess amount of the VAT, the local administrator must request that, before carrying forward and/or refunding the excess amount of the VAT or its portion, the VAT payer submits a security or guaranty instrument issued by a banking or an insurance company established and operating in the Republic of Lithuania and having a banking or insurance licence respectively, under which the person standing security or guarantor obligate themselves to discharge tax obligations of the VAT payer relating to the VAT in the event it is later established that the excess amount of the VAT or its portion has been carried forward and/or refunded unjustifiably. The procedure for calculating the sum of a security or guarantee and submitting the instrument of security and guarantee shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
9. If the refundable VAT amount is specified in the annual VAT return, the amount shall be refunded in accordance with the procedure and within the time period laid down in the Law on Tax Administration.
10. The overpaid amount of the VAT shall be refunded in accordance with the procedure set forth in the Law on Tax Administration.
11. Refunding of the excess amount of the VAT or its carrying forward shall be suspended when institutions authorised to investigate crimes submit to the tax administrator information about initiating an investigation of the activities of a VAT payer in respect of a criminal act if this is related or may be related to improper performance of the obligations of a VAT payer, including an unlawful refunding of the excess amount of the VAT and its carrying forward. If the criminal case is dismissed or discontinued or where an acquittal becomes effective, the excess amount of the VAT shall be refunded/carried forward in accordance with the procedure prescribed by this Law and the Law on Tax Administration. Institutions authorised to investigate crimes must submit to the tax administrator information about initiating an investigation of the activities of a VAT payer in respect of a criminal act if this is related or may be related to improper performance of the obligations of a VAT payer, including an unlawful refunding of the excess amount of the VAT and its carrying forward.
Article 92. Obligations of Taxable Persons Who Are Not Registered as VAT Payers Related to Payment of the VAT
1. A taxable person of the Republic of Lithuania who was supposed to file an application for his registration as a VAT payer but who failed to do that or a person who filed an application for being registered as a VAT payer but who, by a decision of the tax administrator subject to the provisions of this Law and the implementing legal acts, was not registered, must calculate and pay into the budget the VAT on the goods and services which, under this Law, are subject to VAT, in accordance with the procedure set forth in this Law. The amount of the VAT due on the goods and/or services supplied shall be calculated in accordance with the following formula (the VAT shall not be calculated on the goods and services supplied a consideration for which amounted to LTL 100,000 as specified in Article 71 (1) of this Law):
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The amount of the VAT due = consideration *T/(100%+T), where T means the rate(in per cent) of the VAT established on these goods and/or services in this Law; * - a multiplication symbol.
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2. Taxable persons referred to in paragraph 1 of this Article must pay the amount of the VAT calculated in the above manner due for a given month into the budget by the 25th day of the following month. They must also submit a statement of the VAT due by a person who has not been registered as a VAT payer, of a form prescribed by the central tax administrator.
3. The amount of the VAT on the goods and/or services supplied by the persons referred to in paragraph 1 of this Article, calculated in the above manner, may not be stated separately in the accounting documents recording supply of those goods and/or services.
4. A taxable person who is not a VAT payer and who has to pay the VAT into the budget subject to the provisions of Article 53 (3) of this Law, must pay the VAT due within 10 days from the start of use/consumption or loss; a person who has to pay the VAT into the budget subject to Article 71 (6) must pay it within 10 days from issuing the document in which the VAT has been stated without good cause.
Article 93. Calculation of the Amount of Import VAT Due
The amount of import VAT due shall be calculated in accordance with the procedure established by the Customs Code, this Law and the implementing legislation.
Article 94. Procedure of Payment of Import VAT
Import VAT shall be paid in accordance with the procedure established by the Government of the Republic of Lithuania. However, import VAT on goods imported by VAT payers may be included into the sum of their output VAT under procedures established by the Government of the Republic of Lithuania or an institution authorised by it. The Government of the Republic or an institution authorised by it shall establish the criteria which the VAT payers wishing to include import VAT into output VAT must meet.
CHAPTER XI
CASES WHERE THE PURCHASER/CUSTOMER MUST CALCULATE OR WITHHOLD AND PAY VAT ON THE GOODS AND/OR SERVICES ACQUIRED
Article 95. Goods and/or Services Supplied within the territory of the Country by Foreign Taxable Persons Not Registered as VAT Payers in the Republic of Lithuania
1. Provisions of this Article shall apply only to the goods and/or services supplied within the territory of the country by foreign taxable persons (hereinafter - a foreign person) not registered as VAT payers in the Republic of Lithuania which under this Law:
2. Provisions of this Article shall apply to the following purchasers/customers of goods and/or services:
1) all legal entities of the Republic of Lithuania, including the State, municipalities, state and municipal institutions and agencies, public legal entities etc., or subdivisions of foreign persons in the Republic of Lithuania;
3. Where a foreign person supplies, within the territory of the country, services specified in Article 13 (6) and /or (7) of this Law, , , the purchaser/customer of these services must calculate output VAT in respect of the said services supplied by a foreign person, according to the procedure set forth in this Law, and pay it into the budget. The purchaser/customer shall not calculate and pay into the budget output VAT on lease of movable property supplied by a foreign person if said movable property was imported into the customs territory of the Republic of Lithuania by paying relevant amount of import VAT according to the established procedure.
4. If a foreign person supplies, within the territory of the country, goods and/or services other than those specified in paragraph 3 of this Article, the purchaser/customer of these goods and/or services must calculate, following the procedure set forth in this Law, the output VAT on these goods and/or services supplied by the foreign person and pay it into the budget.
5. If the purchaser/customer is a VAT payer, the calculated output VAT for the goods and/or services supplied by a foreign person within the territory of the country during the tax period shall be included in the VAT return for this tax period as payable into the budget. At the end of the tax period, such a purchaser/customer shall complete, in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it, a statement about the acquired goods and/or services in respect of which for which output VAT was so calculated, where VAT amounts so calculated are deductible by the purchaser/customer like any other input VAT under this Law. The above statement shall be submitted together with the VAT return for the tax period.
6. If the purchaser/customer is not a VAT payer he must pay into the budget the amount of output VAT calculated in accordance with the procedure laid down in this Article by the 25th day of the month following the month in which the tax had to be calculated. Alongside with the tax, a statement of the VAT due by a person who has not been registered as a VAT payer, of a form prescribed by the central tax administrator must be submitted. .
Article 96. Other Cases Where VAT on Acquisition of Goods and/or Services Is withheld and Paid by the Purchaser/Customer
1. Output VAT calculated on supplies by agricultural producers of agricultural products the supply of which must be documented by a receipt of purchase of agricultural products must be withheld and paid into the budget by the acquiring VAT payers.
2. VAT on the objects of ownership right taken over as a property contribution into company or owing to the restructuring of another VAT payer as well as the VAT calculated on the transferred material improvement of a building/structure in the case of supply of goods referred to in Article 9 (5) of this Law, must be withheld and paid into the budget by a VAT payer who is issued a document recording such supply of goods or services i.e. a VAT payer taking over the objects of the right of ownership as a property contribution to company or owing to the restructuring of another VAT payer, or the VAT payer - the owner of the materially improved building/structure.
3. The Government of the Republic of Lithuania or an institution authorised by it shall establish cases when, in order to ensure the discharge of tax obligations, including justification of carrying over and refund of the excess amount of VAT, the tax administrator must inform the supplier of goods or services and the purchaser/customer that output VAT on goods and/or services supplied shall be withheld and paid into the budget by the purchaser/customer of these goods and/or services provided he is a VAT payer.
4. The amounts of the VAT withheld during the tax period which, subject to the provisions of this Article must be paid into the budget by the purchaser/customer of the goods and/or services shall be indicated in the VAT return of that tax period as the VAT payable into the budget. These amounts of VAT may be deducted as prescribed by this Law by the purchaser/customer like any other input VAT.
Article 97. Application of Provisions of this Section
1. The provisions of this Section shall apply to farmers who meet all the requirements set forth below:
1) the amount of consideration during a year (the last 12 months) for goods and services supplied in the course of his economic activities does not exceed the threshold specified in Article 71 (1) of this Law. Where the total amount of consideration of all the members of a farmer's farm for the goods and services supplied in the course of their economic activities exceeds the above threshold it shall be regarded that he does not meet this requirement;
2) they have registered a farmer's farm in accordance with the procedure laid down in the Law of the Republic of Lithuania on the Farmer's Farm or have documents evidencing allotment of land for a personal farm;
2. A farmer who meets the requirements of paragraph 1 of this Article shall have a right to be registered as a VAT payer as prescribed in Chapter IX of this Law. If a farmer is registered as a VAT payer the provisions of this Section may not apply to him. Neither may they apply to a farmer when at least one member of a farmer's farm is registered as a VAT payer.
Article 98. Application of the Compensatory VAT Rate
1. Farmers to whom the compensatory VAT rate scheme applies shall have the right to receive from the purchasers/customers, provided they are taxable persons, a compensation. The amount of the compensation shall be calculated on the taxable amount of agricultural products and/or agricultural services supplied by farmers, established in accordance with the procedure laid down in Article 15 of this Law, by applying the compensatory VAT rate specified in Article 100 of this Law.
2. The amount of the compensation must be stated in the accounting documents recording the supply of agricultural products and/or services. The amount of the compensation shall be deductible by the purchaser/customer of agricultural products and/or services who is a VAT payer, as prescribed in this Law, like any other input VAT .
3. Supply of agricultural products by a farmer who is eligible for the compensatory VAT rate scheme shall be recorded in accordance with the procedure laid down in Article 81 (4) of this Law, in cases other than those specified in Article 81 (4) - by an accounting document of a free form issued by the purchaser/customer.
Article 99. Accounts of the Compensatory VAT Rate
1. Farmers who are eligible for the compensatory VAT rate scheme shall keep their accounts of the agricultural products and services supplied in accordance with the procedure established by the central tax administrator.
2. Farmers who are eligible for the compensatory VAT rate scheme shall not be entitled to VAT deductions and the requirements of this Law shall not apply to them where they are applied only in respect of VAT payers.
Article 101. Application of the Provisions of this Section
1. The provisions of this Section shall apply only to those tourist services, which are acquired by the VAT payer from third persons and subsequently provided to the final consumer in his own name (hereinafter in this Section such a VAT payer shall be referred to as a travel agent). Where the final consumer is sold a package of several tourist services purchased from third persons, which are provided during a single journey, it shall be deemed that the travel agent has supplied a single service to the final consumer.
Article 102. Taxable Amount
1. The taxable amount of any service provided by the travel agent to the final consumer shall be the travel agent’s margin calculated in accordance with the procedure established in paragraph 2 of this Article.
2. The travel agent’s margin shall be determined as the difference between the amount (exclusive of VAT itself) payable by the final consumer to the travel agent for the service provided by him and the amount (including VAT) paid or payable by the travel agent to third persons for this tourist service or services (where the final consumer is sold a package). The travel agent’s margin shall be calculated regardless of whether or not these services provided by third persons are subject to VAT.
Article 103. Characteristics of VAT Deduction
1. A travel agent shall have no right to deduct the input VAT referred to in Article 102 (2) of this Law, which has been paid or is payable to the third persons for the tourist services acquired from them.
Article 104. Transactions Outside of the Territory of the Country
Services provided by a travel agent shall be subject to the zero-rate of VAT where the travel agent acquires from third persons and provides to the final consumer tourist services, which are provided by these third persons outside of the territory of the country.
Article 105. Characteristics of the Invoicing of Services Provided by a Travel Agent
A service provided by the travel agent to the final consumer shall be invoiced in accordance with the general procedure established by this Law; however, the document invoicing the service shall not specify the rate and amount of VAT.
Article 106. Application of the Provisions of this Section
1. A VAT payer supplying second-hand goods, works of art, as well as collectors’ items and/or antiques as they are defined in this Article shall calculate VAT on the supplied second-hand goods, works of art, collectors’ pieces and antiques in accordance with the procedure established in this Section. The provisions of this Section shall apply to VAT payers who, in the course of their economic activities, are continuously engaged in the supply of second-hand goods, works of art, as well as collectors’ items and/or antiques.
2. The provisions of this Section shall apply in the case when a VAT payer supplies second-hand goods, works of art, as well as collectors’ items and/or antiques acquired without VAT, as well as in the cases when a VAT payer:
1) supplies second-hand goods, works of art, collectors’ items and/or antiques, which he has imported himself and in respect of which import VAT has been calculated in accordance with the prescribed procedure;
3. For the purposes of this Section, an organiser of a sale by public auction shall mean any taxable person who, in the course of his economic activities, offers the goods for sale by public auction in his own name but for the account of the seller of the goods, as well as hands over the goods, in his own name but for the account of the seller of the goods, to the highest bidder.
4. The provisions of this Section shall also apply to organisers of sales by public auction supplying second-hand goods, works of art, collectors’ items and/or antiques by public auction, provided such goods are sold by public auction in the name of the organiser of the sale by public auction but for the account of the seller of the good, who is:
2) a taxable person whose supply of these goods is exempt from VAT under the provisions of this Law, Article 33 (1);
3) a taxable person who is not registered and, under Article 71 (1) of this Law must not be registered as a VAT payer. This provision shall apply only in the case of the supply of tangible capital assets; or
5. For the purposes of this Section, second-hand goods shall mean any used movable property (except for those referred to in paragraphs 6-8 of this Article, as well as precious metals, precious stones and articles of precious metals and/or precious stones), which are suitable for further use irrespective of whether or not those items require additional repairs and/or other servicing prior to their use.
6. For the purposes of this Section, works of art shall mean:
1) paintings, drawings and pastels classified under subheading 9701 of the Combined Nomenclature of Customs Tariffs and Foreign Trade Statistics (hereinafter referred to as CN);
7. For the purposes of this Section, collectors’ items shall mean:
1) postage or revenue stamps, postmarks, first-day covers, postal (stamped) paper and the like classified under CN subheading 9704;
Article 107. Taxable Amount
1. When supplying the goods referred to in Article 106 (2) of this Law, the taxable amount shall be the seller’s margin calculated in accordance with the procedure established in paragraph 2 of this Article.
2. The seller’s margin shall be calculated as the difference between the consideration (exclusive of VAT itself) received or receivable by the seller for the good supplied and the amount (including VAT) paid or payable by him to his supplier when acquiring this good. Where the good imported by the VAT payer is supplied, the amount of import duties, import charges and import VAT charged on this good shall be additionally subtracted.
3. When supplying the goods referred to in Article 106 (4) of this Law by public auction, the taxable amount shall be the margin of the organiser of the sale by public auction calculated as the difference between the total consideration (exclusive of VAT itself) received or receivable from the purchaser of the good and the amount (including VAT) paid or payable by the auctioneer to the seller of the good. The total consideration received or receivable from the purchaser shall be constituted of not only the price of the good at the public auction but also the amounts specified in subparagraphs 1 and 2 of Article 15 (5) of this Law. The amount paid or payable to the seller of the good shall be the difference between the price of the good at the public auction and the commission received or receivable by the organiser of the sale by public auction under the contract with the seller of the good.
Article 108. Characteristics of VAT Deduction
1. Where a VAT payer calculates VAT in respect of the supply of the good referred to in this Section on the margin, he shall have no right to deduct input or import VAT on that good.
Article 109. Invoicing of the Supply of Goods
1. Where, in accordance with Article 107 (1), (2) and (3) of this Law, the VAT on the supply of the good has been calculated not on the total value of the good, the VAT payer shall have no right to specify the VAT calculated in this manner in documents invoicing this supply.
2. The organiser of the sale by public auction must, in the accounting documents issued to invoice the supply of the good to the purchaser of that good, separately indicate the price of the good at the public auction, as well as the amounts payable by the purchaser, which are specified in subparagraphs 1 and 2 of Article 15 (5) of this Law. For the purpose of invoicing the supply of the good, the organiser of the sale by public auction must issue the seller of the good, if he is a taxable person, a document of the form prescribed by the central tax administrator, which must specify the price of the good at the public auction and the amount of the commission received or receivable by the organiser of the sale by public auction under the contract with the seller of the good.
Article 110. Accounting
1. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to determine cases when a VAT payer shall be entitled to calculate VAT on the margin in respect of all the goods or all the goods of a particular kind supplied during the tax period rather than every good supplied.
Article 111. Application of the Provisions of this Section
1. Under the provisions of this Section, investment gold shall mean:
1) gold bars, wafers and plates with a purity of at least 995/1000 recognised in the international markets of precious metals, provided the weight of such a bar, wafer or plate is at least 1 gram;
2. For the purposes of this Section, investment gold shall also mean securities certifying the right of ownership in respect of gold referred to in subparagraph 1 of paragraph 1 of this Article, as well as securities certifying the right or obligation to purchase or transfer the securities certifying the right of ownership in respect of gold referred to in subparagraph 1 of paragraph 1 of this Article.
Article 112. Procedure for the Taxation of Investment Gold and Related Services
2. Services of agency (agent’s services) shall also be exempt from VAT, where the agent takes part in supplying or acquiring investment gold in the name and for the account of another person.
3. VAT payers producing investment gold or transforming any gold into investment gold shall have the right to choose to calculate VAT on the supply of investment gold in accordance with the general procedure established by this Law, provided the purchaser of investment gold is the VAT payer.
4. Where a VAT payer producing investment gold or transforming any gold into investment gold exercises the right referred to in paragraph 3 of this Article, the agent taking part in the transaction for the supply of this investment gold in the name and for the account of another person shall also have the right to calculate VAT on the services of agency (agent’s services) provided by him in accordance with the general procedure established by this Law.
Article 113. Right of the Supplier of Investment Gold to be Registered as a VAT Payer
In derogation from the provisions of Article 72 of this Law, taxable persons who are not VAT payers and who are engaged in the supply of investment gold shall have the right to be registered as VAT payers.
Article 114. Characteristics of VAT Deduction
1. While the supply of investment gold is exempt from VAT, the VAT payer shall have the right to deduct the following:
1) input VAT on purchases paid or payable in respect of investment gold to the supplier who has exercised the right referred to in Article 112 (3) of this Law;
2) input and/or import VAT on gold acquired and/or imported, which is intended for transforming into investment gold;
2. A VAT payer producing investment gold or transforming any gold into investment gold shall have the right to deduct input and/or import VAT on the goods and/or services acquired and/or imported, which are related to the production or transformation of the above-mentioned gold, irrespective of whether or not he has exercised the right referred to in Article 112 (3) of this Law.
Article 115. Accounting
The Government of the Republic of Lithuania or an institution authorised by it shall set additional requirements for the accounting of taxable persons who are covered by the provisions of this Section.
Article 116. Right to Recover the VAT paid in the Republic of Lithuania
1. A foreign taxable person shall, in accordance with the procedure established in this Chapter, have the right to be refunded the VAT paid in the Republic of Lithuania.
Article 117. Requirements for Foreign Taxable Persons who Wish to be Refunded VAT
1. Any foreign taxable person shall have the right to submit an application to be refunded the VAT paid in the Republic of Lithuania only in the case where during that period in which the VAT paid is requested to be refunded he satisfies the following criteria:
1) he had no subdivision in the Republic of Lithuania, or, in the event of a natural person, his normal place of residence was not in the Republic of Lithuania either; and
2. The right to submit an application shall also be enjoyed by such a foreign taxable person who satisfies the criterion set in subparagraph 1 of paragraph 1 of this Article and who during the period in which the VAT paid is requested to be refunded in the territory of the country:
1) carried out only the activity indicated in Article 45 of this Law or acted as agent in the transactions indicated in the above-mentioned Article, as well as carried out the activity indicated in Article 53 of this Law which under the provisions of this Law would be subject to the zero-rate of VAT; and/or
Article 118. Refundable VAT
1. The following shall be refundable to a foreign taxable person:
1) the import VAT paid in respect of the goods owned by him, which are released for free circulation in the customs territory of the Republic of Lithuania, provided that no VAT payer shall have the right to deduct this import VAT;
2. The VAT referred to in paragraph 1 of this Article shall be refundable only in the case where the goods and/or services, in respect of which the refund of the paid VAT is requested, are intended to be used for the following economic activities of a foreign taxable person:
3. The VAT paid by a foreign taxable person in respect of the goods and/or services, the input and/or import VAT whereof shall, under the provisions of this Law, in no case be deductible by VAT payers, shall not be refundable to foreign taxable persons.
4. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish that the VAT paid in respect of certain goods and/or services shall not be refundable to foreign taxable persons, where the deduction of input and/or import VAT on these goods and services is limited under the provisions of this Law.
Article 119. Period the VAT Paid in which shall be Refundable, Minimum Refundable VAT Amount and Refund Procedure
The maximum and minimum duration of the period the VAT paid in which may be requested to be refunded, the minimum amount of refundable VAT the amounts under which specified in applications of foreign taxable persons shall not be refundable, as well as the procedure for submitting and examining applications to refund foreign taxable persons the VAT paid by them and the procedure for VAT refund shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
Article 120. Control over VAT
1. VAT, except for the case specified in paragraph 2 of this Article, shall be controlled by the State Tax Inspectorate. The State Tax Inspectorate shall also control the payment of VAT in respect of imported goods, where the import VAT on them is included into output VAT in accordance with the procedure established in Article 94 of this Law.
2. VAT on imported goods that are not covered by paragraph 1 of this Article shall be controlled by territorial customs.
Article 121. Refund of the VAT Paid/Recovered Unjustifiably
1. The amount of VAT paid/recovered in excess shall be refundable/carried forward in accordance with the procedure established by the Law on Tax Administration, except for the case specified in paragraph 2 of this Article.
2. The VAT paid in respect of imported goods shall be refundable or its recovery shall be waived in the cases specified in the Customs Code. Applications to refund the paid VAT or to waive its recovery shall be examined in accordance with the procedure established in the Customs Code. The import VAT paid/recovered unjustifiably shall be refundable by the customs in accordance with the procedure established by the Customs Department under the Ministry of Finance of the Republic of Lithuania.
Article 122. Failure to Submit a VAT Return within the Established Interval
Where a VAT payer fails to submit a VAT return within the interval established in this Law, the amount of VAT payable into the budget for that period shall be increased (the amount of VAT refundable from the budget shall be reduced) by 1%.
Article 123. Failure to Comply with the Procedure for the Payment of VAT
1. With regard to tax payers violating the provisions of this Law, default interest shall be calculated in accordance with the procedure established by the Law on Tax Administration.
2. Where it is discovered that a VAT payer has unjustifiably reduced the calculated amount of VAT payable into the budget (increased the calculated amount of VAT refundable from the budget), an additional amount of VAT payable shall be calculated whereby the amount of VAT payable into the budget shall be increased (the amount of VAT refundable from the budget shall be reduced) accordingly, and a penalty of 10 to 50% of the calculated additional amount of VAT due shall be imposed.
3. Where it is discovered that a taxable person or any other person, who is not a VAT payer, but in accordance with the procedure established by this Law should have paid VAT into the budget, has failed to pay it, the amount of VAT payable into the budget shall be calculated and a penalty of 10 to 50% of the calculated amount of VAT shall be imposed.
4. The amount of an individual penalty imposed in the cases specified in paragraph 2 or 3 of this Article shall depend on the nature of violation, the form of the guilt of the tax payer and other circumstances which are recognised by the tax administrator as relevant when imposing larger or smaller penalty.
Article 124. Non-compliance with the Procedure for the Completion of Customs Approved Treatment and the Payment of VAT on Importation
In the event of non-compliance with the procedure for the completion of customs approved treatment established in the Customs Code and legal acts regulating the application thereof, which results in a customs debt on importation, default interest of import VAT shall be calculated from the date when a customs debt on importation is incurred, while in other cases – on the expiration of the period in which import VAT should have been paid. Default interest shall be calculated in accordance with the procedure established by the Law on Tax Administration.
Article 126. Entry into Force of the Law
1. This Law shall enter into force from 1 July 2002, except for subparagraphs 2, 3, 4, 5, 6 and 7 of Article 19 (3), Article 130 and Section Four of Chapter XII.
2. Subparagraph 2 of Article 19 (3) of this Law shall enter into force from 1 January 2003. Until 31 December 2002, the printing, publication and circulation of books, newspapers and magazines, except for publications publicising eroticism and violence, which have been recognised as such by an institution authorised by legal acts, as well as paper for printing newspapers shall be exempt from VAT.
3. Subparagraph 3 of Article 19 (3) of this Law shall enter into force from 1 January 2004. Until 31 December 2003, pharmaceuticals and medicinal products included on the list approved by the Government of the Republic of Lithuania shall be exempt from VAT; however, the Government of the Republic of Lithuania shall have the right to approve the list of pharmaceuticals and medicinal products on which VAT shall be chargeable at the reduced rate of 5% from the day of the entry into force of this Law.
4. Subparagraphs 4, 6 and 7 of Article 19 (3) of this Law shall enter into force from 1 January 2003.
5. Subparagraph 5 of Article 19 (3) of this Law setting the reduced rate of VAT of 5% for organic food products (requirements for organic food products shall be laid down by the Government of the Republic of Lithuania) shall enter into force from 1 January 2006.
7. VAT returns for the tax period of June 2002 shall be filed and VAT shall be paid into the budget in accordance with the procedure and time limits established by this Law.
8. VAT on agricultural products, the supply whereof was duly documented prior to the entry into force of this Law, shall be paid into the budget within 10 days from payment by purchasers for it. The VAT on the services or energy supplied prior to the entry into force of this Law, which are paid for with the resources of the state budget of the Republic of Lithuania or municipal budgets, the Privatisation Fund and the Road Fund (Road Maintenance and Development Programmes), as well as with the resources of soft credits allocated from the General and Municipal Funds for the Construction or Purchase of Housing and Apartments, the time period for the payment whereof has not expired upon the entry into force of this Law, shall be paid into the budget in accordance with the provisions laid down in Article 90 (6) of this Law.
Article 127. Application of the Provisions of this Law to Services Provided by Foreign Taxable Persons
1. The provisions of Chapter XI of this Law shall apply to those services of foreign taxable persons indicated in Article 13 (6) of this Law, which are supplied after the entry into force of this Law. The provisions of this Law shall not apply to the services indicated in Article 13 (6) of this Law, which were supplied by foreign taxable persons prior to the entry into force of this Law, even in the case where the purchaser/customer of these services received the accounting document invoicing the supply of these services and/or paid for these services after the entry into force of this Law.
2. The provisions of Chapter XI of this Law shall not apply to the services of foreign taxable persons indicated in Article 13 (7) of this Law, where the transaction for the supply of such services was concluded and the leased movable property was imported into the Republic of Lithuania prior to the entry into force of this Law.
Article 128. Application of the Provisions of this Law to Tangible Capital Assets Acquired and/or Imported prior to the Entry into Force of this Law
1. This Article shall establish the procedure under which VAT deduction shall be adjusted with respect to the tangible capital assets referred to in Article 67 of this Law, acquired or imported prior to the entry into force of this Law, as well as the change in the use of the building/structure materially improved prior to the entry into force of this Law.
2. VAT deduction shall be adjusted in accordance with the procedure established in this Article, provided:
1) less than 10 years have elapsed after the tax period when the input VAT on the property immovable by nature acquired prior to the entry into force of this Law was wholly or partially deducted; or where the property immovable by nature was manufactured by the VAT payer himself and the input and/or import VAT on the goods and/or services used for the manufacture of the said property was wholly or partially deducted – less than 10 years have elapsed after the tax period when this property was put to use;
2) less than 10 years have elapsed after the tax period when the material improvement of the building/structure carried out prior to the entry into force of this Law was completed where the input and/or import VAT on the goods and/or services used for the said improvement was wholly or partially deducted;
3) less than 5 years have elapsed after the tax period when input VAT on the capital tangible assets referred to in subparagraph 2 of Article 67 (1) of this Law, acquired or imported prior to the entry into force of this Law, was wholly or partially deducted; or where such assets were manufactured by the VAT payer himself and the input and/or import VAT on the goods and/or services used for the manufacture thereof was wholly or partially deducted – less than 5 years have elapsed after the tax period when these assets were put to use.
3. Where prior to the entry into force of this Law tangible capital assets were manufactured by the VAT payer himself or the building/structure was materially improved, the input VAT of such tangible capital assets shall, under the provisions of this Law related to VAT deduction and the adjustment thereof, mean the amount of input and/or import VAT on the goods and/or services used for the manufacture of the said assets (where the material improvement of the building/structure is carried out – for improvement works).
Article 129. Other VAT Rules Applicable until 31 December 2003 (Inclusive)
1. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, the reduced VAT rate of 9% shall also be applied to heat energy supplied for housing heating.
2. In derogation from the provisions of Chapter III of this Law, until 31 December 2002, the VAT rate of 9% shall be applied to dehydrated and denatured ethyl alcohol and rape methyl (ethyl) ester produced in accordance with the requirements laid down in the Law of the Republic of Lithuania on Biological Fuel and legal acts regulating the implementation thereof. From 1 January 2003 to 31 December 2003, the zero-rate of VAT shall be applied to dehydrated and denatured ethyl alcohol and rape methyl (ethyl) ester produced in accordance with the requirements laid down in the Law of the Republic of Lithuania on Biological Fuel and legal acts regulating the implementation thereof.
3. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, the zero-rate of VAT shall be applied to the total margin of travel agents calculated in accordance with the procedure established in Article 102 of this Law.
4. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, the zero-rate of VAT shall be applied to the transport of passengers on international routes, as well as the transport of passenger luggage, irrespective of the forms of transport. Under this provision, an international route shall mean transport starting in the Republic of Lithuania and ending outside of the Republic of Lithuania, as well as transport starting outside of the Republic of Lithuania and ending in the Republic of Lithuania, as well as transport starting and ending outside of the Republic of Lithuania.
5. In derogation from the provisions of Chapter III of this Law, the management of the granted credits, as well as of the financial securities or guarantees, where it is provided by taxable persons other than those who have granted credits, securities or guarantees, shall be exempt from VAT until 31 December 2003.
6. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, imported goods shall be exempt from VAT where they are paid for with the resources of credits received in the name of the State or with the resources of credits granted to budgetary agencies with the guarantee of the State, provided the resources of the credit received in the name of the State were re-lent to the recipient thereof or the credit with the guarantee of the State was granted to the budgetary agency prior to the entry into force of this Law. The procedure for the implementation of the provisions of this paragraph shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
7. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, the zero-rate of VAT shall be applied to the goods supplied or services provided in the territory of the country where they are paid for with the resources of credits received in the name of the State or with the resources of credits granted to budgetary agencies with the guarantee of the State, provided the resources of the credit received in the name of the State were re-lent to the recipient thereof or the credit with the guarantee of the State was granted to the budgetary agency prior to the entry into force of this Law. The procedure for the implementation of the provisions of this paragraph shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
8. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, works of construction, renovation, insulation and design of residential houses, engineering network building and territorial management, which are financed with the resources of state and municipal budgets, as well as with the resources of soft credits granted by the State and of state special funds, shall be exempt from VAT, provided contracts for such works were concluded prior to the entry into force of this Law.
9. In derogation from the provisions of Chapter III of this Law, the services referred to in subparagraphs 4 and 5 of Article 28 (5) of this Law shall be exempt from VAT until 31 December 2003.
10. In derogation from the provisions of Chapter IX of this Law, until 31 December 2003, correctional institutions where convicted persons are employed, as well as occupational therapy units of health care institutions where patients are employed shall not pay into the budget the VAT due, calculated in accordance with the procedure established by this Law. Until 31 December 2003, industrial enterprises where students of higher educational institutions and colleges, students of vocational training institutions engaged in practical training, as well as the disabled of Group III are employed, shall reduce the amount of VAT payable into the budget, which is calculated for the tax period, by the amount of the income related to employment relations, which is calculated for the above-mentioned persons during this tax period (but not exceeding one gross average monthly salary in the economy of the Republic of Lithuania in respect of each person, which is published by the Department of Statistics of the Republic of Lithuania in the Official Gazette „Valstybes Zinios“), while industrial enterprises where the disabled of Groups I and II are employed shall reduce the amount of VAT payable into the budget, which is calculated for the tax period, by the amount of the income related to employment relations, which is calculated for the above-mentioned persons during this tax period (but not exceeding 1.5 gross average monthly salary in the economy of the Republic of Lithuania in respect of each person, which is published by the Department Statistics of the Republic of Lithuania in the Official Gazette „Valstybes Zinios“), as well as by the amount of mandatory state social insurance contributions calculated and paid by the insurer on that amount of the income related to employment relations. The criteria and procedure for attributing enterprises to industrial enterprises shall be established by the Government of the Republic of Lithuania or an institution authorised by it. Until 31 December 2003, public and private companies of public organisations of disabled persons where shares are held by public organisations of disabled persons, other types of enterprises whose founders are solely public organisations of disabled persons and which were established before 1 May 1998, shall reduce the sum of VAT payable into the budget by 100%. The public company “Puntukas” of the society of disabled persons shall reduce the sum of VAT payable into the budget in proportion to the capital held by the society.
11. In derogation from the provisions of Chapters I, IV and VII of this Law, until 31 December 2003, the activities of non-profit-making legal persons referred to in Article 24 (1) and (2) of this Law shall be out of scope of VAT and when calculating the proportion referred to in Article 60 (1) of this Law, the consideration received for the said services shall not be taken into account.
12. In derogation from the provisions of Chapter III of this Law, until 31 December 2003, the following items shall be exempt from VAT:
2) agricultural services of agricultural undertakings and co-operative societies (co-operatives) – agricultural entities provided to their members, according to the list of agricultural services approved by the Government of the Republic of Lithuania or an institution authorised by it;
3) the sale or other transfer of objects of ownership right taken over to secure the performance of obligations where no share of input and/or import VAT on these objects of ownership right (or of goods and/or services consumed for their repairs, other improvement of their condition or increase in their value) has been deducted by the VAT payer selling or otherwise transferring them in his name;
4) the sale or other transfer of the damaged goods taken over by insurance companies due to an insurable event where no share of input and/or import VAT on these goods (or of goods and/or services consumed for their repairs, other improvement of their condition or increase in their value) has been deducted by the insurance company selling or otherwise transferring them;
5) articles of traditional fine crafts, which have been granted the status of such articles by the interdepartmental commissions of experts on traditional fine crafts in accordance with the prescribed procedure;
Article 130. Proposals to the Government of the Republic of Lithuania
By 1 May 2002, the Government of the Republic of Lithuania shall approve legal acts necessary to implement this Law or authorise other institutions to do this by the said date.
Article 131. Repealing Laws
On the entry into force of this Law, the following shall be repealed:
3) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;
5) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;
6) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;
7) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;
8) Republic of Lithuania Law Amending Article 38 of the Republic of Lithuania Law on Value Added Tax;
11) Law Amending Article 26 of the Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;
18) Law Amending and Supplementing Articles 17, 18, 26, 27, 28 and 41 of the Republic of Lithuania Law on Value Added Tax;
19) Law Amending Articles 4, 5, 6, 16, 17, 19, 20, 23, 25, 29, 35 and 36 of the Republic of Lithuania Law on Value Added Tax;
20) Law Amending and Supplementing Articles 2, 4, 9, 10, 11, 12, 13, 21, 22, 23, 24, 25, 35, 36, 38 of the Republic of Lithuania Law on Value Added Tax;
23) Law Amending and Supplementing Articles 5, 6, 8 of the Republic of Lithuania Law on Value Added Tax;
28) Law Amending and Supplementing Articles 4, 13, 14 of the Republic of Lithuania Law on Value Added Tax;
30) Law Amending and Supplementing Articles 6, 7, 17, 25, 32, 35, 36, 41 of the Republic of Lithuania Law on Value Added Tax;
32) Law Repealing the Law Amending Article 4 of the Republic of Lithuania Law on Value Added Tax and Amending Article 4 of the Law on Value Added Tax;
37) Law Amending and Supplementing Article 25 of the Republic of Lithuania Law on Value Added Tax and Supplementing the Law with Article 382;