REPUBLIC OF LITHUANIA

LAW ON CHARITY AND SPONSORSHIP

Article 1. Objectives of the Law

The objective of the Law on Charity and Sponsorship of the

Republic of Lithuania shall be to regulate and foster charity and

sponsorship in the Republic of Lithuania by establishing cases

where the reliefs of state taxes, customs duties and state dues

shall apply.

Article 2. Objectives of Charity and Sponsorship

Charity shall be dispensed in order to:

1) aid and render assistance and free services to

individuals for whom it is indispensable: disabled, sick or

lonely individuals incapable of work, orphans or children who

have lost parental care, large families or families with

insufficient means, unemployed, as well as individuals whose

income cannot guarantee the minimum standard of living;

2) aid charitable organizations and the Caritas (the

Lithuanian women's association) organizations, as well as funds

and religious centers which dispense charity to and sponsor

individuals indicated in Item 1 of Part 1 of Article 2, and

Lithuanian communities in foreign states;

3) aid individuals who have suffered from wars and natural

or ecological disasters, epidemics of infections, and help to

liquidate the consequences of said disasters and epidemics; and

4) help to find work by establishing working places or

requalifying socially-needy individuals who have lost their jobs.

Sponsorship shall be provided in order to:

1) promote the programmes of the development of science,

culture, education, art, religion, sports, health care or social

care and support;

2) promote the programmes of environmental protection and

the works of environmental planning;

3) support the programmes of works aimed at the protection

and restoration of the monuments of history, nature,

architecture, culture and art; and

4) foster other activities and programmes of social utility

which are launched by the Government of the Republic of

Lithuania.

Article 3. Acknowledgment of Charity and Sponsorship

The voluntary and not repayable material aid or free

rendering of services excluding any material obligation of the

donee with regard to the donor thereof, aimed for the purposes

specified in Part 1 of Article 2 of this Law shall be recognized

as charity.

Voluntary material support or free rendering of services

provided directly to legal persons and aimed for the purposes

specified in part 2 of Article 2 shall be recognized as

sponsorship.

The agreement on charity or sponsorship may provide for a

special promotional obligation by the donee thereof with respect

to the donor of charity or sponsor, with the exception of

advertising tobacco products and alcoholic beverages.

Pursuant to this Law, direct transferring of material valuables

to natural persons, with the exception of such transferring

carried out by charitable organizations or funds, shall not be

recognized as charity.

Article 4. Charity Donors and Sponsors

The following may be charity donors or sponsors:

1) economic entities of the Republic of Lithuania which have

or have not the rights of a legal person;

2) public organizations and religious centers or

communities, provided such actions do not come counter to their

bylaws and regulations;

3) charitable organizations and funds whose main types of

activities are congruent with the objectives set forth in Article

2 and which have been registered in accordance with the procedure

established by the Government of the Republic of Lithuania;

4) citizens of the Republic of Lithuania; and

5) foreign legal and natural persons, as well as

international organizations.

In the Republic of Lithuania, foreign legal and natural

persons, as well as international organizations may dispense

charity and sponsor individuals both directly or via third

parties, as well as via bodies of power of their respective

states, provided such activities comply with the objectives set

forth in Article 2.

Political parties shall not be recognized as charity donors

or sponsors and reliefs provided for in this Law shall not be

applicable with respect to them.

Article 5. Recipients of Charity and Sponsorship

Donees of charity shall be the institutions of social care

and support, health care, charitable organizations and funds,

societies as well as enterprises, institutions and organizations

of the disabled, as well as orthopedic and prosthetic enterprises

which are established by and financed from the resources of the

State, local governments, public organizations and private

individuals.

Donees of sponsorship shall be institutions of science and

studies, institutions and organizations of health care,

education, science, culture, sports, environmental protection,

and the publications thereof; the object of sponsoring may also

be governmental or local government programmes on education,

science, culture, environmental protection and sports.

According to this Law, political parties and commercial

organizations may not be donees of charity or sponsorship.

Article 6. Ways of Dispensing Charity and Sponsoring

Charity donors and sponsors shall dispense charity and

sponsor by:

1) transferring of money or material values to the donee of

charity or sponsorship in accordance with the procedure set forth

in the Law on the Notary Office of the Republic of Lithuania;

2) rendering free services to the donee of charity or

sponsorship; and

3) providing the property of which they are holders to the

disposal of the donee of charity or sponsorship according to an

operating agreement.

Charity and sponsoring may also be dispensed through other

means which are not prohibited by the laws of the Republic of

Lithuania.

Charity and sponsoring shall be not repayable and based on

mutual understanding.

Article 7. Object of Charity and Sponsoring

The object of charity and sponsorship shall be the donor's

or sponsor's:

1) received income;

2) acquired or held property;

3) products which are manufactured or acquired by his or her

funds; and

4) rendered services.

Article 8. Freedom of Charity and Sponsorship

Donors and sponsors of charity shall themselves choose the

donee of charity and sponsorship and the ways of dispensation.

State institutions and their officers must guarantee the

freedom of charity and sponsorship. Officers of state

institutions as well as legal and natural persons who interfere

with the dispensation of charity and sponsorship shall be liable

under laws of the Republic of Lithuania.

Article 9. Accounting of Charity and Sponsorship

Economic entities which dispense charity and sponsorship in

the Republic of Lithuania as well as public or charitable

organizations and religious communities must manage the

accounting of donees of charity and sponsorship to whom they

donate money and material values: specifying in it the concrete

donees of charity and sponsorship, amount and purpose of

donations. Each quarter donors and sponsors of charity must

furnish the information in the established manner to state

institutions which exercise the control of financial activities

and manage accountability.

The accounting of money and material values which are

received as charity or sponsorship must be managed by all legal

persons and enterprises which do not have the rights of the legal

person. The information about the received charity and

sponsorship must be furnished to state institutions which

exercise the control of financial activities and manage

accountability according to the established unified manner.

Upon withholding the information about money and material

values which are received as charity or sponsorship, profit

(income) tax shall be imposed on that part of funds regardless of

the donee of charity or sponsorship.

Funds and material values transferred by donors or sponsors

of charity must be used properly only for purposes of charity and

sponsorship. The concrete purposes of utilization may be set by

the donor or sponsor of charity himself upon the transfer of

money and material values.

Funds and material values which are received as charity or

sponsorship and used not properly may be confiscated on the

court's ruling and transferred to state charitable funds.

Charitable organizations and funds shall have the right to

use up to 20 percent of funds collected for charity to develop

activities of these organizations and cover the expenditure of

administrating if the donor of charity is not against it and does

not set the concrete purpose and way of using the donation.

Article 10. Stimulation of Charity and Sponsorship

Expenditure of donors or sponsors made on charity and

sponsorship and confirmed by documents shall be included into

actual expenses upon the calculation of taxable profit and

income, and taxable profit of legal persons or taxable income of

natural persons shall be reduced one more time by the amount of

expenditure which is made on charity or sponsorship if it does

not exceed 20 percent of taxable profit (income).

Funds allocated for charity or sponsorship which exceed 20

percent of taxable profit (income) shall be taxed in the

established procedure.

Maximum tax exempt expenditure on charity may be increased

as much as maximum tax exempt expenditure on sponsorship is

reduced. Income of charitable organizations and funds,

societies and unions of disabled persons and their enterprises

which are used for the purposes of charity or sponsorship shall

be exempt from profit (income) taxes regardless of the amount of

income.

Privileges provided in the second part of this Article shall

not be granted to charity or sponsorship which is dispensed to

legal persons of foreign states, with the exception of those

cases when such charity or sponsorship is dispensed through

international charitable organizations or Lithuanian communities

abroad.

Material values allocated for charity or sponsorship which

are imported into the Republic of Lithuania or exported from it,

shall be exempt from customs duty. The procedure of exporting

material values which are exported from the Republic of Lithuania

and allocated for charity shall be established by the Government

of the Republic of Lithuania.

Persons who allocate property as a gift or otherwise

transfer it to the donees of charity or sponsorship shall be

exempt from state duty.

Article 11. Control of Charity and Sponsorship

The legality of funds which are allocated and received for

charity and sponsorship shall be controlled by state tax

inspectorates as far as the application of tax privileges is

concerned, and the legality of the utilization of received funds

shall be controlled by the State Control Department.

Disputes concerning the recognition of charity or

sponsorship shall be settled in the court.

Upon the establishment of concrete purposes and ways of the

utilization of aid or sponsorship donors of charity or

sponsorship shall have the right to acquire information and

control themselves how charitable organizations or funds fulfill

the set conditions.

Article 12. Publication of Charity and Sponsorship

Charitable organizations and funds shall have the right to

announce freely the aims, donees and objects through the mass

media.

Information about the donors and sponsors of charity shall

be furnished through the mass media and to other legal and

natural persons who are not specified in Article 9 of this Law

only upon the consent of the donor or sponsor of charity.

Article 13. Conditions of the Entry into Force of the Law on

Charity and Sponsorship of the Republic of

Lithuania

The Law on Charity and Sponsorship of the Republic of

Lithuania shall enter into force from 1 July 1993 upon the

establishment by the Government of the Republic of Lithuania the

procedure and conditions of the foundation and registration of

charitable organizations and funds as well as upon the

establishment of the procedure of sanitary and hygienic control

of material values which are exported from the Republic of

Lithuania and received shipments which are allocated for charity.

The Law on Charity and Sponsorship shall be valid until 31

December 1995 except as otherwise provided by the Seimas of the

Republic of Lithuania.

I promulgate this Law adopted by the Seimas of the Republic

of Lithuania.

ALGIRDAS BRAZAUSKAS

President of the Republic

Vilnius

4 June 1993

No.I-172