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Tax & Legal Alert - Lithuania is a periodical that provides the latest information on changes in Lithuanian legislation as well as summaries of most recent explanations by the State Tax Inspectorate.
The Description of cases when VAT has to be calculated and paid by the purchaser was amended. The term during which reverse-charge mechanism has to be applied for the supply of timber as well as in cases when bankruptcy procedure is started for the supplier of goods (services) was extended until 31 December 2018.
Decision No 1318 of the Lithuanian Government dated 16 December 2015.
The Tax Authority supplemented the official Commentary on the VAT Law where they explained that input VAT (or a part of it) on acquisition of a passenger car with additional control equipment designed for a driving instructor is VAT deductible, provided that it is intended for VAT taxable supplies.
Press release of the Tax Authority issued on 28 December 2015.
The amended official Commentary of the VAT Law determined stricter conditions for treatment of driving courses as exempt from VAT.
Driving courses of categories A, B and BE will be exempt from VAT only in cases when the aim of the courses will be to provide knowledge for a certain participant which would be required for his/her profession (job).
The Tax Authority explained how creation and submission services of e-invoice should be treated and taxed with VAT. Such services are supplied by banks from 1 January 2016 and will replace services of direct debit.
As the creation and submission services of e-invoice are not essential in order to perform the payment for the goods/services acquired (i.e. the purchaser would still be able to choose the payment method), such services are not considered to be financial services, thus, are taxable with VAT.
However, the services related to the transfer of funds should be treated as financial services, as the aim of these services is to transfer the payment for goods (services) acquired to the supplier’s account according to the information provided in an e-invoice.
Letter No (18.2-31-2) RM-6 issued by the Tax Authority on 31 December 2015.
On 9 October 2013 the European Parliament and the Council adopted Regulation (EU) 952/2013 (Union Customs Code) which will change the currently valid Community Customs Code as from 1 May 2016.
In December 2015 the European Commission published Commission Delegated Regulation (EU) 2015/2446 and Commission Implementing Regulation (EU) 2015/2447 which detail rules concerning certain provisions of the Union Customs Code.
According to the amendments of the Law on Excise Duties starting from 1 January 2016 the order of payment of excise duties will change. The amendments will apply to the excise duty payments for the excise warehouse, performed by the owner of the warehouse or registered consignee, when for the last 3 tax periods the excise duty amount payable exceeds EUR 15 thousand.
In the above mentioned case, the advance payment of excise duties will have to be paid until the 15th day of the current tax period. The advance payment will have to amount to 1/3 average payable excise duty amount that had to be declared for 3 previous tax periods.
The remaining amount of excise duties, i.e. the difference between the actual amount payable and the advance payment, will have to be paid before the 15th day of the following month.
Law on Amending Art. 10 and 12 of the Law on Excise Duties, No XII-2152 dated 10 December 2015.
The amendments establish a consistent increase of the excise duty on all alcoholic beverages and ethanol within three years starting from 1 March 2016: excise duty rates on beer, all kind of wines and other fermented beverages and intermediate products excise will be increased by 8% each year and excise duty on ethanol will be increased by 2.5% each year.
Amendments also determine an increase of excise duty on tobacco products as of 1 March 2016. Excise duty on specific element of the cigarettes will be increased from EUR 45.08 to EUR 50.68 and excise duty on cigars and cigarillos will be increased from EUR 28.09 to EUR 29.54 per kg.
Amendment to the Law on Excise Duty No XII-2145.
Starting from 1 January 2016 the Government decided to increase the minimum monthly wage to EUR 350 and minimum hourly wage to EUR 2.13.
Due to the increase of the minimum monthly wage, HIC payable by self-insured individuals were increased to EUR 31.50 per month (i.e. 9% of the minimum monthly wage amount).
Press release issued by the State Social Insurance Fund Board under the Ministry of Social Security and Labour on 15 December 2015 and Resolution of the Government No 1240.
Starting from 1 January 2016 the level of insured income was increased from EUR 434 to EUR 445.
This change influences the calculation of payable social security contributions for individuals carrying out individual activity, members of small partnerships, owners of individual entities, individuals working under copyright agreements (without the employment agreement), etc., due to the fact that the “ceiling” on which the social security contributions should be calculated and paid have changed.
Resolution of the Government regarding Insured income level for current year 2016 No 1354.
Starting from 1 January 2016 the state base pension amount was increased from EUR 104 to EUR 112. The change will influence individuals working under business certificates, since the payable monthly social security contributions will increase from EUR 54 to EUR 56.
Resolution of the Government No 1353 for the amendment of Resolution of the Government No 1206.
According to the amended Law on PIT, starting from 1 January 2016 interest received on non-equity securities and deposits kept in Lithuanian and foreign banks and other credit institutions will be tax exempt provided that securities were acquired or deposit contracts were concluded starting from 1 January 2014 and the total amount of interest received does not exceed EUR 500 in a taxable period. Previously such interest was tax exempt if the total amount of interest received did not exceed EUR 3,000 in a taxable period.
Supplement 1 “List of non-declarable non-taxable income” of form GPM308 was updated. The supplement provides the list of non-taxable income which may not be declared in the individual’s annual tax return for 2015.
On the contrary to the year 2014, interest received on (1) deposits kept in banks and other credit institutions of the EEA member states, (2) non-equity securities and (3) government securities of the member states of the EEA should not be declared if contracts of deposits were concluded/securities were acquired before 31 December 2013.
The Social Security Authority provided payment codes to be used for paying HIC to their budget that previously were payable to the budget of the Tax Authority.
The updated payment codes can be found in the press release issued by the Tax Authority.
Letter No (18.18-31-1)-RM-26757 issued by the Tax Authority on 10 December 2015.
The Lithuanian Tax Authorities provided the updated Commentary on Art. 35 (Obligations of the tax payer) on the Law on PIT where the procedure of the registration of the individual activity is explained.
Letter No (18.18-31-1)-RM-28178 issued by the Tax Authority on 31 December 2015.
Starting from 1 January 2016 a new obligation to provide notifications (form 1147) to the Tax Authority regarding the Lithuanian tax non-residents who are currently working or worked in Lithuania according to the temporary hire out agreements concluded between Lithuanian and foreign legal entities came into force. Notifications have to be submitted in those cases when individuals who are employed abroad are seconded to work in Lithuania for the benefit of a Lithuanian company.
As from 1 January 2016 deadlines for some of the tax payments and tax returns have been aligned:
The Tax Authority has prepared the new rules on provision of information necessary for the implementation of international co-operation commitments due to automatic exchange of information on financial accounts (Common Reporting Standard - CRS).
The rules came into force on 1 January 2016. The first deadline for information provision for the year 2016 is 1 of July 2017.
Press release issued by the Tax Authority on 2 December 2015.
The rules on filling and submitting form FR7011E and its appendixes regarding legal persons’ information about loans granted to natural persons and returned, loans received from natural person and repaid were changed.
In addition, the rules were supplemented with new appendixes FR0711E and FR0711F.
From 2016 legal persons are obliged to submit the information about:
From 1 January 2016 amendments came into force which state that after each tax period companies organising lotteries and gambling must pay to the state budget lottery and gambling taxes calculated either by applying statutory lottery and gambling tax tariff or fixed lottery and gambling tax, by the 15th day of the first month of the subsequent tax period.
Amendments also granted a right to the Tax Authority to receive data indicated in gambling activity permissions, which is necessary for calculating fixed lottery and gambling taxes and other supervision activities.
Amendment to the Law on the Lottery and Gambling Taxes No. XII-2243.
The European Commission published Regulations (EU) No. 2015/2343 and No. 2015/2441 regarding the amendments to the 19th, 27th, 28th, 34th IAS and the 1st, 5th, 7th IFRS amending Regulation (EC) No. 1126/2008.
The main changes related to the preparation of the condensed income statement:
Amendments shall come into force on 1 March 2016.
Order No. VAS-59 approved by the Director of the Authority of Audit and Accounting on 28 December 2015.
The methodologies were updated considering the 5th BAS “Cash flow statement” and the 10th BAS „Income“ applied for the financial statements of 1 January 2016 and subsequent periods.
The methodologies were supplemented with new examples, most explanations of articles were revised and clarified.
Orders No. VAS-60 approved by the Director of the Authority of Audit and Accounting on 28 December 2015 and No. VAS-62 approved on 29 December 2015.
The methodologies were updated considering the 11th BAS “Expenses” applied for the financial statements of 1 January 2016 and subsequent periods.
The main changes:
Order No. VAS-61 approved by the Director of the Authority of Audit and Accounting on 28 December 2015.
The methodologies were updated considering the 29th BAS “Interim financial statements“ applied for the financial statements of 1 January 2016 and subsequent periods.
The main changes:
Order No. VAS-58 approved by the Director of the Authority of Audit and Accounting on 22 December 2015.
The Authority of Audit and Accounting published the book „Business Accounting Standards 2016” which provides the relevant information required for business managers and accountants who seek that accounting of their companies is managed properly and the financial statements present the company’s financial position and results of operations correctly.
Business accounting standards provided in the book will be applied for the financial statements of 1 January of 2016 and subsequent periods.
From 1 January 2016 the amendments allowing gambling using electronic means came into force. From now on the gambling operators, which have a licence, may organise online gambling, provided that:
Amendments also granted powers to the GCA while performing the supervision of the online gambling operators. If illegal activities are noticed, the GCA has the right, for example, to give mandatory orders to a credit or other financial institution to suspend or terminate payments or other financial operations executed by the illegal gambling operator and etc.
Amendment to the Law on Gambling No XII-1734.
A new version of the Law on Prohibition of Unfair Activities by Retail Trade Companies was adopted which expands the rights of the Competition Council related to investigation of unfair commercial activities.
The new wording of the law will come into effect as of 1 May 2016.
The new wording of the Law on Prohibition of Unfair Activities by Retail Trade Companies No. XII-2204.
For more information about the changes please see our newsletter of November 2015, No. 195.
Amendments are aiming to restore proportional shareholder participation while electing the supervisory and management boards and to eliminate the right of the minority shareholders to veto the decisions made by the majority shareholders related to the formation of the boards.
Amendment provides that the entire supervisory board would be subject to election only if the shareholders whose shares carry at least ½ (instead of 1/10) of all votes agree to the election of individual members of the supervisory board.
Draft Law on Companies No XIIP-3847.
On 9 December 2015 the European Union Court of Justice (further – the EUCJ) ruled in case C-595/13 (Fiscale Eenheid X). According to the court, investment companies which invest not in securities but in immovable property, may be treated as “special investment funds“ (provided that such a fund is subject to state supervision). The asset management services of such companies shall be treated as VAT exempt, however, the exemption does not cover the actual management of special immovable property (administration, letting, management of tenancies, and delegation to the other third parties of maintenance works).
On 9 December 2015 the EUCJ ruled in joined cases C-250/14 and C-289/14 (Air Finance-KLM, Hop!-Brit Air SAS), explaining that flight tickets are subject to VAT (the case concerns local flights) even in case the tickets are not used and no refund is granted. Such supply is neither a deposit, nor compensation of harm. Future supply of services are clearly identified, thus they are treated as supplied at the time of the sale of the ticket. The taxable moment arises on the receipt of payment for the ticket.