Tax & Legal Alert No. 197 (26 01 16)

View this page in: Lietuviškai

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.
 

Reverse-charge VAT mechanism will continue to apply for timber and persons going bankrupt

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.


Input VAT deduction on passenger cars used for driving lessons

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. 


Driving lessons will be exempt from VAT only in certain cases

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).

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Services related to creation and submission of e-invoice are VAT taxable

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.

New Union Customs Code and related regulations

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.

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Advance payments of excise duties

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.


Increased excise duty on alcohol and tobacco products

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.

Tax payment and tax return filing deadlines aligned

As from 1 January 2016 deadlines for some of the tax payments and tax returns have been aligned:

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New rules on provision of information about financial accounts

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.


Changes in provision of information by the legal entities about natural persons’ debts, loans, shareholders contributions and payments to foreign legal entities for the services provided

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: 

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Procedure of the lottery and gambling taxes calculation and payment was specified

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.

Amended European Commission Regulations on International Accounting Standards (IAS) and International Financial Reporting Standards (IFRS)

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.

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Amendments to the 3rd Business Accounting Standard (BAS) „Income Statement“

The main changes related to the preparation of the condensed income statement:

  • Item 29 regarding the presentation of acquired inventories and consumed resources in the income statement was clarified.
  • Item 32 regarding the presentation of depreciation, amortization and impairment of assets in the income statement was clarified.
  • Item 33 regarding the presentation of other expenses in the income statement was changed.

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.


Amendments to the Methodologies of the 5th BAS “Cash flow statement” and the 10th BAS „Income“

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. 


Amendments to the Methodologies of the 11th BAS “Expenses”

The methodologies were updated considering the 11th BAS “Expenses” applied for the financial statements of 1 January 2016 and subsequent periods.

The main changes:

  • Items 13 and 14 regarding the expenses of intermediary transactions and recognition and registration of excise in accounting were explained.
  • The explanation of item 19.1 regarding the assets acquired under financial lease agreements for a period longer than 12 months was updated.

Order No. VAS-61 approved by the Director of the Authority of Audit and Accounting on 28 December 2015.


Amendments to the Methodologies of the 29th BAS „Interim financial statements“

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:

  • The composition of interim financial statements was explained.
  • The provisions regarding the preparation of interim financial statements were explained.
  • Most explanations of articles were revised and clarified.

Order No. VAS-58 approved by the Director of the Authority of Audit and Accounting on 22 December 2015.


The book “Business Accounting Standards 2016”

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.

Management of immovable property fund is VAT exempt

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).   


Flight tickets are subject to VAT even in case they are not used

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.     

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