Tax & Legal Alert No. 213 (16 05 2017)

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.

Consignment notes data can be submitted by another transportation participant at i.VAZ subsystem

Amendment of definition “creator of a transport document“ to Rules on the submission of data on consignment notes and other transportation documents to the Tax Authority (hereinafter – Rules) allows consignment notes data to be submitted to i.VAZ subsystem not only by a sender of cargo but also by another person participating in a transaction without additional authorisation at i.MAS system by a sender.

i.VAZ subsystem also provides the possibility to deactivate function that allows any person to submit consignment note. 

The amendment to Rules can be accessed here

Remuneration for resale of art work and original manuscript – not subject to VAT

Letter No (18.2-31-2 E) RM-4122 issued by the Tax Authority on 14 February 2017.

Official Commentary on the VAT Law supplemented with provisions of Regulation regarding services connected with immovable property

The official Commentary on the VAT Law is supplemented with provisions of Regulation No 1042/2013, however, provides only brief explanations. Therefore, attention to Explanatory Notes prepared by the European Commission might be paid. In case ruling regarding VAT treatment of services was obtained from the Tax Authority before Regulation came into force, it is recommended to review explanation received and assess its compliance with Regulation and Explanatory Notes.

Letter No (18.2-31-2 E) RM-4368 issued by the Tax Authority on 17 February 2017.

Explanatory Notes of the European Commission.

Only fuel transported in standard tanks installed by a manufacturer of a vehicle is exempted from Excise Duty

Order No 264 of the Government of the Republic of Lithuania dated 12 April 2017.

New definitions related to application of Excise Duty procedures introduced: Customs Simplifications and Business Continuity Procedure

Letter No (18.2-31-2 E) RM-3094 issued by the Tax Authority on 2 February 2017.

Letter No (18.2-31-2 E) RM-3096  issued by the Tax Authority on 2 February 2017.

Proposal  to amend the CIT relief for companies established in FEZ

The Lithuanian Parliament agreed on amendments to the Law on Free Economic Zones (FEZ) which aim to not only improve the existing FEZ regulations but also to create a more attractive investment environment in Lithuania.

It is also proposed to amend Article 58 Part 16 Point 1 of the Law on Corporate Income Tax (CIT) by establishing new procedures on CIT relief application. Based on the amendment proposed, companies registered in FEZ and meeting certain criteria would be released from CIT payment for the first 10 years of activities (currently - 6 years) and for the next 6 years (currently – 10 years) would be enabled to pay CIT at the standard rate reduced by 50 percent.

Moreover, it is also planned to abolish the list of activities allowed and forbidden to be carried out in FEZ. The existing list limits the applicability of the relief and does not allow some investors to enjoy benefits of FEZ as their activities are out of scope of the list.  The above listed amendments will be discussed again at the Parliament.

Amendment to Article 58 of the CIT Law No. XIIIP-455.

For legal entities calculating advance CIT according to historic liability – preliminary Advance CIT returns

It should be noted that as of 1 January 2017 the filing and payment rules of advance CIT have been amended. The amendments are explained in more detail in “Tax and Legal Alert” of August 2016.

For small companies - amendments to the rules on annual CIT return filing

Order No. VA – 18 of the Head of the Tax Authority dated 8 February 2017. 

Receiving certificate on income received and tax paid in Lithuania became easier

Tax Authority simplified a procedure of obtaining a certificate on income received and tax paid in Lithuania. Starting from 1 March 2017, an individual is allowed to submit the request to issue the certificate via ManoVMI system. The certificate should be provided to an individual within 5 business days via the post (if the hard copy is necessary).

Updated Order No VA-50 of the Head of the Tax Authority valid from 1 March 2017.

Updated publication for individuals acquiring business certificates

The announcement of the Tax Authority dated 20 March 2017.

Updated publication “Income taxation of the Lithuanian non-residents”

The announcement of the Tax Authority dated 29 March 2017.

Updated factsheet “Individual income taxation rules starting from 1 January 2017”

The announcement  of the Tax Authority dated 3 February 2017.

Amendments to the Methodologies of the 6th Business Accounting Standard (BAS) “Explanatory notes”

The methodologies were updated considering the 6th BAS “Explanatory notes” applied for the financial statements of 1 January 2016 and subsequent periods.

Order No V2-1 approved by the Director of the Authority of Audit, Accounting, Property Valuation and Insolvency Management on 15 February 2017.

The fact of earlier domain registration does not provide additional rights, if the domain was not used in activities

Rights of users of business indicators (logos, websites, various types and nature of advertising and other similar measures) have to be protected if these rights appeared earlier than rights challenged to the domain. In case a person who was the first to register a domain does not use it in his activities, the fact of domain registration does not grant additional rights against other users of a domain name. When unfair actions of registration and later use of a domain are determined, registration of a domain could be cancelled in order to protect the rights of initial users.

Ruling of the Supreme Court of Lithuania No e3K-3-68-469/2017 dated 1 March 2017.

Refusal to perform the contract – not necessarily an infringement by the general manager

General manager is protected from civil liability by the business decision making rule. Civil liability to the general manager is applied not for business failure but for a decision that is not in compliance with fiduciary duties and (or) misuse of powers. Therefore, if a company refuses to perform a contract because the general manager decides that such a strategy best suits the company’s interests or it is impossible to objectively perform the contract, it does not mean that the general manager violated its statutory and (or) fiduciary duties to the company.

Ruling of the Supreme Court of Lithuania No. e3K-3-32-421/2017 dated 3 February 2017.

Upon termination of services agreement, service provider must be compensated for loss incurred

The Supreme Court of Lithuania stated that despite the fact that a client has the right to terminate service agreement at any time, a service provider must be informed and the balance of interests of service provider and recipient of services must be ensured. Client has to pay the part of service cost proportional to services provided until the termination and to compensate other reasonable costs experienced by a service provider while executing the contract until notification on the termination.

Ruling of the Supreme Court of Lithuania No. 3K-3-16-969/2017 dated 9 February 2017.

Property rights of factoring reserve were clarified

Ruling of the Supreme Court of Lithuania No e3K-3-105-219/2017 dated 2 March 2017.

Powers of acting general manager explained

Ruling of the Supreme Court of Lithuania No. 3K-3-31-378/2017 dated 9 February 2017.

The right to deduct VAT on formal transactions is denied, if supply of goods did not take place

A dispute arose whether an agent had the right to deduct input VAT when purchasers took goods directly from sellers. The agent paid to sellers via bank transfer only after purchasers take over goods. The Court ruled that supply of goods did not take place, i.e. title to goods was not transferred to the agent as the transfer of title to goods to the agent de facto occurs at the same time when purchasers are entitled actually to dispose the goods. Therefore, the exercise of the agent‘s right to deduct input VAT is limited.

Ruling of the Supreme Administrative Court of Lithuania No eA-230-438/2017 dated 20 April 2017.

Registration with VIES system is not a substantive condition to exempt intra-Community supplies from VAT

The European Union Court of Justice (EUCJ) analysed the question whether registration in the VAT Information Exchange System (hereinafter - VIES) is necessary to exempt intra-Community supplies from VAT.

The EUCJ stated that requirement for a purchaser to obtain VAT number valid for intra-Community transactions and for such VAT number to be included in VIES are not essential for transactions to be exempted from VAT. These are formal requirements which cannot deny supplier’s entitlement to exempt supplies from VAT in case the substantive conditions outlined in VAT Directive for an intra-Community supply are satisfied.

Judgment of the European Union Court of Justice in case No C-21/16 (Euro Tyre) dated 9 February 2017.

Provisions of VAT Directive regarding ‘certain cultural services’ must be interpreted as not being of direct effect

The EUCJ analysed whether the requirement set in VAT Directive to exempt ‘certain cultural services’ from VAT must be interpreted as being of direct effect, so that in the absence of national provisions transposed it may be applied directly.

The EUCJ stated that the EU legislation exempting ‘certain cultural services’ gives the Member State a discretion to determine the exempted services, and cannot be interpreted being of direct effect.

Judgment of the European Union Court of Justice in case No C-592/15 (British Film Institute) dated 15 February 2017.

VAT paid to insolvent seller may become purchaser‘s expenses and non-allowable deductions 

The European Union Court of Justice (EUCJ) explained that despite the fact that the seller paid VAT to the budget, a Member State is able to refuse the purchaser’s right to deduct input VAT, if a seller of an asset falsely indicated VAT in an invoice. However, as it might be impossible for a purchaser to claim VAT back from a seller, for these cases the Member States are required to implement a mechanism for VAT payer to be able to refund VAT from the budget. Lithuania has not yet implemented such mechanism.


Should you wish to find a previous issues of Tax & Legal Alert - Lithuania, please visit our archive.

Should you wish to subscribe to Tax & Legal Alert - Lithuania and receive it by email, please send us your contact details to