Tax & Legal Alert No. 214 (21 06 2017)

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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.

Individuals registered for VAT purposes may issue and receive e-invoices on i.SAF

The announcement of the Tax Authority dated 24 May 2017.

VAT and excise duties for road transport fuel are refunded to diplomatic staff of the French Embassy in Lithuania within the limit of 200 liters

Order No. 1K-188 of the Minister of Finance dated 17 May 2017.

Proposal to treat expenditure for health and wellness improvement as deductible

Draft Law amending the Article 17 of the CIT Law No. XIIIP-548

The filing rules of the Dividend income tax return were amended

Order No. VA-38 of the Head of the Tax Authority dated 9 May 2017.

The filing rules of the annual reports on sponsorship received, its use, and on sponsorship provided were amended

Order No. VA-40 of the Head of the Tax Authority dated 12 May 2017.

Updated rules regarding the registration/de-registration with the Tax Authority and application form for the individuals’ registration with the Tax Authority

The announcement of the Tax Authority dated 11 May 2017.

Updated rules on filing of the annual non-resident‘s tax return (form GPM309) due to the change in formula for calculating the applicable tax exempt amount

The announcement of the Tax Authority dated 19 May 2017.

Updated Commentary on Art. 2 Part 35 of the Law on PIT regarding the updated concept in respect the attribution of individual activity to independent professions

The announcement of the Tax Authority dated 29 May 2017.

Amendments to the procedure for calculation of land tax for 2017 and 2018

Letter No (32.42-31-1E)-RM-14251 issued by the Tax Authority dated 28 April 2017.

Tax arrears in a foreign country may be covered by a tax payer's tax overpayments from the Lithuanian state budget

A dispute arose whether the Tax Authority was entitled to transfer a taxpayer's overpayments to the German competent authority‘s account in order to cover his tax arrears in Germany. The Court decided that in the case of forced recovery of tax arrears, the Tax Authority has the right to dispose of a taxpayer's existing tax overpayment, which is located in the state budget accounts, and allow to offset it in order to cover the tax payer‘s tax arrears abroad.

Ruling of the Supreme Administrative Court of Lithuania No. eA-331-438/2017 dated 18 May 2017.

Tax arrears of a deceased individual have to be paid by heirs in accordance with the procedure of the Civil Code

The Tax Authority performed a tax inspection after death of an individual and decided to calculate tax arrears of the deceased. This decision was made against an heir of the deceased taxpayer, establishing an obligation to pay the tax arrears.

The court decided that the tax obligation generally does not expire after an individual’s death, it must be carried out by heirs of the deceased taxpayer. However, the Tax Authority has not entitled to make an administrative decision on transferring the tax arrears of the deceased taxpayer to his heirs, because tax liabilities of a deceased taxpayer which were not performed have to be performed by his or her heirs in accordance with the procedure established in the Civil Code.

Ruling of the Supreme Administrative Court of Lithuania No. eA-396-602/2017 dated 18 May 2017.

Providing restaurant and entertainment services to limited public for consideration by educational institutions may be exempt from VAT

The European Union Court of Justice (EUCJ) explained that restaurant and theatrical performance activities/services provided by students of a higher education for consideration and as part of their education to third parties may be regarded as supplies ‘closely related’ to the principal supply of education and thus,  exempt from VAT. This interpretation would apply provided that the services (i) are supplied by an eligible institution, (ii) are essential to the students’ education, and (iii)  its purpose is not to obtain additional income for that institution by carrying on business in direct competition with businesses whose supplies are liable to VAT.

Judgment of the European Union Court of Justice in case No. C-699/15 (Brockenhurst College) dated 4 May 2017.

An honest buyer is entitled to apply the margin scheme for VAT calculation, even if the supplier did not apply the margin scheme

The Court of the Republic of Lithuania appealed to the EUCJ for a preliminary ruling in proceedings between a Lithuanian company and the Lithuanian Tax Authority concerning the authority’s refusal to grant the Lithuanian company a right to apply the margin scheme when calculating VAT. The Lithuanian company applied the margin scheme in relation to the sale of second-hand vehicles acquired from a Danish undertaking. The EUCJ decided that competent authorities of a Member State are not entitled to deny a taxable person the right to apply the margin scheme, if he received an invoice that includes references relating to the margin scheme, even if it is apparent from a subsequent check carried out by those authorities that the taxable person supplying the second-hand goods had not actually applied that scheme to the supply of the goods. This treatment should be applied, only if the competent authorities did not establish that the taxable person did not act in good faith or did not take every reasonable measure in his power to be sure that the transaction carried out does not result in his participation in tax fraud.

Judgment of the European Union Court of Justice in case No. C-624/15 (Litdana UAB) dated 4 May 2017.

Labour Code: salaries will not grow, the amount of painful disputes - will

More information here.

Business as usual is illegal, and dividends at risk

More information here.

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