Tax and Legal Alert

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.

NO. 223 (26 April 2018)

 In this issue:

  • Excise Duties
  • Customs
  • Personal Income Tax and Social Insurance Tax
  • Tax Case-Law

Excise Duties  

As of 1 of March weighted average retail price for a pack of 20 cigarettes is EUR 3,18

Announcement of the Tax Authority No. (18.2-31-2 E) RM-7224 dated 2 March 2018.



As of 10 April territoriality principle of submission of import and export (re-export) declarations and other electronic information applies, i.e. according to the location that the declared goods were provided to customs office

Order No 1B-273 of General Director of Customs Department dated 5 April 2018.


Personal Income Tax and Social Insurance Tax

Rules on filing Annual Personal Income Tax Return and its annexes were amended

In accordance with amended Rules on filing Personal Income Tax Return and its annexes, when Lithuanian residents are finally departing from Lithuania in 2018 and receive income from abroad which are exempt from taxation in Lithuania in order to avoid double taxation of such income, it must be reported in Annex P “Taxable Income”. Digit “1” should be stated instead of the tax rate applicable to such income. Starting from 2018 such income should be included in the total income amount received when applying the tax exempt amount.

Other changes of filing the tax return form and its annexes are directly related to the amendments of the Law on Personal Income Tax which came into force on 1 January 2018.

Order No. VA-21 of the Head of the Tax Authority dated 01 March 2018. 


Tax Case-Law

The Tax Authority must prove the basis of restriction of the right to deduct VAT

The Tax Authority decided that transactions between the applicant and other companies (sellers), did not occur and the content of the transactions was not as indicated on the VAT invoices. The Tax Authority argued that, in the present case, the right to deduct must be limited because the taxpayer participated in VAT fraud transactions. The court ruled that the burden of proof on the applicant's participation in a transaction involving VAT fraud lies with the Tax Authority.

In the case, the court relied on the circumstances established in the pre-trial investigation that the applicant concluded with the other company contracts for the provision of accounting services, however in the original documents the transactions were incorrectly recorded as transport services. The applicant explained that VAT invoices were issued with a technical error without changing the content of the service. The court ruled that the Tax Authority had incorrectly identified the facts, assessed the evidence not related to the tax case and, therefore, the decision of the Tax Administrator was unlawful.

In the same case, there was a question whether the applicant was actually provided with advertising services for which a VAT invoice was issued. The court ruled that the facts confirm that the applicant knew or ought to have known that his transactions had been concluded with contractors related to VAT fraud, since accounting of the applicant and suppliers was managed by the same person, advertising services were purchased from all these companies headed by the same person, there were factual circumstances indicating the possibility of illegal actions performed by suppliers (and in some cases, already proved).

Ruling of the Supreme Administrative Court of Lithuania No eA-2812-602/2018 dated 25 January 2018.

Custom confirmation on the fact of departure of goods is sufficient proof to justify the transfer of goods outside the EU territory

The Tax Authority in its decision ordered the applicant to pay VAT and related amounts for deliveries made in 2009-2010 which were charged by the applicant with zero-rated VAT. The Tax Authority based its decision on the sole fact that the applicant did not provide evidence that the goods were physically exported outside the territory of the EU. The court ruled that in accordance with Art. 56 Part 1 of the VAT Law, the proper initial and principal proof that the goods had left the territory of the EU is the confirmation of the competent export customs office of the fact of the departure of the goods. Thus, it should be considered that the applicant complied with the obligation to provide proof of delivery of the goods.

Ruling of the Supreme Administrative Court of Lithuania No eA-3010-438/2018 dated 13 February 2018.

The period to refund tax overpayments may be calculated from the date of submission of adjusted VAT returns

It was identified in the case that on 30 December 2015 the applicant submitted adjusted VAT returns concerning amounts of VAT refundable for tax periods starting from 1 August 2010 to 30 September 2010, and in January 2016 submitted a request for VAT refund. The Tax Authority refused to refund the overpayment, as in order to recover the declared overpayment of the VAT, the applicant was obliged to request a refund of the tax overpayment in 2015.

Paragraph 13 of Art. 87 of the Law on Tax Administration provides that if the taxpayer performs an action indicating that he is aware of the existence of a tax overpayment before the application and seeks to recover it (set off), the five-year period shall be calculated from the day the action was performed. The court ruled that the action of the applicant - the submission of adjusted VAT returns, in which the refundable (deductible) VAT overpayment is indicated, undeniably confirms that the applicant was aware of the existence of a tax overpayment, and, therefore, the period for which the applicant may ask for a refund of VAT must be calculated from 30 December 2015.

Ruling of the Supreme Administrative Court of Lithuania No eA-619-442/2018 dated 7 March 2018.

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