Value Added Tax

General Information

Tax

Value Added Tax

Main legal act

Law on Value Added Tax

Tax payers

Lithuanian and foreign natural and legal persons who carry out any kind of economic activities in Lithuania. Also undertakings for collective investment that do not have a status of legal person and whose form of activity is an investment fund.

In certain cases even a person who does not carry out economic activity can be treated as a taxpayer.

Subject to tax

VAT is levied on taxable person's supply of services and goods for consideration if such supply according to Law on VAT is considered as made in Lithuania. VAT might be levied and on the acquisition of goods and services for consideration within Lithuania from another member state.

Import VAT is levied on importation of goods if the importation is made in Lithuania.

Tax rates

Standard VAT rate is 21%.

Reduced VAT rates are fixed at 9% and 5%.

Reduced 9% VAT rate is applied:

1. to heating power used for heating residential premises including heating energy transmitted via hot water supply systems), to hot water or to cold water used for preparing hot water and to heating power used for preparing hot water if water is supplied to residential premises.

2. to books and non-periodical information publications (including textbooks, workbooks, encyclopedias, dictionaries, manuals, information leaflets, photo and reproduction albums, children's picture books, drawing and coloring books, printed or manuscript sheet music, maps, layouts and graphics, but excluding calendars, memo books and similar publications);

3. to periodical publications (e.g. newspapers, magazines) excluding publications of erotic and/or violent nature or publications failing to comply with professional ethics, recognised as such by an institution authorised under the law, and printed products in which paid advertising accounts for more than 4/5 of total area of the publication;

4. to services of passenger transport by regular routes established by the Ministry of Transport or an institution authorised by it or by local authorities as well as services of transportation of such passengers‘ luggage;

5. accommodation services supplied according to the procedures prescribed by legal acts governing tourist activities (the reduced rate is valid till 31/12/2022).

Reduced 5% VAT rate is applied:

1. to supply of medicines and medical aid equipment when such supply is made to persons to whom the acquisition costs are compensated in whole or in partial pursuant to the Law on Health Insurance as well as to prescription drugs where the costs of acquisition are not compensated pursuant to the Law on Health Insurance.

2. to technical aids for disabled persons and to repairs of such aids.

0% VAT rate is applied to certain supplies of goods and services.

Tax period

Normally tax period of a legal person is a calendar month and tax period of a natural person is a calendar half-year.

Both legal and natural person have a right to ask for a different tax period. The legal person can ask for a half-year tax period if its turnover from the economic activity did not exceed EUR 60 000 during previous calendar year. Natural person can ask for a tax period of calendar month without any restrictions on the turnover.

In certain cases Lithuanian legal persons and foreign natural and legal persons have a right to ask for a specific tax period (i.e. for a tax period that is neither calendar month nor calendar half-year).

However the tax period is calendar month for all persons (i.e. for Lithuanian legal and natural persons and for foreign legal and natural persons) if those persons acquire goods/services from other states and the obligation to account for VAT arises to the customer according to art. 95 of the Law on Value Added Tax.

Main exemptions

Cases in which supply of goods and services is exempted (without a right of deduction) are determined in art. 20 – 33 of the Law on Value Added Tax.

The following is exempted without the right of deduction (certain conditions might be applied):

supply of goods and services related to healthcare;

supply of social services and related goods;

supply of education and training services;

supply of cultural and sport services;

supply of goods and services by non-profit legal entities;

supply of postal services;

supply of information to the public via radio and television

supply of insurance services,

supply of financial services;

supply of special marks;

betting, gambling and lotteries;

letting, sale and other transfer of immovable property.

The exemption of imported goods from import VAT is provided in art. 34 – 40 of the Law on Value Added Tax.

Cases in which supply of goods and services is exempted (with a right of deduction) are determined in art. 41 – 53 of the Law on Value Added Tax.

The following is exempted with the right of deduction, i.e. 0% VAT rate is applied (certain conditions might be applied) to:

supply of goods when goods are exported from the European Union;

supply of goods when goods are exported from the European Union by passengers;

supply of vessels and aircrafts, chartering and hiring of vessels and aircrafts and certain other transactions related to the vessels and aircrafts;

provisioning of vessels and aircrafts;

supply of transportation services and other related transactions;

supply of insurance and financial services related to the exportation of goods;

supply of goods and services to diplomatic missions, consular posts and international organizations or their representations as well as to the staff of the missions and institutions and their family members;

supply of gold to the system of the European central banks as well as to the European central bank;

supply of goods to another Member State;

supply of goods to the recipients of sponsorship if the goods are transported out of the European Union;

work and processing of movable property if such property is placed under inward processing arrangements;

supply of intermediation services in above mentioned cases;

certain transactions related to international trade.

Registration

Special scheme for small enterprises has been implemented in Lithuania. That means that Lithuanian taxable persons are allowed not to register as VAT payer if their turnover during last 12 calendar months does not exceed EUR 45 000. However it should be noted that if during the last calendar year Lithuanian taxable person has acquired goods from other EU member states and the taxable amount of those goods has exceeded EUR 14 000 or it is foreseen that it will exceed this threshold during current year, then such taxable person is obliged to register as VAT payer even in cases where the annual turnover threshold (EUR 45 000) is not exceeded.

Foreign taxable persons carrying out economic activity in Lithuania are not subject to the above mentioned special scheme. That means that foreign taxable persons have to register as VAT payers from the start of their activities and the turnover of such activities does not have any impact on such obligation.

However there are some exceptions when foreign taxable persons are not obliged to register as VAT payers despite their economic activity in Lithuania:

1) the foreign taxable person supplies in Lithuania only such goods or services which are exempted without a right of deduction;

2) the foreign taxable person supplies only such goods or services which are outside the scope of VAT;

3) the foreign taxable person supplies only such goods or services on which 0% VAT rate is levied (except the cases where 0% VAT rate is levied under art. 41, 49, 53 (1) (1-3), 53 (1) (6-7), 53 (5-6), 53 (10) of the Law on VAT);

4) the foreign taxable person supplies only such goods or services in respect of which the buyer is obliged to charge and pay VAT in Lithuania under art. 95 (2) – (4) of Law on VAT;

5) the foreign taxable person supplies goods under the distance selling scheme and the value of the goods which were brought to Lithuania during the calendar year does not exceed the limit of EUR 35 000 (except the cases where the goods supplied are subject to the excise duties);

6) the foreign taxable person supplies only telecommunications, broadcasting or electronic services under MOSS (is registered as MOSS VAT payer in another EU member state) (valid as of 1st January, 2015).

It should be noted that though in some cases there is no obligation for foreign taxable person to register as VAT payer in Lithuania the VAT on the purchases can be refunded only via VAT deduction (that means that the foreign taxable person has to register). For example, foreign taxable person purchases some goods in Lithuania from Lithuanian taxable person and the Lithuanian VAT is levied on that purchase. Then foreign taxable person supplies those goods as provisions to certain vessel (such supply is taxed at 0% VAT rate under art. 44 of the Law on VAT). According to art. 71 (3) foreign taxable person is not obliged to register however according to art. 117 VAT refund to such person cannot be made under the VAT refund scheme (that means such VAT can only be deducted in the VAT return).

Registration is done via form FR0388 (unofficial translation of the form can be found here). More detailed description of the registration procedure is available here. Please note that in order to register as VAT payer you have to be registered as Lithuanian taxpayer as well (information on registration as taxpayer for legal persons is available here and for natural persons - here).

Please note that in cases where it is foreseen that the economic activity carried out in Lithuania is temporary it is also allowed to carry out VAT obligations and rights (including right of deduction) without registration as VAT payer. In such cases special VAT return form FR0608 is used. However registration as Lithuanian taxpayer is mandatory.

Returns and payments

Return of tax period (calendar month, calendar half-year, other tax period) is form FR0600 (unofficial translation of the form can be found here). It should be submitted not later then 25 days after the end of the tax period. The VAT accounted for a certain tax period should also be paid not later then 25 days after the end of the tax period.

The person who is deregistered from VAT payers' register should submit VAT return for the last tax period not later then 20 days after the deregistration. The person who is under liquidation process should submit the last VAT return prior to the end of the liquidation process. The VAT accounted for in such returns should be paid on the same day as the return is submitted however if the return is not submitted during the specified period then the VAT due must be paid not later then the expiration of the term for submitting the VAT return.

Annual VAT return is form FR0516 (unofficial translation of the form can be found here). This return is normally used for the correction of pro-rata. It must be submitted and the VAT due must be paid not later then the 1st of October of the next year.

Please note that in cases where special VAT return form FR0608 is used (unofficial translation of the form can be found here) the tax period differs depending on the type of obligations. If the form is submitted because of intra-EU acquisition of goods subject to excise duty or of new means of transport then it should be submitted and the tax paid within 5 working days from the day on which the goods where brought to Lithuania. In other cases the form should be submitted and the tax paid by the 25th day of the next month.

VAT declaration FR0600, FR0516, FR0608 forms are provided electronically via the electronic declaration system (EDS).

Other peculiarities

Foreign taxable persons in certain cases have a right to obtain a refund of VAT paid in Lithuania.

The foreign taxable person, established in another Member State, has to submit an electronic refund application via the system provided to him by the Member State of establishment.

The foreign taxable person established outside the European Union has to submit a paper refund application directly to the Vilnius County State Tax Inspectorate. Currently only taxable persons established in Armenia, Iceland, Norway, Canada, Switzerland and Turkey have a right to ask for a refund of VAT. However those restrictions are not applied if the foreign taxable person established outside the European Union is using e-commerce scheme.

From the 1st of January 2018 taxable persons established in the countries which are members of OECD (Organization for Economic Co-operation and Development), in which there is no VAT (or a tax identical to it) are entitled to apply for VAT paid in Lithuania refund. However, this provision applies for VAT paid on purchases from 1 January 2018.

In the Law on VAT are specified such cases where the buyer is liable to withhold and pay VAT on goods or services supplied:

1) the VAT calculated on assets taken over as a contribution in kind or due to reorganization of another VAT registered person;

2) the VAT on a material improvement of a building/structure being transferred, calculated in case of goods supplied referred to in art. 9(4) of Law on VAT;

3) the VAT calculated in case of construction works referred to in art. 7(4) of Law on VAT as it defined in The Republic of Lithuania Law on Construction art. 2(15) (valid from 1st of July, 2015);

4) other cases established by The Government of the Republic of Lithuania or an institution authorized by it where VAT on goods and/ or services supplied is calculated and paid to the state budget by the buyer/ customer of the goods and/ or services provided if the buyer/customer is a VAT payer (e. g. ferrous and non-ferrous metal waste and scrap, used materials and a certain type of wood).

Other information

Binding ruling instrument is available in Lithuania. Lithuania is participating in a test case for private VAT ruling requests relating to cross-border situations (CBR) as well (more information is available here).

Rules for submitting a binding ruling request were adopted by the Order of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania No. VA-105 of 19 October 2011.