When can the tax rates provided for in international treaties for the avoidance of double taxation be applied

When foreign units receive income subject to corporate income tax at source other than through a permanent establishment in Lithuania, and an international treaty for the avoidance of double taxation (hereinafter referred to as “TADT”), concluded and applied between Lithuania and the respective country, provides for a lower tax rate on this type of income, or such income is not subject to tax, then the rules of the respective TADT are applied under Article 4 of Republic of Lithuania Law on Tax Administration.

Forms (FR0021 (DAS-1), FR0021 (DAS-2), FR0023 (DAS-3), FR00254 (DAS-4) are used to apply for exemptions provided for in the respective TADTs. Forms (FR0021 (DAS-1), FR0021 (DAS-2), FR0023 (DAS-3), FR00254 (DAS-4) with rules thereof were approved by Order No 159 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania on 27 June 2001.

Form FR0021 (DAS-1) is used when Lithuanian entities make payments to residents of foreign countries with which a TADT is concluded and applied, and when exemptions provided for in the respective TADT are applied, i.e. a lower tax rate is applied, or no tax is withheld at all.

Form FR0021 (DAS-2) is used when foreign country residents want to recover the amount of tax withheld at source in Lithuania, or part thereof, which was withheld by a Lithuanian entity, where the Lithuanian entity made payments without the foreign country resident filing Form DAS-1 to reduce the tax being withheld, in accordance with the procedure established by the domestic tax laws of Lithuania.

Form FR0023 (DAS-3) is used when foreign country residents want to receive confirmation from the tax authorities of the Republic of Lithuania about income received by him/her, and about taxes withheld or paid at source in the Republic of Lithuania.

Form FR00254 (DAS-4) is used when Lithuanian entities receive income from foreign countries, or in a foreign country with which a TADT is concluded and applied, and want to claim tax benefits under the respective TADT, and ask the tax authorities of Lithuania to confirm that they are residents of Lithuania for the purposes of the respective TADT.

For more information on tax rates provided for in international TADTs, and applied to dividends, interest, royalties, please see here (only in Lithuanian).