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Lithuania: Vat purposes

Alessandro PasutObligation for travel agents to register for VAT purposes. The travel agents, who supply tourism services for end consumers, which are considered to be supplied in the territory of Lithuania and for which margin scheme is applied, are obliged to register for VAT purposes when the amount of consideration paid by end consumers exceeds the threshold of LTL 155,000. In cases, when a travel agent exceeds the threshold, but does not register for VAT purposes, the VAT amount payable is calculated on the margin of services supplied for which the threshold of obligatory registration was exceeded.

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Lithuania: income threshold

Alessandro PasutThe commentary of the Corporate income tax law regarding the application of a 5% was supplemented. The amended commentary sets forth that, when determining if the income of a taxable period of an entity does not exceed Litas 1 million, the total income of the entity sourced in Lithuania and outside Lithuania has to be calculated.

When an entity performs activities through a permanent establishment in another foreign state, the total income of the Lithuanian entity and income earned abroad through a permanent establishment have to be calculated, except for dividends received.

When this relief is applied to a permanent establishment of a foreign entity in Lithuania, the total income of the foreign entity including income of the permanent establishment earned in Lithuania has to be calculated.

The commentary also explains that income from agricultural activities has also to be calculated by considering income earned through a permanent establishment abroad and income of a foreign entity from agricultural activities earned though a permanent establishment in Lithuania.

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Lithuania: Miscellaneous

Lithuania - flag


Corporate income tax. The Lithuanian Tax Authorities have released some commentaries on the corporate income tax law. One of the commentaries refers to the way how income and expenses related to interest-free loans should be recognized for corporate income tax purposes.
According to the new rule, a company providing interest-free loans to associated parties has to include deemed interest income to its taxable income. Consequently, the company receiving such a loan may attribute the amount of deemed interest expenses to its allowable deductions.

Benefits in kind. The Tax Authorities have published a simplified order of evaluation of benefits in kind deriving from the use of a company car for private purposes. According to the order, this kind of benefits valued as 0.75% of the vehicle’s market price will have to include fuel expenses covered by the company. When a company does not compensate fuel expenses, the benefits in kind should be valued as 0.70% of the vehicle’s market value.

VAT. The Tax Authorities issued an explanation stating that Lithuanian taxable persons have a right to calculate VAT on rent of immovable property located in Lithuania supplied to taxable persons, who are VAT payers irrespective of the place where the purchaser is registered.
As of 1 January 2010, taxable persons are entitled to opt to tax advance payments received for goods/services supplied not later than within 12 months from the date when the contract was signed. In a publication the Tax Authorities explain that advance payments received from foreign taxable persons should be taxed with VAT if the services will be supplied within a period exceeding 12 months.

Collective investment funds. The Tax Authorities explained that despite the fact that a collective investment fund does not have the status of a legal entity in Lithuania, it has to be entered into the register of tax payers if it is planning to perform activities creating an obligation to register for VAT purposes in Lithuania. After registration the collective investment fund will receive a tax payer’s identification number and a VAT number.