The latest tax news from Lithuania
Obligations to register as a VAT payer for Lithuanian and foreign persons (article in Lithuanian)
Law on VAT imposes different requirements for Lithuanian and foreign persons concerning the obligation to register as a VAT payer. The Law basically defines three cases when a person, falling under certain additional specifications bears an obligation to be registered as a VAT payer in the Republic of Lithuania: 1) the location of the supply of goods and of the provision of services is the Republic of Lithuania 2) goods are acquired from VAT payers registered in other EU Member States 3) remote trade. It should be remembered that in case of failing to register as a VAT payer and not paying VAT to the budget might cause a risk of penalties and fines, moreover, foreign taxable person might lose a right for VAT refund. Provisions applied to Lithuanian and foreign persons, based on which an obligation to register as a VAT payer in Lithuania arises, are discussed in the first and second parts of the article (in Lithuanian).
VAT issues of the activity of holding companies (article in Lithuanian)
Recently an increasing number of business mergers and business concentration cases are spotted in Lithuania. While the number of unrelated companies increase inside the groups, holding companies are being established, which not only concentrate shares of the group members but also with the help of proactive performance of the companies seek the optimization of effective management and control of the group, also the increase of group profit or the reduction of expenses, etc. All general VAT taxation and VAT deduction rules apply to holding companies based on the activity the holding company is involved in.
VAT taxation of agency activity (article in Lithuanian)
Agency is a common form of business in today’s business world. In a broad sense, agency is defined as any business person acting as an agent between the producer and the end-buyer in the goods or services’ supply chain. Therefore, supermarkets selling food stuffs of different brands to users might also be considered agents. As business develops a number of more complicated agency forms are established in Lithuania, e.g., agents enter into agreements with both parties of the transaction, etc. Despite of the complicated agent involving business schemes, only two mediation forms are established for the purpose of VAT calculation: 1) disclosed agent and 2) undisclosed agent.
Recognition of contributions for the benefit of employees as deductible expenses of limited amount (article in Lithuanian)
Recently tax environment has been rather favourable for the implementation of motivational tools. According to the provisions of the Law on Income Tax contributions for the benefit of employees are considered deductible expenses of limited amounts. The adopted amendments to this law also impose larger possibilities and provide more favourable conditions to deduct motivational expenses from income. The article discusses aspects of the recognition of contributions for the benefit of employees and costs for the benefit of employees as deductible expenses of limited amount.
Reasoning of charging of zero-rate of VAT on goods exported to other EU Member States (article in Lithuanian)
Before Lithuania joined the European Union goods exported to other countries had to undergo customs duty procedures. Export of goods was charged with zero-rate VAT and VAT payers reasoned this tax rate by providing documents confirmed by the customs. After joining the EU the customs control of exported goods to the other EU states was repealed, thus the act of exporting goods from Lithuania to the other EU Member States must be proved differently (by other documents).
