Accounting in Lithuania is regulated according to the following legal acts:
• Accounting Law of the Republic of Lithuania*;
• Business Accounting Standards or International Accounting Standards;
• Law on Company Financial Statements of the Republic of Lithuania;
• other legislation governing accounting and financial statements.
Both Business Accounting Standards and International Accounting Standards are acceptable for financial reporting. There are certain companies (e.g. insurance, brokerage companies) having obligation to apply International Accounting Standards, other companies may choose which standards to apply for the reporting.
The head of an entity has to approve an accounting policy taking into consideration specific business conditions, type of business, and invoking the Accounting Standards. Accounting policy shall comprise accounting principles, accounting methods and rules for handling an entity’s accounting, as well as compiling and presenting financial statements.
ACCOUNTING OF THE COMPANIES MUST BE HANDLED BY:
• employed chief accountant (accountant) or
• a company providing accounting services according to an agreement or
• a person providing accounting services individually.
In most cases accounting may not be handled by the head of a company himself/herself.
Employed accountant, a company or a person providing accounting services is responsible for accuracy of accounting entries.
All accounting records shall be supported by accounting documents (invoices, cheques, accounting statement, expense reports etc.). Requirements of accounting documents are specified in Art. 13 of Accounting Law of the Republic of Lithuania. Accounting documents shall be archived for 10 years, some payroll documentation must be archived for 50 years.
In order to prepare accurate financial statements both assets and liabilities shall be inventoried at least once a year but no later than at the end of fiscal year before financial statements are prepared.
ANNUAL FINANCIAL STATEMENT
Fiscal year starts on any month of a calendar year but must have twelve consecutive months at the end of which accounting books are closed and financial statements are prepared. Fiscal year may be changed not more than once per 5 years (exception, if a new fiscal year matches a calendar year).
Tax year for Corporate Income Tax does not automatically matches Fiscal year (if fiscal year does not match calendar year). Therefore, the Company which would like to have Tax year not matching calendar year, must submit request to the Lithuanian Tax Authority and indicate the reasons of change.
The set of annual financial statement depends on the Company’s size.
The Company is considered to be a very small enterprise if at least two indicators do not exceed the following limits on the last day of financial year:
• net turnover during the reporting year – EUR 700.000;
• the value of the assets specified in the balance sheet – EUR 350.000;
• average number of payroll workers during the reporting year – 10 persons.
The Company is considered to be a small enterprise if at least two indicators do not exceed the following limits on the last day of financial year:
• net turnover during the reporting year – EUR 8 million;
• the value of the assets specified in the balance sheet – EUR 4 million;
• average number of payroll workers during the reporting year – 50 persons.
The Company is considered to be a medium sized enterprise if at least two indicators do not exceed the following limits on the last day of financial year:
• net turnover during the reporting year – EUR 40 million;
• the value of the assets specified in the balance sheet – EUR 20 million;
• average number of payroll workers during the reporting year – 250 persons.
The Company is considered to be a large sized enterprise if at least two indicators exceed a medium sized enterprise’s indicators limits on the last day of financial year.
Very small-sized enterprises shall prepare:
• Short Balance Sheet;
• Short Profit (Loss) Account.
Small-sized enterprises’ annual financial reporting package consist of:
• Balance Sheet or Short Balance Sheet;
• Profit (Loss) Account;
• Explanatory Notes.
Medium and large-sized entities are obliged to prepare the following set of annual reports:
• Financial Reports
Profit (Loss) Account;
Cash Flow Statement;
Statement of Changes in Equity;
• Annual report (description of highlights and accomplishments for the fiscal year and future plans).
A package of financial statements shall be prepared, signed by manager and accountant and approved by shareholders within 4 months after the end of financial year. A package of financial statements shall be submitted to the Register of Legal Entities within 30 days after the approval.
Annual financial reports must be audited if at least the following two indicators are exceeded on the last day of the financial year:
• net turnover during the reporting financial year – EUR 3,5 million;
• the total value of assets specified in the balance sheet – EUR 1,8 million;
• average annual number of payroll workers during the reporting financial year – 50 persons.
PROFIT DISTRIBUTION AND DIVIDENDS
Profit distribution can be performed within 4 months after the end of financial year together with approval of annual financial statements.
Dividends can be allocated and paid for shorter period than financial year.
In this case:
• interim financial statement should be prepared, approved by the General Meeting of Shareholders and submitted to the Register of Legal Entities,
• financial statement must be audited if audit is required.
The General Meeting of Shareholders may not adopt a decision to allocate and pay dividends if at least one of the following conditions is met:
• the Company has unfulfilled expired obligations;
• the aggregate amount of profit (loss) of the reporting financial year available for appropriation is negative (losses have been incurred);
• the equity capital of the Company is lower or upon payment of dividends would become lower than the aggregate amount of the authorized capital of the Company, the mandatory reserve, the revaluation reserve and the reserve for own shares of the Company.
Art. 60 of the Law on Companies indicates terms and conditions of paying of dividends:
• the Company must pay the allocated dividends within one month from the day of adoption of a decision on profit appropriation;
• payment of dividends in advance shall be prohibited;
• the Company shall pay the dividends in cash;
• persons who were the shareholders of the Company at the close of the day when the General Meeting of Shareholders declared the dividends shall be entitled to dividends.
STANDARD ACCOUNTING DATA FILE (I.SAF-T)
The State Tax Inspectorate is developing a smart tax administration system and taxpayers are obliged to provide to the State Tax Inspectorate with more information on their activity by preparing Standard Accounting Data file (SAF-T).
Starting from 2019 if the sales revenue exceeds EUR 300 000 the accounting data must be ready to be submitted.
The Companies are obliged to submit SAF-T upon the request of the State Tax Inspectorate. SAF-T contains the entity’s accounting data of the reporting period exported from the entity’s accounting system covering the respective period. It signifies that accounting systems used by the Companies must have possibility to export data from the current company’s chart of accounts to the standard chart of accounts approved by the State Tax Inspectorate.