Information about case No. A-315-556/2020

Information about case No. A-315-556/2020 regarding the right to 0 % VAT rate

We would like to inform about the case No. A-315-556/2020 issued on 1 April 2020 of Supreme Administrative Court of Lithuania (further – the Court) in which the Court set out the arguments on the basis of which the right to 0 % VAT rate of the company was denied.

We would like to note that the mentioned case once again shows that the Lithuanian Tax Authority while assessing the application of 0% VAT rate, evaluates not only the formal documents, but also reviews the circumstances of the transaction.

Please find below the main arguments of the case No. A-315-556/2020:

–       the director of the company did not explain in any way how he found the buyers, also could not provide any contact details, orders or other facts of correspondence with buyers.

–       Estonian tax administrator provided information that Estonian companies, i.e. the buyers of the company are not found, do not carry out any economic activities, they do not own any storage facilities in Estonia.

–       Latvian carriers did not submit transport documents and could not indicate other circumstances confirming the fact of transport of goods.


–       Consignment notes are in most cases incomplete: the name of the carrier’s driver, the loading and unloading times, the quantity of goods and other relevant information when transporting the goods are not indicated.


Taking into consideration the above-mentioned arguments, the Court agreed that the Lithuanian tax administrator based on all direct and indirect evidence had denied the right of the company to apply 0 % VAT rate. Thus, the standard VAT rate was applied to the transactions of the company.


Therefore, the circumstances of the mentioned case once again demonstrate that the formal application of criteria for 0% VAT rate is not sufficient. As applying 0% VAT rate, the Lithuanian Tax Authority is assessing not only the quality of the documents collected but also the circumstances of the supply of goods of the company. Therefore, the taxpayer must act responsibly in concluding transactions applying 0% VAT rate and be interested in business partners.


Should you have any questions, please do not hesitate to contact Leinonen Tax team and we would be happy to provide you with more information about the mentioned case which may be relevant to Your business.


The information above was prepared by the Leinonen tax team.

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