Leinonen would like to inform you regarding the obligation for the Company to register for VAT purposes in Lithuania.
VAT registration may be required in the below mentioned cases.
I. The place of supply of goods/services of the transactions performed by the foreign taxable person is Lithuania. Please note that there is no minimum threshold for foreign taxable persons, i.e. VAT registration is required from “the first euro”.
We would like to note that if the foreign taxable person is planning to perform economic activities in Lithuania, it should evaluate if the planned economic activity is subject to VAT. If the economic activity is not subject to VAT, in such case the foreign Company does not have the obligation to register for VAT purposes in Lithuania.
According to provisions of Article 95 of Lithuanian Law on VAT, if a foreign Company does not register for VAT purposes in Lithuania, the buyer (taxable person) has the obligation to calculate and pay the VAT to Lithuanian budget for the goods/services provided by the foreign Company. Furthermore, if the foreign Company has the obligation to register for VAT purposes in Lithuania and does not register, it does not have the right to deduct purchase VAT in Lithuania and the paid purchase VAT cannot be returned via EPRIS system.
Please find below some other examples, when the VAT registration in Lithuania should be seriously considered:
· Foreign Company provides services in Lithuania which are related to real-estate. In such case VAT registration is useful in order to deduct purchase VAT from local suppliers, i.e. Company needs to purchase goods/services from local suppliers to continue its economic activities in Lithuania;
· Foreign Company purchases goods from Lithuanian suppliers, the ownership is transferred in Lithuania and later the purchased goods are supplied to another Member State/ exported outside of EU. In such case the Company would have the obligation to register for VAT purposes in Lithuania and could deduct the purchase VAT from Lithuanian suppliers;
· Foreign Company transports goods from another Member State in order to provide services in Lithuania and later on the transported goods are sold (not returned). In such case the Company would have the obligation to register for VAT purposes in Lithuania and pay the purchase VAT to Lithuanian budget unless the Company could prove that the VAT was paid by the buyer. Furthermore, if the Company does register for VAT purposes in Lithuania, another Member state, from which the goods were transported may apply the reserve rule;
· Foreign Company imports goods which will be sold and transported to another Member State within 7 days. Such imported goods can be exempt from import VAT in Lithuania, if the Company will be registered for VAT purposes in Lithuania.
Please be noted that there are other cases which may require VAT registration, i.e. transfer of own goods, intra-acquisition or supply of goods, etc.
2. Distance sales – if the threshold of EUR 35.000 is exceeded for the goods supplied in Lithuania during a calendar year.
Please be informed that such threshold is applied to online businesses, i.e. online stores, which supply goods to another Member State’s non-taxable persons and the goods are transported by the supplier or on his behalf. After the threshold of EUR 35.000 is exceeded, the Company is obliged to register for VAT purposes in Lithuania and calculate and pay VAT for the goods provided.
We would like to note that Lithuanian VAT payers have certain obligations, such as to fill monthly VAT registers of VAT invoices issued/received, to submit VAT returns and to fill EU sales listings for intra-community supplies of goods/services (if there are any).
If you have any further questions, please do not hesitate to contact us. Leinonen Tax Team can provide expert knowledge and help you with VAT registration procedure, VAT compliance and review and other tax related services.
The information above is prepared by Leinonen Tax Team.
