REPUBLIC OF LITHUANIA

REPUBLIC OF LITHUANIA REPUBLIC OF LITHUANIA LAW ON CHARITY AND SPONSORSHIP Article

1. Objectives of the Law The objective of the Law on Charity and Sponsorship of the Republic of Lithuania shall be to regulate and foster charity and sponsorship in the Republic of Lithuania by establishing cases where the reliefs of state taxes, customs duties and state dues shall apply. Article
2. Objectives of Charity and Sponsorship Charity shall be dispensed in order to: 1) aid and render assistance and free services to individuals for whom it is indispensable: disabled, sick or lonely individuals incapable of work, orphans or children who have lost parental care, large families or families with insufficient means, unemployed, as well as individuals whose income cannot guarantee the minimum standard of living; 2) aid charitable organizations and the Caritas (the Lithuanian women's association) organizations, as well as funds and religious centers which dispense charity to and sponsor individuals indicated in Item 1 of Part 1 of Article 2, and Lithuanian communities in foreign states; 3) aid individuals who have suffered from wars and natural or ecological disasters, epidemics of infections, and help to liquidate the consequences of said disasters and epidemics; and 4) help to find work by establishing working places or requalifying socially-needy individuals who have lost their jobs. Sponsorship shall be provided in order to: 1) promote the programmes of the development of science, culture, education, art, religion, sports, health care or social care and support; 2) promote the programmes of environmental protection and the works of environmental planning; 3) support the programmes of works aimed at the protection and restoration of the monuments of history, nature, architecture, culture and art; and 4) foster other activities and programmes of social utility which are launched by the Government of the Republic of Lithuania. Article
3. Acknowledgment of Charity and Sponsorship The voluntary and not repayable material aid or free rendering of services excluding any material obligation of the donee with regard to the donor thereof, aimed for the purposes specified in Part 1 of Article 2 of this Law shall be recognized as charity. Voluntary material support or free rendering of services provided directly to legal persons and aimed for the purposes specified in part 2 of Article 2 shall be recognized as sponsorship. The agreement on charity or sponsorship may provide for a special promotional obligation by the donee thereof with respect to the donor of charity or sponsor, with the exception of advertising tobacco products and alcoholic beverages. Pursuant to this Law, direct transferring of material valuables to natural persons, with the exception of such transferring carried out by charitable organizations or funds, shall not be recognized as charity. Article
4. Charity Donors and Sponsors The following may be charity donors or sponsors: 1) economic entities of the Republic of Lithuania which have or have not the rights of a legal person; 2) public organizations and religious centers or communities, provided such actions do not come counter to their bylaws and regulations; 3) charitable organizations and funds whose main types of activities are congruent with the objectives set forth in Article 2 and which have been registered in accordance with the procedure established by the Government of the Republic of Lithuania; 4) citizens of the Republic of Lithuania; and 5) foreign legal and natural persons, as well as international organizations. In the Republic of Lithuania, foreign legal and natural persons, as well as international organizations may dispense charity and sponsor individuals both directly or via third parties, as well as via bodies of power of their respective states, provided such activities comply with the objectives set forth in Article
5. Political parties shall not be recognized as charity donors or sponsors and reliefs provided for in this Law shall not be applicable with respect to them. Article
6. Recipients of Charity and Sponsorship Donees of charity shall be the institutions of social care and support, health care, charitable organizations and funds, societies as well as enterprises, institutions and organizations of the disabled, as well as orthopedic and prosthetic enterprises which are established by and financed from the resources of the State, local governments, public organizations and private individuals. Donees of sponsorship shall be institutions of science and studies, institutions and organizations of health care, education, science, culture, sports, environmental protection, and the publications thereof; the object of sponsoring may also be governmental or local government programmes on education, science, culture, environmental protection and sports. According to this Law, political parties and commercial organizations may not be donees of charity or sponsorship. Article
7. Ways of Dispensing Charity and Sponsoring Charity donors and sponsors shall dispense charity and sponsor by: 1) transferring of money or material values to the donee of charity or sponsorship in accordance with the procedure set forth in the Law on the Notary Office of the Republic of Lithuania; 2) rendering free services to the donee of charity or sponsorship; and 3) providing the property of which they are holders to the disposal of the donee of charity or sponsorship according to an operating agreement. Charity and sponsoring may also be dispensed through other means which are not prohibited by the laws of the Republic of Lithuania. Charity and sponsoring shall be not repayable and based on mutual understanding. Article
8. Object of Charity and Sponsoring The object of charity and sponsorship shall be the donor's or sponsor's: 1) received income; 2) acquired or held property; 3) products which are manufactured or acquired by his or her funds; and 4) rendered services. Article
9. Freedom of Charity and Sponsorship Donors and sponsors of charity shall themselves choose the donee of charity and sponsorship and the ways of dispensation. State institutions and their officers must guarantee the freedom of charity and sponsorship. Officers of state institutions as well as legal and natural persons who interfere with the dispensation of charity and sponsorship shall be liable under laws of the Republic of Lithuania. Article
10. Accounting of Charity and Sponsorship Economic entities which dispense charity and sponsorship in the Republic of Lithuania as well as public or charitable organizations and religious communities must manage the accounting of donees of charity and sponsorship to whom they donate money and material values: specifying in it the concrete donees of charity and sponsorship, amount and purpose of donations. Each quarter donors and sponsors of charity must furnish the information in the established manner to state institutions which exercise the control of financial activities and manage accountability. The accounting of money and material values which are received as charity or sponsorship must be managed by all legal persons and enterprises which do not have the rights of the legal person. The information about the received charity and sponsorship must be furnished to state institutions which exercise the control of financial activities and manage accountability according to the established unified manner. Upon withholding the information about money and material values which are received as charity or sponsorship, profit (income) tax shall be imposed on that part of funds regardless of the donee of charity or sponsorship. Funds and material values transferred by donors or sponsors of charity must be used properly only for purposes of charity and sponsorship. The concrete purposes of utilization may be set by the donor or sponsor of charity himself upon the transfer of money and material values. Funds and material values which are received as charity or sponsorship and used not properly may be confiscated on the court's ruling and transferred to state charitable funds. Charitable organizations and funds shall have the right to use up to 20 percent of funds collected for charity to develop activities of these organizations and cover the expenditure of administrating if the donor of charity is not against it and does not set the concrete purpose and way of using the donation. Article
11. Stimulation of Charity and Sponsorship Expenditure of donors or sponsors made on charity and sponsorship and confirmed by documents shall be included into actual expenses upon the calculation of taxable profit and income, and taxable profit of legal persons or taxable income of natural persons shall be reduced one more time by the amount of expenditure which is made on charity or sponsorship if it does not exceed 20 percent of taxable profit (income). Funds allocated for charity or sponsorship which exceed 20 percent of taxable profit (income) shall be taxed in the established procedure. Maximum tax exempt expenditure on charity may be increased as much as maximum tax exempt expenditure on sponsorship is reduced. Income of charitable organizations and funds, societies and unions of disabled persons and their enterprises which are used for the purposes of charity or sponsorship shall be exempt from profit (income) taxes regardless of the amount of income. Privileges provided in the second part of this Article shall not be granted to charity or sponsorship which is dispensed to legal persons of foreign states, with the exception of those cases when such charity or sponsorship is dispensed through international charitable organizations or Lithuanian communities abroad. Material values allocated for charity or sponsorship which are imported into the Republic of Lithuania or exported from it, shall be exempt from customs duty. The procedure of exporting material values which are exported from the Republic of Lithuania and allocated for charity shall be established by the Government of the Republic of Lithuania. Persons who allocate property as a gift or otherwise transfer it to the donees of charity or sponsorship shall be exempt from state duty. Article
12. Control of Charity and Sponsorship The legality of funds which are allocated and received for charity and sponsorship shall be controlled by state tax inspectorates as far as the application of tax privileges is concerned, and the legality of the utilization of received funds shall be controlled by the State Control Department. Disputes concerning the recognition of charity or sponsorship shall be settled in the court. Upon the establishment of concrete purposes and ways of the utilization of aid or sponsorship donors of charity or sponsorship shall have the right to acquire information and control themselves how charitable organizations or funds fulfill the set conditions. Article
13. Publication of Charity and Sponsorship Charitable organizations and funds shall have the right to announce freely the aims, donees and objects through the mass media. Information about the donors and sponsors of charity shall be furnished through the mass media and to other legal and natural persons who are not specified in Article 9 of this Law only upon the consent of the donor or sponsor of charity. Article
14. Conditions of the Entry into Force of the Law on Charity and Sponsorship of the Republic of Lithuania The Law on Charity and Sponsorship of the Republic of Lithuania shall enter into force from 1 July 1993 upon the establishment by the Government of the Republic of Lithuania the procedure and conditions of the foundation and registration of charitable organizations and funds as well as upon the establishment of the procedure of sanitary and hygienic control of material values which are exported from the Republic of Lithuania and received shipments which are allocated for charity. The Law on Charity and Sponsorship shall be valid until 31 December 1995 except as otherwise provided by the Seimas of the Republic of Lithuania. I promulgate this Law adopted by the Seimas of the Republic of Lithuania. ALGIRDAS BRAZAUSKAS President of the Republic Vilnius 4 June 1993 No.I-172