Article 48

Article 48 Official translation REPUBLIC OF LITHUANIA LAW ON VALUE ADDED TAX 5 March 2002 No IX-751 Vilnius (as amended 15 January 2004 No. IX-1960) CHAPTER I GENERAL PROVISIONS Version of Article 1 applicable until 1 May 2004: Article 1. Purpose of the Law This Law establishes the imposition of the value added tax (hereafter  VAT) and the obligations of taxable persons, VAT payers and other persons incidental to the payment of the tax. Version of Article 1 applicable from 1 May 2004: Article 1. Scope of the Law 1. This Law establishes the imposition of the value added tax (hereafter  VAT) and the obligations of taxable persons, VAT payers and other persons incidental to the payment of the tax. 2. The provisions of this Law have been harmonised with the EU ;legal acts specified in Annex 2 to this Law. Version of Article 2 applicable until 1 May 2004: Article 2. Definitions For the purposes of this Law: 1. "Taxable person" shall mean any taxable person of the Republic of Lithuania or a foreign taxable person. 2. "Consideration" shall mean everything which has been or is to be obtained in money or in any other form as payment for the supply of goods and services from the purchasers/customers and/or third party. Subscription fees and/or donated funds received by non-profit-making legal persons shall not be treated as consideration provided the receipt thereof cannot be linked to the supply for the benefit of a specific person of specific goods or services, i.e. the above-mentioned funds are obtained for financing the general activities of the non-profit-making legal person, linked to representation of the interests of its members and for their benefit. 3. "Disclosed agent" shall mean a taxable person acting as an intermediary in the transaction for the supply of goods or services in the name and for the account of another person.  4. "Employment" shall mean work carried out under the employment contract, also any other activity performed on the basis of legal ties creating the relationship of employer and employee (by agreement as regards remuneration for work , workplace and functions, work discipline, etc), corresponding to those created under the employment contract.  5. "Economic activities" shall mean activities (including all activities of producers, traders and persons supplying services, agricultural activities, fishing activities, mining, activities of the professions, exploitation of tangible and/or intangible property or property rights) seeking to obtain any income (regardless of whether or not the activity is aimed at making a profit). The following activities, however, shall not be considered as economic activities: 1) employment as it is defined in paragraph 4 of this Article; 2) activities of state and local government authorities as they are defined in paragraph 30 of the Article, even where they collect dues, fees or payments in connection with these activities; 3) holding of shares (interests, member shares) and other securities, even though income (interest, dividends, etc) is obtained therefrom on a continuing basis. The said exception shall not cover sale or any other transfer of shares (interests, member shares) even though income accrued from the holding thereof is obtained due to such sale or transfer; 4) keeping of a bank deposit, bank account or bank card account, even though income is obtained therefrom on a continuing basis; 5) transactions carried out on an occasional basis, i.e. not inter-connected transactions giving no grounds to believe that they are or will be carried out on a continuing basis. Where the transactions which are carried out are not uniform, this fact by itself does not give ground to treat them as being carried out on an occasional basis,  where other circumstances give grounds to believe  otherwise. 6. "Capital assets" shall mean tangible property and other objects of the right of ownership which are used in the economic activities of the taxable person (with the exception of natural persons) for a period exceeding one year and the price of acquisition whereof is not less than the price fixed by the taxable person (according to the groups of capital assets listed in Annex 1 to the Law on  Profit Tax). Capital assets acquisition price shall be included in the costs gradually in portions during the period of depreciation or amortisation. For the purposes of this Law, tangible capital assets of a natural person shall be tangible property of the types listed by the Government of the Republic of Lithuania or an institution authorised by it, which are  used in the economic activities of the natural person for a period exceeding one year. 7. "Import VAT " shall mean the amount of VAT which is calculated or must be calculated in the manner established by this Law and other legal acts on the imported goods due to which according to the Customs Code of the Republic of Lithuania customs debt on importation is incurred.       8. "Derivative " shall mean a financial instrument (future contract, forward contract, etc.) the value or price whereof is linked to the value or price of the goods on which the instrument is based as well as a financial instrument (future contract, forward contract, etc.) the value or price whereof is linked to the price of securities, exchange rate, interest rate, stock exchange index, determination of creditworthiness or any other variable. 9. "Movable" shall mean any property except for that referred to in paragraph 15 of this Article. 10. "Controlling person" shall mean any person controlling the taxable person if he: 1)  directly or indirectly holds over 50% of shares (interests, member shares) in the taxable person or other rights to distributable profit or pre-emptive rights to the acquisition thereof; 2) himself being the holder of not less than 10% of shares (interests, member shares) in the taxable person or other rights to a share of distributable profit or pre-emptive rights to the acquisition thereof, holds over 50% thereof together with the related persons, or 3) has the right to elect/appoint the majority of members of the managing body of the taxable person and/or actually is in control of the decisions made by the taxable person. 11. "Transport of cargo" shall mean transport of tangible property (mail including) by all forms of transport, also transport of goods by stationary transport installations (pipelines, electricity lines, etc.). 12. "Reduced rate of the VAT" shall mean the rate of VAT fixed in this Law below the standard rate,  except for the zero-rate. 13. "Taxable person of the Republic of Lithuania" shall mean a legal or natural person of the Republic of Lithuania who/which carries out economic activities of any type. 14. "Undisclosed agent" shall mean a taxable person acting as an intermediary in the transaction for the supply of goods or services in his own name but for the account of another person. 15. "Property immovable by nature" shall mean property which is immovable by nature, i.e., land or other property, that cannot be removed from one place to another without the change of  its purpose and  a material reduction of its value. 16. "Place where the person has his permanent address or usually resides" shall mean the country where he usually resides or, in the absence of such place, the country where he has a place of  personal, social and economic interests. 17. "Subdivision" shall mean a branch or a representative office of the taxable person set up according to the established procedure, also the permanent establishment  of the foreign taxable person through which the foreign taxable person is operating in the Republic of Lithuania. For the purposes of this Law the term "permanent establishment" shall be used as it is defined in the legislation on profit (income) taxation. 18. "Output VAT " shall mean the amount of VAT that has been or is due to be calculated on the supply of goods and/or services.      19. "Material improvement of the building/structure" shall mean construction works the value whereof exceeds 50% of the value of the building or structure before the completion of the works. 20. "Non-profit-making legal persons" shall mean legal persons established for other than profit-making purposes, whose generated profit under the legal acts regulating their activities shall not be distributable to their founders and/or members. 21. "Input VAT" shall mean the amount of VAT paid or payable on purchases of  goods and/or services, also the amount of VAT calculated on the tangible capital assets specified in Article 6 of this Law, manufactured by the taxable person himself. 22. "A good" shall mean any thing (including notes and coins of numismatic interest), also electricity, gas, heat and other types of energy. 23. "VAT deduction" shall mean the proportion of input and/or import VAT , deductible under the provisions of this Law. 24. "VAT payer" shall mean a taxable person identified for purposes of value added tax  by the tax administrator as the VAT payer. 25. "Open market value" shall mean the amount of consideration which a purchaser  would have to pay for the goods or services to a supplier thereof at arm's length where each one of them is seeking maximum economic benefit for himself. 26. "Related persons" shall mean: 1) a natural person and his spouse, fiancé or cohabitant; 2) a natural person and persons connected to him by blood relationship (up to the fourth degree) or by  marriage (a natural person and the relatives of his spouse (up to the fourth degree), also natural person and the relatives (up to the second degree) of the relatives of his spouse (up to the second degree); 3) a natural person and the person connected to him by guardianship relations; 4) a taxable person  and a person who holds an interest in the latter (shareholder, holder of member share, etc.); 5) a taxable person  and a member of its management body; 6) a taxable person  and its employees; 7) a taxable person  and a natural person who is related to the person holding an interest in the taxable entity or is a member of the taxable entity's  management body by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph; 8) taxable persons that are subsidiaries of the same taxable parent entity; 9) a taxable parent entity and a person holding an interest in its taxable subsidiary; 10) a taxable subsidiary and a person holding an interest in its taxable parent entity; 11) a taxable parent entity and a member of the management body of its taxable subsidiary; 12) a taxable subsidiary and a member of the management body of the taxable parent entity;  13) a taxable parent entity  and a natural person connected to a person holding an interest in its taxable subsidiary or to a member of the management body of its taxable subsidiary company by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph; 14) a taxable subsidiary and a natural person connected to a person holding an interest in its taxable parent entity or to a member of its management body by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph; 15) two taxable persons if one of them directly or indirectly (through one or several intermediaries) controls over 25% of shares (interest, member shares) or has a right to over 25% of decisive votes in the other person or has undertaken to co-ordinate his business decisions with that other person or has assumed liability for the performance of obligations of that other person to third persons or has undertaken to transfer to that other person  all or part of the profit or has granted that other person the right to use over 25% of its assets; 16) two taxable persons if the same persons holding an interest in them (alone or together with persons connected with them by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph) directly or indirectly hold over 25% of shares (interest, member shares) in each one of them; 17) two taxable persons if one of them has the right to elect (appoint) the majority of members of that other person's management bodies and/or actually controls the decision making of that other person. 27. "Standard rate of VAT" shall be 18 %. 28. "Territory of the country" shall mean the territory of the Republic of Lithuania and the area adjacent to the territorial waters of the Republic of Lithuania where, under the laws of the Republic of Lithuania and international law, the Republic of Lithuania has the right to carry out exploration and to exploit the sea-bed and underground natural resources.  29. "Foreign taxable person" shall mean any of the following persons engaged in any form of economic activity: 1) a legal person or organisation of a foreign state, having its seat in a foreign state and incorporated or otherwise organised in accordance with the legal acts of the foreign state, or     2) any other entity incorporated, established or otherwise organised abroad, or 3) a natural person who has a permanent address or usually resides outside the Republic of Lithuania. 30. "Activities of the state and municipalities" shall mean the activities of the state, municipalities, state or municipal institutions and offices and, in the cases specified by laws, also the activities of other public legal persons, which the said persons are obligated under laws to engage in. For the purposes of this Law the following  activities engaged in by the said persons shall not be considered as state and municipality  functions: 1) supply of new goods (except for the supply of seized, ownerless goods (or goods recognised as ownerless property), or goods acquired by inheritance by the state or goods or treasure taken or transferred to state income), which are or may be in competition with goods supplied by taxable persons; 2) supply of electricity, gas, heat and other forms of energy, supply of water, steam; 3) supply of transport services and ancillary transport services; 4) supply of services of trade fair and business exhibition organisation; 5)  supply of advertising, market survey and/or public opinion polling and other similar services; 6) supply of tourist services; 7) supply of telecommunication services; 8) supply of public information services;   9) supply of catering services; 10) activities of agricultural market economic regulation agencies; 11) lease; 12) any activities carried out by the above persons, that are not specified in paragraphs 1-11, if the goods and/or services supplied thereby by the said persons are or may be in competition with goods and/or services supplied by the taxable persons. 31. Other concepts used in this Law shall be interpreted as they are defined in the Law of the Republic of Lithuania on Tax  Administration (hereafter - the Law on Tax Administration), the Customs Code of the Republic of Lithuania (hereafter - the Customs Code), as well as the Civil Code of the Republic of Lithuania (hereafter - the Civil Code) to the extent this is in conformity with this Law (with the exception of the cases authoritative under the Civil Code). Version of Article 1 applicable from 1 May 2004: Article 2. Definitions 1. "Goods subject to excise duty" shall mean ethyl alcohol and alcoholic beverages, manufactured tobacco, energy products (except coal, coke and lignite) as defined in the Law of the Republic of Lithuania on Excise Duty. 2. "Taxable person" shall mean any taxable person of the Republic of Lithuania or a foreign state. 3. "Consideration" shall mean everything which has been or is to be obtained in money or in any other form as payment for the supply of goods and services from the purchasers/customers and/or third party. 4. "Disclosed agent" shall mean a taxable person acting as an intermediary in the transaction for the supply of goods or services in the name and for the account of another person.  5. "Employment" shall mean work carried out under the employment contract, also any other activity performed on the basis of legal ties creating the relationship of employer and employee (by agreement as regards remuneration for work , workplace and functions, work discipline, etc), corresponding to those created under the employment contract.  6. "Economic activities" shall mean activities (including all activities of producers, traders and persons supplying services, agricultural activities, fishing activities, mining, activities of the professions, exploitation of property and/or property rights) seeking to obtain any income (regardless of whether or not the activity is aimed at making a profit). The following activities, however, shall not be considered as economic activities: 1) employment as it is defined in paragraph 5 of this Article; 2) activities of state and local government authorities as they are defined in paragraph 39 of this Article, even where they collect dues, fees or payments in connection with these activities; 7. "Electronic means" shall mean electronic equipment intended for data processing (including digital compression) and storage of data, employing wires, radio transmission, optical technology or other electromagnetic means. 8. "Territory of the European Communities" shall mean the territory in which the provisions of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the member states relating to turnover taxes - common system of value added tax: uniform basis of assessment (hereafter - Directive 77/388/EEC) shall be applicable. 9. "Capital assets" shall mean tangible property and other objects of the right of ownership which are used in the economic activities of the taxable person for a period exceeding one year (according to the groups of capital assets listed in Annex 1 to the Law on  Profit Tax). 10. "Importer" shall mean a person who is liable to pay the set customs debt on importation for the imported goods in the territory of the country or would be liable to pay customs debt on importation if import duties, agricultural or other charges were levied on the imported goods. 11. "Derivative " shall mean a financial instrument (future contract, forward contract, etc.) the value or price whereof is linked to the value or price of the goods on which the instrument is based as well as a financial instrument (future contract, forward contract, etc.) the value or price whereof is linked to the price of securities, exchange rate, interest rate, stock exchange index, determination of creditworthiness or any other variable. 12. "Movable" shall mean any property except for that referred to in paragraph 18 of this Article. 13. "Controlling person" shall mean any person controlling the taxable person if he: 1)  directly or indirectly holds over 50% of shares (interests, member shares) in the taxable person or other rights to distributable profit or pre-emptive rights to the acquisition thereof, or 2) himself being the holder of not less than 10% of shares (interests, member shares) in the taxable person or other rights to a share of distributable profit or pre-emptive rights to the acquisition thereof, holds over 50% thereof together with the related persons, or 3) has the right to elect/appoint the majority of members of the managing body of the taxable person and/or actually is in control of the decisions made by the taxable person. 14. "Reduced rate of the VAT" shall mean the rate of VAT fixed in this Law below the standard rate,  except for the zero-rate. 15. "Taxable person of the Republic of Lithuania" shall mean a legal or natural person of the Republic of Lithuania who/which carries out economic activities of any type. 16. "New means of transport" shall means the means of transport referred to in Article 35 of this Law, which fulfil at least one of the following conditions: 1)  the motorised land vehicle was supplied no more than 6 months, the vessel and the aircraft - no more than 3 months  after the date of first entry into service (according to the criteria for determining the first entry into service approved by the Government of the Republic of Lithuania or an institution authorised by it.  2) the motorised land vehicle has travelled more than 6 000 kilometres, the vessel has sailed for more than 100 hours, or the aircraft has flown for more than 40 hours. 17. "Undisclosed agent" shall mean a taxable person acting as an intermediary in the transaction for the supply of goods or services in his own name but for the account of another person. 18. "Property immovable by nature" shall mean property which is immovable by nature, i.e., land or other property, that cannot be removed from one place to another without the change of  its purpose and  a material reduction of its value. 19. "Place where the person has his permanent address or usually resides" shall mean the country where he usually resides or, in the absence of such place, the country where he has a place of  personal, social and economic interests. 20. "Subdivision" shall mean an established place through which a taxable person of one state is engaged in economic activities in another state. 21. "Material improvement of the building/structure" shall mean construction works the value whereof exceeds 50% of the value of the building or structure before the completion of the works. 22. "Non-profit-making legal persons" shall mean legal persons established for other than profit-making purposes, whose generated profit under the legal acts regulating their activities shall not be distributable to their founders and/or members. In the cases when profit generating activity constitutes a substantial part of activities of the person conforming to the definition of the non-profit making person, for the purposes of this Law such a person shall not be considered as non-profit making person, even though profit-making is not the purpose of the person's activities.  23. "A good" shall mean any thing (including notes and coins of numismatic interest), also electricity, gas, heat and other types of energy. A computer medium the contents whereof is comprised of nonstandardised software shall not be treated as a good. Nonstandardised software shall be the software that has not been developed for mass consumption to be used by the consumers independently following its introduction and limited training necessary in order to perform standardised operations or functions.   24. "Importation of goods" shall mean: a) the entry into the territory of the European Communities of non-Community goods or the actions which brought about the entry thereof; b) the entry into the territory of the European Communities of Community goods from  third territories or the actions which brought about the entry thereof. 25. "Transport of cargo" shall mean transport of tangible property (mail including) by all forms of transport, also transport of goods by stationary transport installations (pipelines, electricity lines, etc.). 26. "Intra-Community transport of goods" shall mean transport where the place of departure and the place of arrival are situated within the territories of different Member States. The transport of goods where the place of departure and the place of arrival are situated within the territory of the country shall be treated as intra-Community transport of goods  where the place of departure and the place of arrival are situated within the territories of two different Member States. 27. "VAT deduction" shall mean the proportion of input and/or import VAT, deductible under the provisions of this Law. 28. "VAT payer" shall mean a taxable person identified for purposes of value added tax by the tax administrator, including any other identification for value added tax purposes, provided the person has been issued with an appropriate identification number, except for the identification of persons for flat-rate VAT scheme purposes. 29. "VAT invoice" shall mean a document serving as an invoice in respect of  goods or services supplied and in respect of advance payments made, which meets all requirements prescribed by this Law for  such a document for it to serve as an invoice. Where such a document is issued after the arising of an obligation to issue in any other Member State, it shall be treated as the VAT invoice, provided that it meets the conditions imposed by that Member State on the issue of VAT invoice in such instance. 30. "Open market value" shall mean the amount of consideration which a purchaser  would have to pay for the goods or services to a supplier thereof at arm's length where each one of them is seeking maximum economic benefit for himself. 31.  "Related persons" shall mean: 1) a natural person and his spouse, fiancé or cohabitant; 2) a natural person and persons connected to him by blood relationship (up to the fourth degree) or by  marriage (a natural person and the relatives of his spouse (up to the fourth degree), also natural person and the relatives (up to the second degree) of the relatives of his spouse (up to the second degree); 3) a natural person and the person connected to him by guardianship relations; 4) a taxable person  and a person who holds an interest in the latter (shareholder, holder of member share, etc.); 5) a taxable person  and a member of its management body; 6) a taxable person  and its employees; 7) a taxable person  and a natural person who is related to the person holding an interest in the taxable entity or is a member of the taxable entity's  management body by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph; 8) taxable persons that are subsidiaries of the same taxable parent entity; 9) a taxable parent entity and a person holding an interest in its taxable subsidiary; 10) a taxable subsidiary and a person holding an interest in its taxable parent entity; 11) a taxable parent entity and a member of the management body of its taxable subsidiary; 12) a taxable subsidiary and a member of the management body of the taxable parent entity;  13) a taxable parent entity  and a natural person connected to a person holding an interest in its taxable subsidiary or to a member of the management body of its taxable subsidiary company by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph;  14) a taxable subsidiary and a natural person connected to a person holding an interest in its taxable parent entity or to a member of its management body by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph; 15) two taxable persons if one of them directly or indirectly (through one or several intermediaries) controls over 25% of shares (interest, member shares) or has a right to over 25% of decisive votes in the other person or has undertaken to co-ordinate his business decisions with that other person or has assumed liability for the performance of obligations of that other person to third persons or has undertaken to transfer to that other person  all or part of the profit or has granted that other person the right to use over 25% of its assets; 16) two taxable persons if the same persons holding an interest in them (alone or together with persons connected with them by the links or relationship specified in subparagraphs 1, 2 or 3 of this paragraph) directly or indirectly hold over 25% of shares (interest, member shares) in each one of them; 17) two taxable persons if one of them has the right to elect (appoint) the majority of members of that other person's management bodies and/or actually controls the decision making of that other person. 32. "Standard rate of VAT" shall be 18 %. 33. "Territory of the country" shall mean the territory of the Republic of Lithuania and the area adjacent to the territorial waters of the Republic of Lithuania where, under the laws of the Republic of Lithuania and international law, the Republic of Lithuania has the right to carry out exploration and to exploit the sea-bed and underground natural resources. 34. "Telecommunication services" shall be deemed to be services relating to the transmission, emission or reception of signals, writing, images or sound or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception as well as provision of access to global information networks.   35. "Means of transport" shall mean means of transport intended for the transport of persons or goods provided that at least one of the following conditions is fulfilled: 1) motorised land vehicles the capacity of which exceeds 48 cubic centimetres or the power of which exceeds 7.2 kilowatts; 2) vessels exceeding 7.5 metres in length, except for the vessels used for navigation on the high seas and for carrying passengers and/or cargo on international routes and/or the provision of other services for reward, also fishing vessels and vessels used for rescue and assistance at sea; 3) aircraft the take-off weight of which exceeds 1550 kilograms which are used  for carrying passengers and cargo or for the provision of other services for reward by means of air transport on international routes. 36. "Third territories" shall mean the territories specified in the list approved by the Minister of Finance based on the Directive 77/388/EEC, excluded from the area of application of the provisions of the Directive. 37. "Third country" shall mean any territory other than the territory of the European Communities or a third territory as these are defined in paragraphs 8 and 36 of this Article.  38. "Foreign taxable person" shall mean any of the following persons engaged in any form of economic activity: 1) a legal person or organisation of a foreign state, having its seat in a foreign state and incorporated or otherwise organised in accordance with the legal acts of the foreign state, or    2) any other entity incorporated, established or otherwise organised abroad, or 3) a natural person who has a permanent address or usually resides outside the Republic of Lithuania. 39. "Activities of the state and municipalities" shall mean the activities of the state, municipalities, state or municipal institutions and offices and, in the cases specified by laws, also the activities of other public legal persons, which the said persons are obligated under laws to engage in. For the purposes of this Law the following  activities engaged in by the said persons shall not be considered as state and municipality  functions, provided they are not carried out on such a small scale as to be negligible: 1) supply of new goods (except for the supply of seized, ownerless goods (or goods recognised as ownerless property), or goods acquired by inheritance by the state or goods or treasure taken or transferred to state income), which are or may be in competition with goods supplied by taxable persons; 2) supply of electricity, gas, heat and other forms of energy, supply of water, steam; 3) supply of transport services, placing in a warehouse, also provision of port (sea, etc.) services and granting of the right to use airports; 4) supply of services of trade fair and business exhibition organisation; 5)  supply of advertising, market survey and/or public opinion polling and other similar services; 6) supply of travel and tourist agency services; 7) supply of telecommunication services; 8) supply of public information services;   9) supply of catering services; 10) activities of agricultural market economic regulation agencies; 11) lease; 12) any activities carried out by the above persons, that are not specified in paragraphs 1-11, if the goods and/or services supplied thereby by the said persons are or may be in competition with goods and/or services supplied by the taxable persons. 40. A Member State (or territory of a Member State) shall mean the territory of a European Union Member State except for the third territories. The territory of a Member State shall also mean the territories transactions concluded in which or intended for which, based on the provisions of Directive 77/388/EEC, shall be treated as transaction originating in that Member State or intended for that Member State. 41. Other concepts shall be used in this Law within the meaning defined in the Law of the Republic of Lithuania on Tax  Administration (hereafter - the Law on Tax Administration), the Customs Code of the European Communities (hereafter - the Customs Code), as well as the Civil Code of the Republic of Lithuania (hereafter - the Civil Code) to the extent it is in conformity with this Law (with the exception of the cases authoritative under the Civil Code), however, for the purposes of this Law, only the State Tax Inspectorate shall be treated as tax administrator. Version of Article 3 applicable until 1 May 2004: Article 3. Scope of VAT 1. The supply of goods or services shall be subject to VAT provided the following conditions are satisfied: 1) the supply of goods and/or services is effected for consideration; 2) the supply of goods and/or services according to the provisions of this Law is considered to be effected within the territory of the country; 3) the goods and/or services are supplied by a taxable person in the performance of his/its economic activities, i.e. acting as such.  A natural person shall not be considered a taxable person in respect of the supply of goods and/or services if the transactions concluded by the natural person are not related to the economic activities carried out by him. 2. The scope of import VAT shall be importation of goods where under the Customs Code customs debt on importation is incurred due to the imported goods. Version of Article 1 applicable from 1 May 2004: Article 3. Scope of VAT 1. The supply of goods or services shall be subject to VAT provided the following conditions are satisfied: 1) the supply of goods and/or services is effected for consideration; 2) the supply of goods and/or services according to the provisions of this Law is considered to be effected within the territory of the country; 3) the goods and/or services are supplied by a taxable person in the performance of his/its economic activities, i.e. acting as such.  A natural person shall not be considered a taxable person in respect of the supply of goods and/or services if the transactions concluded by the natural person are not related to the economic activities carried out by him. The condition specified above shall not apply with respect to supplies for consideration of new means of transport dispatched or transported by the supplier, purchaser or the third party on behalf of any one of them out of the territory of the country but within the European Community. 2. The following acquisitions of goods for consideration within the territory of the country from another Member State shall be subject to value added tax: 1) acquisitions of goods from a taxable person in the performance of his/its economic activities, i.e. acting as such, with respect to whom the provisions of Article 24 of Directive 77/388/EEC are not applicable, by a taxable person who concluded the transaction in the performance of his/its economic activities, i.e. acting as such, or  a legal person who is not a taxable person, provided that the supply of goods is not treated as having been effected within the territory of the country in the meaning of Article 12 (2 or 3) of this Law; 2) acquisitions of new means of transport effected by any person; 3) acquisition of goods for which excise duties become chargeable under the Law of the Republic of Lithuania on Excise Duties by any person except for a natural person who is not a taxable person. 3. The scope of import VAT shall be importation of goods where under the provisions of this Law the goods are treated as imported  within the territory of the country. 4. In addition to the supply of goods (supply of services) indicated in paragraph 1, acquisitions of goods specified in paragraph 2 and importation of goods referred to in paragraph 3 of this Article, the emergence of the circumstances indicated in Article 53 of this Law shall also be subject to value added tax. 5. In derogation of subparagraph 1 of paragraph 2 of this Article, the following shall not be treated as acquisition of goods subject to value added tax; 1) acquisitions of goods from any other Member State where zero-rated VAT would be applied under Articles 43, 44 or 47 of this Law to such supply of goods if effected within the territory of the country; 2) acquisitions from any other Member State of second-hand goods, works of art, collector's items or antiques, within the meaning of this Law, where the vendor is a taxable dealer who is engaged in the supply of goods or where the vendor is an organised of public sales by public auctions and the goods acquired have been subject to tax in the Member State of departure of the dispatch or transport in accordance with the provisions comparable to the provisions of Section Three of Chapter XII of this Law; 3) acquisition of means of transport from any other Member State where the vendor is a taxable person engaged in the supply of the goods and the supplies of  goods acquired have been subject to tax in the Member State of departure of the dispatch in accordance with the special arrangements applied in the Member State with respect to second-hand means of transport.    Article 4. Supply of Goods 1. Supply of goods shall mean the transfer of goods to another person where under the conditions of the transaction this person or a third party is transferred the right to dispose of the goods as their owner. Version of paragraph 2 applicable from 1 February 2004: 2. The actual handing over of goods, pursuant to a contract of lease or any other contract for the transfer of goods providing for payment on deferred terms or by instalments shall also constitute supply of goods for the purposes of  this Law, if under the terms of the transaction the major portion of risk and benefit relating to ownership of goods as well as ownership shall pass to the person to whom the goods have been handed or to the third party upon payment of the final instalment. Version of paragraph 3 applicable until 1 May 2004: 3. For the purposes of this Law, the establishment or transfer of the rights in rem over the property immovable by its nature (easement, usufruct, right of development, long-term lease) shall also be considered as supply of goods (of the property immovable by its nature in respect whereof they have been established). The transfer of interest or a share, where the transfer of the interest or share gives the holder thereof the  right to dispose of the  property immovable by its nature (or part thereof) as its owner shall also be considered supply of goods (property immovable by its nature) within the meaning of this Law.   Version of paragraph 3 applicable from 1 May 2004: 3. For the purposes of this Law, the establishment or transfer of the rights in rem over the property immovable by its nature (easement, usufruct, right of development, long-term lease) shall also be considered as supply of goods (of the property immovable by its nature in respect whereof they have been established). The transfer of interest or a share, where the transfer of the interest or share gives the holder thereof the  right to dispose of the  property immovable by its nature (or part thereof) as its owner shall also be considered supply of goods (property immovable by its nature) within the meaning of this Law. The provisions of this paragraph shall be applied only where the amount of consideration for determining or transferring the rights in rem, passing of a member share or security corresponds to the open market value of the property immovable by its nature. Article 41 shall be added to the Law from 1 May 2004: Article 41. Intra-Community Acquisition of Goods 1. Intra-Community acquisition of goods for consideration shall mean acquisition, according to the terms and conditions of the transaction, of the right to dispose as owner of the goods dispatched or transported by the supplier, purchaser or a third party on behalf of any one of them  to a Member State other than that from which the goods are dispatched or transported.  2. Where a non-taxable legal person acquires goods that are dispatched or transported from a third territory or third county and imports those goods into a Member State other than the Member State of arrival of the goods dispatched or transported, the legal person shall be deemed to have acquired the goods from the Member State of import. 3. The transfer by a taxable person or any other person on his behalf of goods from his undertaking to another Member State for business purposes shall also be treated as intra-community acquisition of goods for consideration, unless the importation is effected according to the terms and conditions of paragraph 2 of Article 51 of this Law.   4.  The appropriation of goods by the forces of the states parties to the North Atlantic Treaty, for their use or for the use of the civilian staff accompanying them, which they have not acquired subject to the general rules governing taxation on the domestic market of the Member State, where the importation of these goods could not benefit from the exemption from import VAT under paragraph 3 of Article 40 of this Law, shall also be deemed to be an intra-Community acquisition of goods. 5. For the purposes of this Law, the dispatch or transport of goods under a contract,  which would also constitute supply of goods within the meaning of paragraph 2 of Article 4 of this Law, shall be deemed to be intra-Community acquisition of goods for consideration. Article 5.  Private Use of Goods by a VAT Payer 1. For the purposes of this Law private use of goods by a VAT payer, as it is defined in paragraph 2 of this Article, shall also constitute supply of goods for consideration. 2. Unless otherwise provided by this Article, private use of goods by VAT payer  shall be considered to have occurred  where goods at the disposal of the VAT payer, input and/or import VAT on which (if the goods are manufactured by the VAT payer itself/himself - on other goods and/or services used for the manufacture of the said goods) was  wholly or partly deductible by the VAT payer, are subsequently : 1) transferred free of charge, whereas the person to whom the goods are transferred or the third party acquires the right to dispose of the goods as their   owner, or 2) used in any other manner where input and /or import VAT  on goods and/or services intended for the above use would not be deductible by the VAT payer under this Law.  3. In derogation from provisions of paragraph 2 of this Article, the transfer or use of goods shall not be treated as private use of goods by  the VAT payer, where the goods are transferred or used as samples, i.e. goods forming part of the VAT payer's regular business are transferred or used for examination, analysis or test. In this case goods may be transferred or used in the amount required in order to ensure the quality of the examination, analysis or test, having regard to the nature of the goods and character of the examination, analysis or test, as well as pursuant to relevant provisions of the legal acts regulating the above (provided it is regulated by legal acts). 4. In derogation from provisions of paragraph 2 of this Article, the transfer or use of goods shall not be treated as private use of goods by  the VAT payer, where the goods are transferred or used for the making of gifts of small value (for advertising, representation, charity and/or support purposes). The Government of the Republic of Lithuania or an institution authorised by it shall establish the conditions and limitations of the application of the provisions of this paragraph, including the limitations relating to  the value of goods transferred or used for the purposes specified herein.   5. In derogation from provisions of paragraph 2 of this Article, the loss of goods shall not be treated as their private use  by the VAT payer. 6. Where a natural person who is a VAT payer attributes part of the acquired tangible capital assets to his/her economic activities pursuant to the provisions of this Law, the provisions of this Article shall apply only to the part of the assets attributed in the said manner. The provisions of this Article shall not be applicable to any transfer or use of the remaining part of the assets regardless of the fact that input and/or import VAT on the  property became partly deductible.  Article 51 shall be added to the Law from 1 May 2004: Article 51 . Intra-Community Transport of Goods  1. Supplies of goods effected for consideration shall be the transfer by the taxable person of goods from his undertaking from the Member State where the place of departure of goods is situated to another Member State if  the goods are transferred by the taxable person himself or by another person on his behalf. 2. In derogation of  provisions of paragraph 1 of this Article, the following shall not be treated as supply of goods: 1) the transfer of goods to another Member State where the supply of the goods will be effected (which will be subject in the Member State to the provisions equivalent in essence to those of paragraph 3 of Article 12 of this Law); 2) the transfer of goods to another Member State where the goods will be installed or assembled and where supply of the goods will take place (which in that Member State will be subject to the provisions equivalent in essence to those of paragraph 2 of Article 12 of this Law); 3) the transfer of goods intended for the purposes of supplies effected on board vessels,  aircraft and/or on trains during intra-Community passenger transport and where the supply  of  the goods will take place in another Member State (which in that Member State will be subject to the provisions equivalent in essence to those of Article 121 of this Law);  4) the transfer of goods to another Member State when the goods are transferred for the purpose of supply on which zero-rated VAT is charged subject to the provisions of Chapter VI of this Law (with the exception of Article 53); 5) the transfer of goods to another Member State for the purpose of work on the goods (repair, maintenance, adaptation, etc.), processing and/or alteration provided that the goods, after being worked upon, are re-dispatched to that taxable person in the Member State from which they  had initially been dispatched or transported; 6) the transfer of goods to another Member State for the purpose of temporary use of the goods in question for the supply of services by the taxable person established within the Member State and therefore the goods are temporarily transferred (i.e. until they are needed in another Member State for the provisions of the services in question); 7) temporary transfer of goods for a period not exceeding 24 months to another Member State in which the import of the same goods from a third country with a view to temporary use would be eligible for the arrangements for temporary importation with full exemption from import duties; *8) transmission of natural gas and electricity via natural gas and electricity supply systems to another Member State (to which provisions equivalent in essence to those laid down in paragraph 6 of Article 12 of this Law will be applied in the other Member State). 3. Where the conditions specified in paragraph 2 of this Article are no longer satisfied, the transfer of goods to another Member State shall be considered as the supply of goods for consideration as indicated in paragraph 1 of this Article. The supply of goods shall be deemed effected if the above conditions are satisfied. *Note. Subparagraph 8 of paragraph 2 of Article 51, paragraph 6 of Article 12, subparagraph 12 of paragraph 6 of Article 13, paragraph 5 of Article 40 and subparagraph 5 of paragraph 3 of Article 95 of the Law on Value Added Tax shall become effective from 1 January 2005.  Article 6. Manufacture of Tangible Capital Assets by a VAT Payer himself 1. For the purposes of this Law, supply of goods for consideration shall include manufacture of tangible capital assets by a  VAT payer himself. In this Law, manufacture of tangible capital assets by the VAT payer himself shall mean  the entirety of operations of processing of acquired and/or imported raw materials and materials, manufacturing and other operations performed by the VAT payer himself and/or services acquired by the VAT payer, the result whereof is a new unit of tangible capital assets. Material improvement of the building/structure used in the economic activities of the VAT payer shall also be treated as manufacture of tangible capital assets by the VAT payer himself, regardless of whether or not the VAT payer is the owner of the building/structure or uses it on other grounds, unless otherwise provided in Article 9 of this Law, and regardless of whether the VAT payer made improvements in the building/structure by himself or by acquiring services from other taxable persons. 2. The provisions of this Article shall be applied only in the cases where the input and/or import VAT  on the goods and/or services used for such manufacture of tangible capital assets was  wholly or partly deductible by the VAT payer.  Article 7. Supply of Services Unless otherwise established in this Law, supply of services shall mean any transaction in respect of any civil rights object, provided this transaction is not treated as supply of goods within the meaning of this Law. Such transactions shall  include, inter alia: Version of paragraph 1 applicable until 1 May 2004: 1) sale or any other transfer of software; Version of paragraph 1 applicable from 1 May 2004: 1) sale or other transfer of non-standardised software; 2) lease; 3) assignment of intangible property and title, except for the cases provided in paragraph 3 of Article 4 of this Law; 4) construction works, including the handing over of a constructed new building or structure to the client/contractor; 5) obligation to refrain from an act or to tolerate an act or situation. Article 8. Supply of Services for Private Use of a VAT Payer 1. For the purposes of this Law,  supply of services for consideration shall also constitute supply of services for private use of a VAT payer, as it is defined in paragraph 2 of this Article. 2. The following shall be treated as supply of services for private use  of a VAT payer: 1) giving another person the right to use for a certain time free of charge the object of the right of ownership of the VAT payer. The above provision shall apply only where input and/or import VAT on  the object of the right of ownership  (where it is manufactured by the VAT payer himself - on the goods and/or services used for the manufacture thereof) was wholly or partly deductible by the VAT payer, or 2) the object of the VAT payer's right of ownership which is not considered as a good within the meaning of this Law, is  transferred or used in the ways specified in paragraph 2 of Article 5 of this Law. The provision shall be applicable only where input and/or import VAT on  the object of the right of ownership (where it is manufactured by the VAT payer himself - on the goods and/or services used for the manufacture thereof) was wholly or partly deductible by the VAT payer. Subparagraph 3 shall be added to paragraph 2 from 1 May 2004: 3) the services have been rendered free of charge and not in relation to the VAT payer's economic activities. 3. Where a natural person who is a VAT payer attributes part of the acquired tangible capital assets to his/her economic activities pursuant to the provisions of this Law, the provisions of this Article shall apply only to the portion of the assets attributed in the said manner. The provisions of this Article shall not be applicable with respect to the use of any other part of the assets regardless of the fact that the input and/or import VAT on  the assets became  partly deductible. Version of Article 9 applicable until 1 May 2004: Article 9. Special Rules Applied in respect of Certain Transactions 1. For the purposes of  this Law the transfer of an undertaking into the ownership of another person where the undertaking is transferred into the ownership of one person as a complex shall not be treated as supplies of either goods or services. The provisions of this paragraph shall not apply with respect to the sale or any other transfer of shares (interests, member shares) in the undertaking. 2. If a natural person who has carried out economic activities in accordance with the procedure laid down by legal acts without having established an undertaking (registered a farmer's farm, etc.), later transfers the activities as a complex (i.e. the entirety  of  the objects of the right of ownership, acquired and used for the activities, also other property and non-property rights, debts and other obligations related to the said activities) to another taxable person who continues the activities that are transferred  to him/it, for the purposes of this Law such transfer of activities shall not be considered as supplies of either goods or services.    3. Any transfer of an object of the right of ownership, where it is transferred as a property contribution to a company  and the input and/or import VAT on the object of the ownership right (and in case of manufacture thereof by the  VAT payer himself - on the goods and/or services used for the manufacture) was wholly or partly deductible by the VAT payer, shall be treated for the purposes of this Law as supply of goods for consideration (in case of transfer of an object considered as a good within the meaning of this Law) or as supply of services for consideration (where the transferred object is not treated as a good for the purposes of this Law). 4. Transfer of any object of the right of ownership due to the winding up of the legal person-VAT payer by way of  reorganisation, where  input and/or import  VAT on  the object of the ownership right (and in case of manufacture thereof by the  VAT payer himself - on the goods and/or services used for the manufacture) was wholly or partly deductible by the VAT payer being wound up shall be treated for the purposes of this Law as supply of goods for consideration ((in case of transfer of an object considered as a good within the meaning of this Law)  or as supply of services for consideration (where the transferred object is not treated as a good for the purposes of this Law)). 5. Return to the owner of a building/structure  materially improved  by the VAT payer who/which used it on the grounds other than the right of ownership prior to the expiry of the period of adjustment of VAT deductions fixed in this Law shall be treated as supply of goods for consideration provided that the input and /or import VAT on  goods and/or services used for the improvement was  wholly or partly deductible by the VAT payer. The parties shall have the right to make an agreement that material improvement of the building/structure shall be considered to be  supplied to the owner of the building/structure not at the moment of return thereof,  but right after the completion of the improvement works and in such case the provisions of this Law related to the manufacture of tangible capital assets by the taxable person himself shall not be applied to the VAT payer who carried out the improvement with respect to this building/structure. Version of Article 9 applicable from 1 May 2004: Article 9. Special Rules Applied in respect of Certain Transactions 1. If a natural person who has carried out economic activities in accordance with the procedure laid down by legal acts without having established an undertaking (registered a farmer's farm, etc.), later transfers the activities as a complex (i.e. the entirety  of  the objects of the right of ownership, acquired and used for the activities, also other property and non-property rights, debts and other obligations related to the said activities) to another taxable person who continues the activities that are transferred  to him/it, for the purposes of this Law such transfer of activities shall not be considered as supplies of either goods or services. 2. Any transfer of an object of the right of ownership, where it is transferred as a property contribution to a company  and the input and/or import VAT on the object of the ownership right (and in case of manufacture thereof by the  VAT payer himself - on the goods and/or services used for the manufacture) was wholly or partly deductible by the VAT payer, shall be treated for the purposes of this Law as supply of goods for consideration (in case of transfer of an object considered as a good within the meaning of this Law) or as supply of services for consideration (where the transferred object is not treated as a good for the purposes of this Law). 3. Transfer of any object of the right of ownership due to the winding up of the legal person-VAT payer by way of  reorganisation, where  input and/or import  VAT on  the object of the ownership right (and in case of manufacture thereof by the  VAT payer himself - on the goods and/or services used for the manufacture) was wholly or partly deductible by the VAT payer being wound up shall be treated for the purposes of this Law as supply of goods for consideration ((in case of transfer of an object considered as a good within the meaning of this Law)  or as supply of services for consideration (where the transferred object is not treated as a good for the purposes of this Law)). 4. Return to the owner of a building/structure  materially improved  by the VAT payer who/which used it on the grounds other than the right of ownership prior to the expiry of the period of adjustment of VAT deductions fixed in this Law shall be treated as supply of goods for consideration provided that the input and /or import VAT on  goods and/or services used for the improvement was  wholly or partly deductible by the VAT payer. The parties shall have the right to make an agreement that material improvement of the building/structure shall be considered to be  supplied to the owner of the building/structure not at the moment of return thereof,  but right after the completion of the improvement works and in such case the provisions of this Law related to the manufacture of tangible capital assets by the taxable person himself shall not be applied to the VAT payer who carried out the improvement with respect to this building/structure. Article 10. Barter Where consideration for the supplied goods and/or services is given (wholly or in part) in goods and/or services, each party to the transaction shall be considered as supplying goods and/or services. Article 11. Agency 1. For the purposes of this Law, a disclosed agent shall be considered as supplying the service of agency (agent's service) to the person in whose name and for whose account he is taking part in the transaction. 2. Where an undisclosed agent takes part in the transaction, it shall be considered that  the goods or services were at first supplied to the undisclosed agent  and later by the undisclosed agent, even in the case where the same goods or services  are in fact supplied directly to the final purchaser/customer. Version of Article 12 applicable until 1 May 2004: Article 12. Criteria for Determination of  the Place of Supply of Goods 1. If the supplied goods have to be transported, the place of supply of goods shall be deemed to be the place …