Article 48

Article 48 Official translation REPUBLIC OF LITHUANIA LAW ON VALUE ADDED TAX 5 March 2002 No IX-751 Vilnius (As last amended on 12 January 2006 No. X-487) CHAPTER I GENERAL PROVISIONS 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. 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 which extends the useful life of the building or structure or improves its useful properties. 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: 1) the entry into the territory of the European Communities of non-Community goods or the actions which brought about the entry thereof; 2) 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. 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. 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. 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. 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 . 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. 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: 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. 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. 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. Article 12. Criteria for Determination of  the Place of Supply of Goods (except for the Goods Supplied on Board Ships, Aircraft or Trains during the Transport of  Passengers Effected in the Community) 1. If the supplied goods have to be transported, the place of supply of goods shall be deemed to be the place where the goods are at the time when transport of the goods begins regardless of who is transporting the goods (supplier, purchaser  of the goods or, on behalf of any one of them, the third party). In the cases where the supplied goods were dispatched from a third territory or third country, the supply of goods, when the goods are supplied by the importer, and any subsequent supply shall be deemed to have been effected within the territory of the country, provided that the goods were imported in the Republic of Lithuania. The provisions of this paragraph shall not be applicable and the supply of goods shall not be regarded as having taken place in the territory of the country if the goods are dispatched or transported to another Member State where the supply of goods will be considered to have been effected because of the relevant requirements of legal acts of the Member State or in view of the right granted to the supplier of the goods in the application of the provisions, equivalent in essence to the provisions of paragraph 3 of this Article. The supplier of goods (if under the provisions of this paragraph the place of supply of his goods supplied and transported to another Member State according to the conditions laid down in paragraph 3 of this Article would be within the territory of the country) who himself wishes to consider another Member State as the place of supply of the goods supplied by him must apply to the local tax administrator in the manner prescribed by the central tax administrator with a request to grant him such right. The granted right may not be relinquished earlier than upon the lapse of 24 months after the granting thereof.    2. Where the goods supplied (regardless of who is transporting them) have to assembled or installed, with or without trial run, by or on behalf of the supplier, the place of the supply shall be deemed to be the territory of the country where the goods are installed or assembled. 3. The supply of goods shall also be deemed to have been effected in the territory of the country where the following conditions are fulfilled: 1) the goods are transported by the supplier or any other person on his behalf from any other Member State into the territory of the country (i.e. transport ends in the territory of the country). Where the transport of the supplied goods dispatched into the territory of the country started in a third territory or third state and the supplier thereof imported them in another Member State, the goods shall be deemed dispatched from that other Member State; 2) the purchaser of goods is one of the persons indicated in subparagraph 1 of paragraph 1 of Article 711 of this Law or a natural person who is not a taxable person; 3) the supply is of goods other than  new means of transport and other than goods supplied after assembly or installation. 4. By way of derogation from paragraph 3 of this Article, the supply of goods indicated in paragraph 3 of this Article shall not be deemed to have been effected in the territory of the country where the following conditions are fulfilled: 1) the supply is of goods other than goods subject to excise duty; 2) the total value, less value added tax, of the supplies of goods other than products subject to excise duty effected by the supplier under the conditions laid down in paragraph 3 of this Law transported into the Republic of Lithuania in the current calendar year does not exceed LTL 125 000; 3) the total value, less value added tax, of the supplies of goods other than products subject to excise duty effected by the supplier under the conditions laid down in paragraph 3 of this Law transported into the Republic of Lithuania in the previous calendar year did not exceed LTL 125 000; 4) the supplier of the goods has not established his business in the Republic of Lithuania (i.e. he has his permanent address or usually resides (if he is a natural person) outside the Republic of Lithuania) or has not established a subdivision in the Republic of Lithuania; 5) the competent authority of the place of dispatch of the goods has not granted the supplier of the goods the right to apply the provisions of paragraph 3 of this Article. 5. The provisions of paragraph 3 of this Article  shall not be applied to the supplies of second-hand goods, works of art, collector's items and antiques to which   special tax arrangements laid down in Section Three of Chapter XII of this Law or arrangements equivalent to them in principle in another Member State are applicable  as well as in the cases of supplies of means of transport to which special transitional provisions are applicable to second-hand means of transport in the Member State of departure of the dispatch or  transport. 6. In derogation of other provisions of this Article, the supply of natural gas and electricity shall be deemed effected in the territory of the country  only in the following cases: 1) when the goods are acquired by a taxable person established in the Republic of Lithuania (i.e. if its principal place of business (if it is not a natural person), subdivision (through which the above goods are acquired), or his permanent address or the place where he usually resides (if he is a natural person) is in the Republic of Lithuania), the  main purpose for which it/he acquired natural gas and/or electricity is resale of the natural gas and/or electricity to other persons and if the consumption of the said goods for its/his own needs is negligible; 2) when the goods are acquired by a person not indicated in subparagraph 1 of this paragraph - if the actual consumption of the said goods is effected in the Republic of Lithuania or, in case the said goods are not actually consumed, the registered office of the purchaser (if the purchaser is not a natural person), the subdivision (through which the said goods are acquired) or the place where the purchaser (if he is a natural person) has his permanent address or usually resides is in the Republic of Lithuania. 7. If the case of goods not  dispatched or  transported, the supply of goods shall be deemed to have been effected in the territory of the country in case the goods were in the territory of the country when the supply of the goods took place.     Article 121. The Place of Supply of Goods on Board Ships, Aircraft or Trains during the Transport of  Passengers Effected in the Community 1. In the case of goods supplied on board ships, aircraft or trains during the transport of passengers effected in the Community the place of supply of goods shall be deemed to be effected in the territory of the country if the part of transport or the point of the departure of the transport of passengers is within the territory of the country. 2. For the purposes of this Article: 1) ships, aircraft or trains shall be considered as providing transport of passengers within the Community if the transport or a part thereof is effected within the Community; 2) a transport of passengers or a part thereof shall be considered as effected in the Community if the point of departure and the point of arrival of the transport of passengers or a part thereof is within the Community; 3) the point of departure of the transport of passengers or of a part thereof shall mean the first point of passenger embarkation foreseen within the Community (where relevant after a leg outside the Community); 4) the point of arrival of the transport of passengers or of a part thereof shall mean the last point of disembarkation foreseen within the Community of passengers who embarked in the Community (where relevant before a leg outside the Community). 3. In the case of a return trip on board the ship, aircraft or by train, for the purpose of this Law the return leg shall be considered to be a separate transport. Article 122 . The Place of the Intra-Community Acquisition of Goods 1. The intra-Community acquisition of goods shall be deemed to have been effected in the territory of the country when the dispatch or transport of the goods ended. 2. The intra-Community acquisition of goods shall also be deemed to have been effected within the territory of the country in the case when the person acquiring the goods is a VAT payer identified for purposes of value added tax in the Republic of Lithuania, his identification number is indicated when acquiring the goods and the goods are dispatched from one Member State to another, unless it is established that acquisition has been subject to tax in the Member State where the transport of the goods ended.  3. In derogation of provisions of paragraph 2 of this Article, when the goods dispatched from one Member State into another Member State are acquired by a VAT payer identified for purposes of value added tax  in the Republic of Lithuania for the needs of a subsequent supply effected within that other Member State to a person for whom VAT is chargeable in that other Member State on the goods supplied, whereas the VAT payer from the Republic of Lithuania declares the transactions in the statement of inter-Community supply of goods according to the procedure laid down in this Law, the acquisition of goods from another Member State shall not be considered as having been effected within the territory of the country.          Article 123. The Place of Import of Goods 1. The place of import of non-Community goods shall be the territory of the country within which the goods are when they enter the Community, except where on entry into the Community territory the non-Community goods are not in free circulation, but are produced to customs and, where applicable, placed in temporary storage, placed in a free zone or a free warehouse, or placed under customs warehousing arrangements or inward processing arrangements, or placed under the arrangements for temporary importation with total exemption from import duty or under external transit arrangements. In the latter cases the place of import of non-Community goods shall be the territory of the country only provided the goods are  within the territory of the country when the above-mentioned  procedures and arrangements cease to apply. 2. The place of import of non-Community goods shall also be the territory of the country in the cases where at the moment of their entry into the Community these goods are  outside the territory of the country, however they are not in free circulation but are produced to customs and placed in temporary storage or placed in a free zone or a free warehouse or placed under customs warehousing arrangements or inward processing arrangements or under the arrangements for temporary importation with total exemption from import duty or under external transit arrangements and within whose territory these goods are when they cease to be covered by those arrangements or procedures. 3. The place of import of Community goods shall be the territory of the country if the goods are within the territory of the country at the moment of their entry into the Community, except where the goods are subject to the regime which, if these were non-Community goods, would allow to place them under customs warehousing arrangements for being placed in temporary storage, to place them in a free zone or a free warehouse for inward processing arrangements, or to place them under the arrangements for temporary importation with total exemption from import duty or under internal transit arrangements. In the latter cases the place of import of the Community goods referred to above shall be the territory of the country within which the goods cease to be covered by the said regime or internal transit arrangements under which they have been placed. 4. Similarly, the place of import of Community goods shall be the territory of the country when, on entry into the Community, the goods are outside the territory of the country but, on entry into the Community, they are placed under the arrangements which, if these were non-Community goods, would allow to place them under customs warehousing arrangements for placing them in temporary storage, to place them in a free zone or a free warehouse, to subject them to inward processing arrangements, or to place them under the arrangements for temporary importation with total exemption from import duty or under internal transit arrangements and within whose territory the goods cease to be covered by the regime under which they were placed or within which the goods cease to be covered by the internal transit arrangements. Article 13. The Place of Supply of Services (with the Exception of Transport Services) 1. Unless otherwise established in this Article or Article 131, the place where a service is supplied shall be deemed to be the territory of the country if the supplier has established his business within the territory of the county, i.e. the supplier of service has a fixed establishment (if it is not a natural person) or if he has his permanent address or usually resides (if he is a natural person) in the Republic of Lithuania, except where the service is performed through the subdivision in a foreign state. The place of the service shall also be within the territory of the country where the service is supplied by a foreign taxable person through its/his subdivision established within the territory of the country. The provisions of this paragraph shall not apply where the services specified in paragraph 6 of this Article are supplied by the supplier established within the territory of the country or the subdivision of a foreign taxable person established within the territory of the country to a taxable person established in another Member State or to any person established outside the Community. 2. Unless otherwise established in this Article or Article 131, the place where the services of agents who act in the name and for the account of another, when they procure for their principal goods or services or supply goods or services shall be situated within the territory of the country, where the principal transaction (i.e. supply of goods or services) has taken place under this Law within the territory of the country, except in cases where the services of agents are supplied to a VAT payer identified for purposes of value added tax  in another Member State and he indicated the identification number when acquiring the services. Where the principal transaction under this Law has taken place in another Member State and the services of agents are supplied to a  VAT payer identified for purposes of value added tax  in the Republic of Lithuania while he indicated the identification number when acquiring the services, the place where the services are supplied shall be deemed to be the territory of the country.           3. In derogation from the provisions of paragraph 1 of this  Article, the place of the supply of services connected with property immovable by its nature shall be the territory of the country only provided that the property with which the services are connected is situated or will be constructed within the territory of the country. For the purposes of this provision, services connected with the property immovable by its nature shall include: 1) construction, design and exploration works; 2) lease of property immovable by its nature; 3) services of agents in the hiring, sale and/or purchase of property immovable by its nature,  services of valuation of the property, services of architects, engineers, services of supervision of the property immovable by its nature and other services  connected with the property. 4. By way of derogation from the provisions of paragraph 1 above, the place of the supply of services relating to cultural, artistic, sporting, scientific, educational, entertainment or similar activities, including the activities of the organisers of such activities, and the supply of ancillary services necessary for the supply of the said services, where the services specified in this paragraph should not be considered as electronically supplied services, shall be  deemed to be the territory of the country only provided that  the services are physically carried out within the territory of the country. 5. By way of derogation from the provisions of paragraph 1 above, the place of the supply of the services of valuation of movable property, also work thereon (repair, maintenance, adjustment, etc.), processing and alteration shall be deemed to be the territory of the country if the services are physically carried out within the territory of the country, except in the cases where the person who purchases the services is a VAT payer identified for purposes of value added tax  in another Member State and he indicated the identification number when purchasing the services, while upon the performance of the services, the property is dispatched or transported outside the territory of the country. When the services are physically carried out within another Member State,  and the purchaser of the services has identified for purposes of value added tax in the Republic of Lithuania and indicated the identification number when acquiring the services, while upon the supply of the services the property is dispatched or transported  from that other Member State where the services are physically carried out, the place of the supply of the services shall also be deemed to be the territory of the country. 6. The place of the supply of services listed in this paragraph shall be deemed to be supplied within the territory of the country if they are supplied by the supplier of the services established outside the territory of the country or the supplier of the services established within the territory of the country through the subdivision in a foreign state to taxable persons of the Republic of Lithuania (with the exception of cases where the services are supplied to the subdivisions of the persons located outside the territory of the country) or to foreign state taxable persons located within the territory of the country. The above provisions shall apply to: 1) transfers and assignments of copyrights and related rights, patents, industrial design, semiconductor topography, trade marks, firm names, secret processes and formulae, transfer of rights under the franchise agreement and other similar rights; 2) services of consultants, lawyers, auditors, accountants, engineers (not referred to in subparagraph 3 of paragraph 2 of this Article), technical control and analysis, market survey, public opinion polling and other similar services; 3) development, sale and other transfer of non-standardised software, data processing, transmission of information (where such services should not be considered as electronically supplied services; 4) insurance and financial services (with the exception of the hire of safes); 5) the supply of staff (with the exception of teaching and training of staff); 6) advertising services; 7) telecommunications services; 8) electronically supplied services (inter alia such as: website supply, web-hosting, distance maintenance of programmes and equipment, supply of software and updating thereof, making databases available, supply of music, films and games,  supply of distance teaching, etc. If the supplier and the purchaser communicate by electronic means, but the good or the service is supplied not electronically, the communication shall not be considered as electronically supplied services); 9) radio and television broadcasting services; 10) the hiring out of movable tangible property, with the exception of all forms of transport; 11) obligation to refrain from performing the activities specified in this paragraph or from exercising any of the rights specified in the said paragraphs; 12) the granting of the right to access natural gas and electricity supply systems, to transport natural gas and/or electricity by natural gas and electricity supply systems and to other services directly related thereto; 13) the services of agents when they procure for their principal any of the services referred to in this paragraph. 7. In derogation of paragraph 1 of this Article, the place of the supply of electronically supplied services shall also be deemed to be within the territory of the country  in the case when they are supplied to  the person who is not a taxable person, who has its seat (if it is not a natural person) or has his permanent address or usually resides (if he is a natural person) within the Republic of Lithuania by the person who has established his business outside the te …