LAW ON VALUE ADDED TAX

In short

This law establishes how Value Added Tax (VAT) is applied and defines the responsibilities of individuals and entities involved in paying this tax.

What it regulates

The imposition of Value Added Tax (VAT).
The obligations of taxable persons regarding VAT.
The obligations of VAT payers regarding VAT.
The obligations of other persons incidental to the payment of VAT.

Who it concerns

Taxable persons of the Republic of Lithuania or a foreign state.
VAT payers and other persons involved in the payment of VAT.

Key points

"Taxable person" means any taxable person of the Republic of Lithuania or a foreign state.
"Economic activities" include activities seeking any income, but exclude employment, activities of state and local government authorities, holding of shares, keeping bank deposits, and occasional transactions.
"Capital assets" are tangible property used in economic activities for over one year, with an acquisition price not less than fixed by the taxable person.
The "Standard rate of VAT" is 18 %.

Įstatymo tekstas

LAW ON VALUE ADDED TAX Official translation REPUBLIC OF LITHUANIA LAW ON VALUE ADDED TAX 5 March 2002 No IX-751 Vilnius CHAPTER ONE GENERAL PROVISIONS Article

Purpose of the Law This Law establishes the imposition of the value added tax (hereinafter referred to as VAT) and the obligations of taxable persons, VAT payers and other persons incidental to the payment of the tax. Article
Definitions For the purposes of this Law:
"Taxable person" shall mean any taxable person of the Republic of Lithuania or a foreign state.
"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.
"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.
"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.
"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.
"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.
"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.
"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.
"Movable" shall mean any property except for that referred to in paragraph 15 of this Article.
"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.
"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.).
"Reduced rate of the VAT" shall mean the rate of VAT fixed in this Law below the standard rate, except for the zero-rate.
"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.
"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.
"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.
"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.
"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.
"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.
"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.
"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.
"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.
"A good" shall mean any thing (including notes and coins of numismatic interest), also electricity, gas, heat and other types of energy.
"VAT deduction" shall mean the proportion of input and/or import VAT , deductible under the provisions of this Law.
"VAT payer" shall mean a taxable person registered by the tax administrator as the VAT payer.
"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.
"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.
"Standard rate of VAT" shall be 18 %.
"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.
"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.
"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.
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). Article
Scope of VAT
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 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. Article
Supply of Goods
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.
The actual handing over of goods, pursuant to a contract for the sale of goods on deferred terms or under a contract of payment in instalments, if under the terms of the transaction ownership shall pass to the person to whom the goods have been handed or to the third party upon payment of the final instalment shall also constitute supply of goods for the purposes of this Law. For the purposes of this Law, the handing over of goods, if under the terms of the transaction ownership of goods may (but not necessarily shall) pass upon the payment of the final instalment, shall be treated as supply of services (lease).
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. Article
Private use of goods by a VAT payer
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.
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.
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).
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.
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.
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
Manufacture of Tangible Capital Assets by a VAT Payer himself
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.
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
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 any other transfer of software; 2) lease; 3) assignment of intangible property and title, except for the cases provided in Article 4

(3)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

Private use of Services by a VAT Payer
For the purposes of this Law, private use of services by a VAT payer, as it is defined in paragraph 2 of this Article, shall also constitute supply of services for consideration.
The following shall be treated as private use of services by 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 Article 5

(2)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.

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
Special Rules Applied in respect of Certain Transactions
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.
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.
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).
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)).
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
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
Agency
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.
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
Criteria for Determination of the Place of Supply of Goods
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 the third party).
If the goods are not transported, the place of supply shall be deemed the place where the goods are when the supply takes place. Article
Criteria for Determination of the Place of Supply of Services
Unless otherwise established in this Article, the place where a service is supplied shall be deemed to be the place where the supplier has established his business, i.e. where the supplier of service has its seat (if it is not a natural person) or the place where he has his permanent address or usually resides (if he is a natural person), however, when services are performed through the subdivision of the taxable person established in the country other than that where the taxable person himself has established his business, the place of supply of service shall be deemed to be the place where the specified subdivision is located.
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 place where the property with which the services are connected is situated or will be constructed. 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 sale and/or purchase of immovable property, 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.
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 where appropriate, the supply of ancillary services shall be the place where the services are physically carried out.
By way of derogation from the provisions of paragraph 1 above, ancillary transport services (loading, unloading, handling of cargo, driving of empty wagons and/or containers, arranging transportation of goods by stationary transport installations and other ancillary services connected with the transportation of cargo by certain means of transport or stationary transport installations) shall be considered supplied in the place where the services are physically carried out.
By way of derogation from the provisions of paragraph 1 above, the services of valuation of movable property, also work thereon (repair, maintenance, adjustment, etc.) shall be deemed supplied in the place where the services are physically carried out.
By way of derogation from the provisions of paragraph 1 above, the services listed in this paragraph shall be considered supplied in the place where the purchaser of services (customer) is established , i.e. where the seat of the purchaser is located (if the purchaser is not a natural person) or where the purchaser has his permanent address or usually resides (if the purchaser is a natural person), however, in the cases where the services are supplied to a subdivision of a taxable person located in a country other than that in which the taxable person himself has his seat, the services shall be considered supplied in the place where the specified subdivision is located. 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 this Article, paragraph 2, subparagraph 3), technical control and analysis, market survey, public opinion polling and other similar services; 3) development, sale and other transfer of software, data processing, transmission of information; 4) insurance and financial services (with the exception of the hire of safes), when supplied by insurance companies, banks, other credit institutions, pension funds, collective investment entities or intermediaries of public trading in securities; 5) the supply of staff (with the exception of teaching and training of staff); 6) advertising services; 7) telecommunications services; 8) obligation to refrain from performing the activities specified in this paragraph, subparagraphs 1-7 or from exercising any of the rights specified in the said subparagraphs; 9) the services of agents when they procure for their principal any of the services referred to in subparagraphs 1-8 above.
By way of derogation from the provisions of paragraph 1 above, in the case of lease of movable tangible property, the place of supply of the service shall be the place of actual utilisation of the leased property. The property shall be considered utilised in the territory of the country if the supplier of the service or the purchaser/customer is unable to submit evidence confirming that the leased property has been exported from the territory of the country.
By way of derogation from the provisions of paragraph 1 above, the place where transport services are supplied shall be the place where transport takes pace. If the transport services are carried out both inside and outside of territory of the country, it shall be considered that the share of the service supplied within the territory of the country is proportionate to the part of the route running through the country's territory. CHAPTER TWO CHARGEABLE EVENT AND TAXABLE AMOUNT Article
Chargeable Event
Unless otherwise provided in this Article, VAT on the good or service supplied shall become chargeable upon the issue, in the manner established in this Law, of the VAT invoice or any other accounting document serving under this Law as invoice for the supply of goods or services.
Where a VAT invoice or other document serving as an invoice for the supply of goods or services is not issued, VAT shall become chargeable upon the occurrence of that of the specified events, which occurs first, when: 1) the good is delivered or the service is supplied, or 2) the consideration for the supplied good or service is received.
Where, in accordance with the provisions of this Law, obligation to calculate and pay VAT on the good delivered or service supplied by a foreign taxable person lies with the purchaser/customer, VAT on said good or service shall become chargeable upon the occurrence of that specified event, which occurs first: 1)when the purchaser/customer receives the invoice for the supply of goods or services; 2) when the purchaser/customer pays the consideration for the supplied goods or services; 3) on the last day of the tax period following the tax period when the goods or services were in fact supplied, provided no event specified in subparagraphs 1 and 2 of this paragraph occurred by the said day.
By way of derogation from the provisions of paragraphs 1, 2 and 3 of this Article, where payment for the goods or services is made in full or in part before the delivery of goods or supply of services, VAT shall become chargeable upon the receipt of the above-mentioned full or partial consideration on the amount received, provided that according to the terms of the contract the goods will be delivered or all services will be supplied not earlier than 12 months after the date of conclusion of the contract (hereinafter in the Law full or partial consideration payable before the delivery of the good or supply of the service shall be referred to as payments on account ). The provisions of this paragraph shall not be applicable in the cases where the taxable amount is the margin calculated in the manner laid down in Articles 102 and 107 of this Law.
By way of derogation from other provisions of this Article, in the cases where goods are supplied as specified in Article 4

(2)of this Law , VAT shall become chargeable upon the issue, in the manner laid down in this Law, of the VAT invoice or any other accounting document serving as invoice for full or partial consideration for the goods supplied, whereas in the cases where the invoice or any other accounting document serving as invoice is not issued - upon the receipt of the consideration, however, in the cases where payment on account is received for the good supplied in the above manner, the provisions of paragraph 4 of this Article shall apply.

By way of derogation from other provisions of this Article, in the case where long-term services are supplied (i.e. services which are supplied for a certain continuous period (telecommunications, lease, etc.), also in the case of long-term supply of electricity, gas, heat, and other types of energy VAT shall become chargeable not later than upon the issue, in accordance with the procedure laid down in this Law, of the VAT invoice or any other accounting document serving as invoice for the supply of goods or services during the accounting period, and in case the invoice or any other accounting document serving as invoice for the supply of goods or services is not issued - upon the receipt of the consideration for the amount of goods or services supplied during the accounting period. If, upon the expiry of the time period fixed in the legal acts regulating accounting, neither the invoice or any other accounting document serving as invoice for the supply of goods or services during the accounting period has been issued, nor the consideration has been received, the obligation to calculate VAT shall arise on the day following the expiry of the said time period within which the document had to be issued. Where under the contract of lease the leased property is to be delivered to the lessee not earlier than after 12 months from the date of conclusion of the contract and the payment on account is received, the provisions of paragraph 4 of this Article shall apply. If the services or goods specified in this Article are supplied by a foreign taxable person and, according to the provisions of this Law, the obligation to calculate and pay VAT on the good delivered or service supplied by a foreign taxable person lies with the purchaser/customer, VAT on said good or service shall become chargeable upon the occurrence of that of the below-specified events, which occurs first: 1) upon receipt by the purchaser/customer of the invoice for the amount of goods or services supplied during the relevant accounting period; 2) upon payment of the consideration by the purchaser/customer for the amount of goods or services supplied during the relevant accounting period (including the payments on account payable under the contract of lease providing for the transfer of the leased property to the lessee not earlier than 12 months after the date of conclusion of the contract); 3) on the last day of the month following the accounting period, provided none of the events specified in subparagraphs 1 and 2 of this paragraph has occurred by the said day.
VAT on private use of goods and/or services by the VAT payer shall become chargeable at the moment of such use of the good or of the service.
The VAT shall become chargeable on the tangible capital assets manufactured by the VAT payer himself when the VAT payer starts to use the assets in his economic activities (in case of material improvement of a building/structure - upon the completion of the improvement works).
Import VAT shall become chargeable when, in accordance with the Customs Code, customs debt on importation is incurred. Article
Taxable Amount
The taxable amount which is the base for calculation of VAT shall comprise the consideration (excluding the VAT itself) which has been or is to be obtained by the supplier of goods or services (hereinafter in this Article - the seller) or, on his behalf, a third party. Where other goods and/or services are obtained in payment for the goods or services supplied, the consideration that would have been obtained if obtained in money shall constitute the taxable amount which is the base for calculation of VAT.
In the cases specified in Article 5

(2)or subparagraph 2 of Article 8

(2)of this Law the acquisition price of the transferred or used object of the right of ownership, i.e. the purchase price (excluding the VAT itself) or the cost price of manufacture by the VAT payer himself (excluding the VAT itself) shall constitute the taxable amount. Where the transferred or used object of the right of ownership was the VAT payer's capital assets, the taxable amount shall be equal to the non-depreciated/non-amortised share of the assets' value at the time the tax becomes chargeable, calculated in accordance with the laws regulating the taxation of profit (income). 3. In the case specified in subparagraph 1 of Article 8

(2)of this Law, the taxable amount shall be the expenses of the VAT payer (excluding the VAT itself) incurred upon giving the object of the right of ownership for use. When the object of the right of ownership given for use is the VAT payer's capital assets, the amount of depreciation of the assets, which would be calculated under the laws regulating the taxation of profit (income) for the period during which the assets were given for use in the said manner, shall be attributable, inter alia, to the expenses incurred by the VAT payer.

In the case specified in Article 6 of this Law the taxable amount shall be the cost price of the capital asset manufactured by the taxable person himself (in case of material improvement of the building/structure - the value of the said works) (excluding the VAT itself).
The taxable amount shall in all cases include: 1) all taxes, duties, levies and charges, excluding the VAT itself; 2) expenses incidental to the supply of a good or service and charged to the purchaser (such as packing, transport, insurance costs, etc.); 3) any subsidies or grants directly linked to the final price of the good or service.
A subsidy or grant shall be considered as directly linked to the final price of the good/service provided all the following conditions are met: 1) it is paid to the seller; 2) it is paid by a third party; 3) the amount constitutes the consideration for the good/service or a part thereof.
The taxable amount shall not include: 1) price discounts and rebates allowed at the time of the supply of the good or service; 2) the amounts received by the seller as repayment for expenses paid out for the third persons in the name, for the benefit and on the account of the purchaser. The amount of the repayment in this case must be equal to the actual amount of the seller's expenditure in the above transactions; 3) default interest.
Where, after the occurrence of the chargeable event, the good or service is refused or returned or the seller allows discounts or rebates (upon compliance with certain additional terms and conditions or for other reasons), the taxable amount in respect of the good or service shall be reduced accordingly.
The value of packing in which the goods are supplied (bottles, crates, containers or other packing necessary for keeping the goods) shall be excluded from the taxable amount of the supplied good only in the case where there is an agreement between the seller and purchaser to return the packing to the seller; however, if the packing is not returned within 12 months, the taxable amount in respect of the goods calculated by the seller must be increased by the amount equal to the value of the unreturned packing. Where the value of the returned packing are lower than the amount specified in the agreement, the taxable amount calculated by the seller must be increased by the amount equal to the difference in the values of packing. Where there is no agreement regarding the return of the packing, the value of the packing shall be included in the taxable amount of the goods supplied. Where the packing, the costs whereof have been included in the taxable amount of the goods supplied, is later returned, whereas the person returning the packing is refunded or is due to be refunded the amount equal to the value of the packing, the taxable amount of the goods shall be reduced by the amount equal to the value of the returned packing.
Where in case of the supply of goods or services it is provided that the purchaser must pay interest (for the deferred time of payment, also in case of financial lease (leasing), etc.) the amount whereof is specified in the contract, the sum of interest shall not be included in the taxable amount of the goods or services supplied. In such case it shall be considered for the purposes of this Law that two transactions have been effected - the principal transaction of supply of goods or services and the ancillary transaction - that of granting of credit, the taxable amount whereof comprises the above-specified interest.
Where the natural person who is the VAT payer transfers the property to another person and the person or the third party acquires the right to dispose of the property as its owner, whereas the property has been the person's tangible capital asset and he/she has attributed a part thereof for the performance of his economic activities in accordance with the provisions of this Law, the taxable amount shall be the part of the consideration (excluding the VAT itself) corresponding to the part of the asset attributed for the performance of economic activities.
The provisions of this Article shall not be applied in the cases specified in Chapter XII of this Law where the taxable amount in respect of supplies of goods and services shall be that which constitutes the margin calculated according to the procedure laid down in the Chapter.
The taxable amount in respect of imported goods on which the VAT on importation is levied shall be calculated by adding the following amounts (insofar as they are not already included in the customs value of the goods) to the customs value determined on the basis of the Customs Code and the legal acts regulating the application thereof: 1) the paid or payable duties, taxes and other charges due outside the Republic of Lithuania and duties and taxes on the products due in the Republic of Lithuania by reason of importation (excluding the VAT itself); 2) costs of transportation of goods, also ancillary transport services and insurance, costs of paid or due commission for agency services and packing costs, incidental to transportation of goods up to the first place of destination within the customs territory of the Republic of Lithuania. For the purposes of this Article, first place of destination within the customs territory of the Republic of Lithuania shall mean the place of delivery of goods indicated on the consignment notes or, in the absence of such an indication, the first place of transfer of goods into the customs territory of the Republic of Lithuania; 3) incidental expenses, such as costs of services specified in subparagraph 2 of this paragraph, where they result from transport to the first place of destination within the customs territory of the Republic of Lithuania, if that place is known when the chargeable event occurs.
For the purposes of Article 9

(3)and

(4)of this Law, the taxable amount shall be the value of the object of the right of ownership which is transferred. 15. For the purposes of Article 9

(5)of this Law the taxable amount shall be the total costs of the works of material improvement of the building/structure (where the material improvement of the building/structure is handed over to the owner thereof immediately after the completion of the works) or a portion thereof corresponding to the number of years remaining until the expiry of adjustment period for VAT deductions, fixed in the this Law (where the material improvement of the building/structure is handed over to the owner at a later date). Article

Taxable Amount in Case of Agency Services
The taxable amount in respect of the services supplied by the disclosed agent shall be the amount of consideration for agency (commission) calculated according to the procedure laid down in Article 15 of this Law.
The taxable amount in respect of supplies of goods and services both to the disclosed agent and by the agent himself shall be determined as the total value of the supplied goods or services calculated according to the procedure established in Article 15 of this Law. Article
Calculation of the Taxable Amount on the Decision of the Tax Administrator
In the cases where the tax administrator has grounds to suspect that the taxable amount of the supplied good or service has been artificially increased or reduced, it shall have the right to calculate the taxable amount . The taxable amount of the supplied good or service may be considered artificially reduced or increased in the case where upon giving due consideration to all conditions of the transaction the taxable amount does not correspond to the open market value of the good or service (it has been fixed having regard to an individual purchaser - related person, etc.).
The taxable amount shall be calculated, on the decision of the tax administrator, on the basis of the open market value determined in accordance with the methods approved by the Government of the Republic of Lithuania or an institution authorised by it and following the procedure of their application.
The provisions of this Article shall not apply to the supply of goods or services effected for a consideration fixed by state or municipal institutions and agencies or in the international agreements of the Republic of Lithuania. CHAPTER THREE RATES OF VAT Article
Application of the Rate of VAT The rate of VAT applicable to the supply of goods or services and the importation of goods shall be that rate of VAT fixed in this Law which was in force the at the time when VAT became chargeable on the goods or services supplied or customs debt on importation was incurred. Article
Rates of VAT
In the cases of supply of goods and services, which are not provided in paragraphs 3,4 and 5 of this Article and Chapter IV of this Law, standard rate of VAT shall be applied.
Standard rate of VAT shall apply to imports of goods which are not indicated in paragraph 3 of this Article and in Chapter V of this Law.
The reduced rate of VAT of 5% shall be applied to: 1) passenger transport by regular routes determined by the Ministry of Transport and Communications or an institution authorised by it, passenger transport by passenger trains as well as transportation of passenger luggage referred to in this subparagraph; 2) books, newspapers and magazines, except for publications publicising eroticism and violence, which have been recognised as such by an institution authorised by legal acts; 3) pharmaceuticals and medicinal products (special purpose food products for children, special medicinal purpose food products and special medicinal body and dental care products, pharmaceutical products, medical devices, compensatory equipment, medical aid devices and articles of personal hygiene). The list of medicinal products indicated in this subparagraph, on which VAT is chargeable at the reduced rate of 5%, shall be approved by the Government of the Republic of Lithuania; 4) accommodation at hotels and other special accommodation services supplied according to the procedure laid down in the legal acts regulating tourist activities; 5) organic food products (the requirements for organic food products shall be laid down by the Government of the Republic of Lithuania); 6) chilled meat and edible offal (with the exception of meat and edible offal of poultry) if it conforms to the standards approved by the Department of Standardisation under the Ministry of the Environment of the Republic of Lithuania; 7) chilled, frozen and deep frozen meat and edible offal of poultry if it conforms to the standards approved by the Department of Standardisation under the Ministry of the Environment of the Republic of Lithuania.
Reduced 9% rate of VAT shall be applied to supplies of services relating to construction, renovation, insulation and design of residential houses, engineering network building and territorial management, which are financed with state and municipal budget resources as well as with soft credits granted by the state and resources of state special funds.
Zero-rate of VAT shall be charged on the supplies of goods and services specified in Chapter VI of this Law. CHAPTER IV SUPPLIES, EXEMPT FROM VAT Article
Goods and Services Related to Health Care
Personal and public health care services provided by health care institutions within the meaning of relevant laws, as well as natural persons who have acquired, according to the procedure established by legal acts, the right to provide the above services shall be exempt from VAT.
Supplies of goods by the persons specified in paragraph 1 of this Article as well as supplies by the said persons of services other than those referred to in paragraph 1 of this Article shall be exempt from VAT provided all the following conditions are met: 1) the goods and services are supplied to the users of services referred to in paragraph 1 of this Article; 2) the supply of the above goods and services is linked to the supply of services referred to in paragraph 1 of this Article.
The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article.
Therapeutic substances of human origin and human milk, also dental prostheses supplied by dentists and dental technicians shall be exempt from VAT.
The supply of transport services for sick or injured persons or other persons in need of medical aid in vehicles specially designed for the purpose shall be exempt. Article
Social Services and Connected Goods
Exempt from VAT shall be the supply of social services by children and young people care institutions, by old people's homes and/or by the care/guardianship institutions for the disabled or by other non-profit making legal persons.
The supplies of goods and services other than those specified in paragraph 1 of this Article by the persons referred to in paragraph 1 of this Article shall be exempt from VAT provided the following conditions are met: 1) the goods and services are supplied for the users of services specified in paragraph 1 of this Article; 2) the supply of the above goods and services is linked to the supply of services referred to in paragraph 1 of this Article.
The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article. Article
Education and Training Services
Pre-school education, primary, general, secondary, tertiary and higher education, additional training of children and young people (in art, music, other spheres), studies at higher educational establishments, vocational training shall be exempt from VAT if provided by legal persons who are qualified under laws to provide the above services, also exempted shall be in-service training and retraining, where the services are supplied by non-profit making legal persons who have acquired the right to supply the services according to the procedure prescribed by legal acts.
Supplies of goods by the persons specified in paragraph 1 of this Article as well as supplies by the said persons of services other than those referred to in paragraph 1 of this Article shall be exempt from VAT provided all the following conditions are met: 1) the goods and services are supplied to the users of services referred to in paragraph 1 of this Article; 2) the supply of the above goods and services is linked to the supply of services referred to in paragraph 1 of this Article..
The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article.
Scientific research carried out by the institutions of science and studies referred to the paragraph 1 of this Article, the type whereof is linked to the supplied services of higher education and/or studies shall be exempt from VAT.
Tuition given by natural persons shall be exempt from VAT provided their syllabi correspond to the general, secondary and higher education syllabi in the respective subject. Article
Cultural and Sports Services
Cultural services supplied by non-profit making legal persons shall be exempt from VAT. For the purposes of this Article, the following shall be considered as cultural services: 1) activities of museums, zoological and botanical gardens, circus; 2) various cultural events (theatre performances, choreographic performances, cultural events for children and young people, art exhibitions and exhibitions of folk art, etc.), film production (including ancillary activities - dubbing, subtitling, etc.), film rent and demonstration; 3) services in the field of bibliography and information supplied by libraries.
Supplies of goods by the persons specified in paragraph 1 of this Article as well as supplies by the said persons of services other than those referred to in paragraph 1 of this Article shall be exempt from VAT provided all the following conditions are met: 1) the goods and services are supplied to the users of services referred to in paragraph 1 of this Article; 2) the supply of the above goods and services is linked to the supply of services referred to in paragraph 1 of this Article.
The Government of the Republic of Lithuania shall have the right to lay down the conditions of and impose restrictions on the application of provisions of paragraph 2 of this Article.
Supply of services linked to physical education and sport by non-profit making legal persons shall be exempt from VAT. For the purposes of this Law, the following services shall be considered linked to physical education and sport: 1) granting of the right to participate in a cultural or sport event. The provisions of the subparagraph shall not be applicable to the sale of tickets to physical education or sporting events; 2) supply of services to the participants in physical education or sporting events directly linked to their participation, i.e. the granting of the right to use special premises, territories and/or inventory for physical education and sport, the services of training of participants and other similar services. The services relating to provision of accommodation, catering and transport shall not be attributable to the above-mentioned services. Article
Activities of Non-profit Making Legal Persons, not Specified in Articles 20, 21, 22 and 23
Services supplied to their member by political parties, trade unions and other non-profit making legal persons set up and operating on the membership basis shall be exempt from VAT provided that the services conform to the aims of the legal person determined in the bylaws/regulations thereof and no consideration is obtained for the above services in addition to membership fees. The provisions of this paragraph shall be applied to the activities of non-profit making legal persons only where the payment of members' fee may be linked to the specific service supplied for the benefit of a specific member.
Supply of services by religious communities, societies and centres for the benefit of their members if the services conform to the aims provided in the cannons, statutes and other norms of the said persons and, save for donations, no additional consideration is received for the services, shall be exempt from VAT. The provisions of this paragraph shall be applied to the activities of the above-mentioned legal persons only where the donations may be linked to a specific service supplied for the benefit of a specific member.
Supply of services by a non-profit making legal person whose regulations (bylaws, statutes, cannons and other norms) provide for the activities indicated in Articles 20, 21 or 22 of this Law shall be exempt from VAT if the non-profit making legal person supplies another person with staff, required for the supply of certain services indicated in Articles 20, 21 or 22 of this Law.
Supplies of goods and/or services by non-profit making legal persons during charitable and sponsorship events organised by the said persons (including sale of tickets to the events) shall be exempt from VAT if the balance of the collected funds remaining after covering the expenses related to the organisation of the event are to be allotted only for charity and/or community service engaged in by the above persons. The provisions shall be applicable to not more than 12 charitable and sponsorship events organised by a specific legal person in the course of a calendar year. If more than 12 events are organised during a calendar year, each subsequent event and related supplies of goods and/or services shall be subject to VAT according to the procedure laid down in this Law. For the purposes of this Law, a cultural event (theatrical, musical, choreographic, etc.), a fair or a similar event shall be considered a charitable or sponsorship event provided it is indicated during the preparatory stage of the event (on the tickets, posters or otherwise) that after covering the organisational expenses, the total balance of the funds collected during the event will be allotted for charity and/or community service performed by the legal person organising the event. For the purposes of this Law, charity and community service shall be interpreted in accordance with the definition of the terms in the Law of the Republic of Lithuania on Charity and Sponsorship.
If it is established that due to the application of provisions of paragraph 4 of this Article the goods and/or services supplied by non-profit making legal persons have gained unjustified competitive advantage over the goods and/or services supplied by other taxable persons which are or may be competitive, the Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish limitations of the value and types of goods and services supplied at charitable and sponsorship events, to which the provisions of paragraph 4 of this Article are applicable. Article
Postal Services
Universal postal services and other postal services supplied by the suppliers of postal services shall be exempt from VAT.
The list of postal services referred to in paragraph 1 of this Article which are exempt from VAT shall be approved by the Government of the Republic of Lithuania or an institution authorised by it.
The provisions of this Article shall not be applicable to the sending of postal parcels. Article
Radio and Television
Supply to the public of public information services by non-profit making legal persons - radio and/or television broadcasters shall be exempt from VAT.
The provisions of paragraph 1 of this Article shall not be applicable to the sale of broadcasts, advertising services and other commercial activities. Article
Insurance Services All types of insurance and re-insurance services, except for those indicated in Article 46 of this Law, shall be exempt from VAT. Article
Financial Services
Granting of credit, also management of the granted credit by the taxable person granting it shall be exempt from VAT.
Unless otherwise provided in Article 46, the granting of financial guarantee or other security for money, also management of the granted guarantee or security shall be exempt from VAT if performed by the taxable person granting the guarantee or security.
The services of taking and managing of deposits and other repayable funds, clearing services between banks and/or other credit institutions, also other services connected with the arrangement of settlements, money transfer, organisation of non-cash settlement (including issue of bank cards or other payment instruments, servicing of the holders thereof and performance of transactions related thereto), issue of letters of credit and transactions related thereto, also transactions related to debts and debt obligations shall be exempt from VAT. The provisions of this paragraph shall not be applicable to debt collection services, also to the factor's services supplied under the factoring agreement.
Currency transactions (including currency exchange), also accepting contributions in cash and disbursing payments, cash management and other services directly connected with bank notes and coins of any currency shall be exempt from VAT.
Transactions in securities, derivatives, also agency services in the above-mentioned transactions (organisation, making, registration, etc. of the issue) shall be exempt from VAT. The provisions of this paragraph shall not be applicable with respect to: 1) transactions in securities establishing any rights to the property immovable by its nature; 2) transactions in securities (except for those specified in Article 111 of this Law) establishing title to goods not specified in subparagraph 1 of this paragraph,; 3) transactions in securities establishing the right or obligation to acquire or assign securities specified in subparagraph 2 of this paragraph; 4) safekeeping of securities and/or derivatives; 5) management of securities and/or derivatives portfolios, consulting on investment into securities and/or derivatives, also research of securities and/or derivatives markets.
Management of assets of special investment variable capital companies, investment funds and pension funds as well as management of funds of pension programmes shall be exempt from VAT.
Where the purchaser/customer is a VAT payer, the taxable person who grants credit shall have a right of option to calculate VAT on the interest in the manner prescribed by this Law.
A detailed list of services indicated in paragraphs 1-4 of this Article shall be determined by the institution authorised by the Government of the Republic of Lithuania. Article
Special Marks Exemption from VAT shall be granted to postal prepayment impressions and other special marks specified in the list approved by the Government or an institution authorised by it, which are sold at face value. The above provision shall be applicable only to those postal prepayment impressions which may be used in the Republic of Lithuania for confirming payment for a supplied postal service. Article
Betting, Gambling and Lotteries Exemption from VAT shall be granted to collection of payments from the participants in the lottery in the amount of nominal value of lottery tickets/cards, also collection of payments from the participants in the betting or gambling irrespective of whether or not the payment in of the amount has to be confirmed by issuing the participant in the game with a chip, card, etc. Article
Letting and Leasing of Property Immovable by its Nature
Exemption from VAT shall be granted to the letting or leasing of residential premises, with the exception of: 1) the provision of accommodation in hotels, motels, camping sites or in sectors with a similar function; 2) the letting or leasing of residential premises not specified in subparagraph 1 of this paragraph, for a term not exceeding 2 months; 3) the leasing of residential premises where under the conditions of the contract or several interrelated contracts the right of ownership to the leased premises may pass to the lessee or the third party not later than upon the expiry of the term of lease and/or upon the payment of the last instalment. The provisions of this subparagraph shall be applicable only in cases where the transaction/transactions have been concluded with respect to the premises which at the moment of transfer thereof for use are located in a new building or structure or in the section of a new building or structure within the meaning of Article
Exemption from VAT shall be granted to the letting or leasing of items of property immovable by its nature other than residential premises, with the exception of: 1) the letting or leasing of premises, sites, garages for parking or keeping of any means of transport (including aircraft, ships, rolling stock) or other property with a similar function, immovable by its nature; 2) the letting or leasing of any permanently installed equipment (including safes) in keeping with the concept of property immovable by its nature; 3) the leasing of property immovable by its nature where under the conditions of the contract or several interrelated contracts the right of ownership to the leased property may pass to the lessee or the third party not later than upon the expiry of the term of lease and/or upon the payment of the last instalment. The provisions of this subparagraph shall be applicable only in cases where the transaction/transactions have been concluded with respect to the premises which at the moment of transfer thereof for use are located in a new building or structure or in the section of a new building or structure within the meaning of Article
The taxable person shall have a right of option for calculating VAT, in the manner established in this Law, on the letting or leasing of property immovable by its nature, which is exempt from VAT under paragraph 1 or 2 of this Article, but only in the case where the property is let or leased to the VAT payer.
Termination for a consideration of the contract of lease of property immovable by its nature shall be exempt from VAT if the leasing of the property was exempt from VAT. Article
Sale or Other Transfer of Property Immovable by its Nature
The sale or other transfer of buildings, structures or sections thereof (with the exception of new buildings and structures, new sections of buildings and structures) shall be exempt from VAT where under the conditions of the contract the person to whom the property is transferred or a third party acquires the right to dispose thereof as its owner. It shall be considered that: 1) a new building or structure is an unfinished building or structure, also a finished building or structure for a period of 24 months following its completion (after it has been found fit for use) or following its material improvement; 2) a new section of a building or structure is a section of a new building or structure within the meaning of subparagraph 1 of this paragraph, also a newly built section of an old building or structure - for a period of 24 months following its completion.
Exemption from VAT shall be granted to the sale or any other transfer of land where under the contract conditions the person to whom the land is transferred or a third party acquires the right to dispose thereof as its owner, with the exception of the land transferred together with a new buildings or structures or sections thereof as well as building land. Within the meaning of this Article, building land means a plot of land assigned for construction works regardless of whether or not any development of the plot has been undertaken.
A taxable person shall have the right of option to calculate VAT in the manner prescribed by this Law on the property immovable by its nature which is exempt from VAT under paragraph 1 or 2 of this Article, however, only in the case where the property is sold or otherwise transferred to the VAT payer. Article
Special Cases of Exemption of Supplies of Goods or Services from VAT
Supply of goods shall be exempt from VAT where the VAT payer has not deducted any proportion of the input and/or import VAT on the said goods on the ground that: 1) the goods have been acquired or imported by the VAT payer for the activities, which do not provide for deduction of input and/or import VAT; or 2) input and /or import VAT on the said goods is not deductible according to the provisions of Article 62

(2)of this Law, .

Other cases when supplies of goods and services are exempt from VAT are specified in Section Four of Chapter XII of this Law. CHAPTER V IMPORTS, EXEMPT FROM VAT Article
Importation of Goods Supply whereof in the Territory of the Country is Exempt from VAT Imported goods shall be exempt from import VAT if under the provisions of this Law the supply thereof in the territory of the country would be in all cases exempt from VAT. Article
Goods Importation whereof is Exempt from VAT under the Customs Code Imported goods which are exempt from import taxes under the Customs Code shall be exempt from VAT on importation. Article
Goods Intended for Diplomatic Missions, Consular Institutions and Representations of International Organisations as well as the Staff of the Representations and Institutions and their Family Members
Goods imported for use in the official activities of foreign state diplomatic missions or consular institutions shall be exempt from import VAT. Exemption from import VAT shall also be granted to imported goods intended for the personal use and/or for establishment of the place of residence of diplomatic staff members of the representations and institutions, consular officers, members of administrative technical personnel and their family members living together, where aforesaid persons are not citizens of the Republic of Lithuania and have a permanent address or usually reside outside the Republic of Lithuania.
In the cases determined in the international agreements to which the Republic of Lithuania is a party, exemption from import VAT shall be granted to goods imported for official activities of representations of international organisations as well as imported goods intended for the personal use and/or for establishment of the place of residence of diplomatic staff members of representations, members of administrative technical personnel and their family members living together, where aforesaid persons are not citizens of the Republic of Lithuania and have a permanent address or usually reside not the Republic of Lithuania.
The procedure of application of provisions of paragraphs 1 and 2 of this Article shall be determined by the Government or the Republic of Lithuania or an institution authorised by it. Article
Goods Imported by Passengers Goods imported by passengers shall be exempt from import VAT in the cases and according to the procedure established by the Government of the Republic of Lithuania, provided the quantity thereof does not exceed the quantity limits prescribed by the Government, which the passengers are allowed to import tax free. Article
Imported Gold Gold imported by the Bank of Lithuania shall be exempt from import VAT. Article
Goods Acquired with Technical Assistance Funds
Imports of goods acquired with technical assistance funds as well as funds received under the international agreement of the Republic of Lithuania, stipulating that funds granted under the agreement may not be used for the payment of VAT, shall be exempt from import VAT.
The procedure for implementing the provisions of paragraph 1 of this Article shall be established by the Government of the Republic of Lithuania or an institution authorised by it. Article
Special Cases of Exemptions on Importation
The following shall be exempt form import VAT: 1) personal property of natural persons transferring their normal place of residence from another country to the territory of the Republic of Lithuania; 2) the property of natural persons transferring their normal place of residence from another country to the territory of the Republic of Lithuania by reason of marriage (trousseaux, household effects), also presents customarily given on the occasion of marriage; 3) imported property acquired by inheritance; 4) outfits, scholastic materials and household effects representing the usual furnishings for a student's room and belonging to students coming to study; 5) agricultural products imported by agricultural producers established in the Republic of Lithuania who obtained the products from properties used by them, located in a foreign county adjoining the territory of the Republic of Lithuania; 6) seeds, fertilisers and products for the treatment of soil and crops, imported by agricultural producers, having their principal undertaking in the foreign country adjoining the Republic of Lithuania, for use on properties used by them in the Republic of Lithuania; 7) laboratory animals and biological and chemical substances intended for use in scientific research; 8) therapeutic substances of human origin, blood-grouping and tissue-typing reagents, human milk; 9) pharmaceuticals and medicinal products used in international sporting events; 10) goods for charitable institutions; 11) honorary awards; 12) gift received in the context of international relations and articles to be offered as gifts (goods received as a gift from the institutions of the host country by persons on an official visit in that country, also goods imported by representatives of foreign state institutions or international organisations, which are to be offered as gifts and goods sent as gifts by foreign states or international organisations in token of friendship and goodwill); 13) articles intended for use by the heads of foreign states on a visit in the Republic of Lithuania; 14) goods imported for the purpose of trade promotion (samples of goods of negligible value, printed matter and advertising material, articles to be used or consumed at international fairs or similar events); 15) articles imported for examination, analysis or test purposes; 16) consignments sent to organisations protecting copyrights or industrial and commercial patent rights (documents relating to objects of industrial property, applications for the registration thereof, etc.); 17) tourist information literature; 18) various documents and data carriers or sound recordings; 19) materials required for the protection of goods during their warehousing and transportation; 20) litter and fodder necessary for animals during their transport; 21) fuel and lubricants present in land motor vehicles and required for their normal operation; 22) goods for the construction, upkeep or ornamentation of memorials to and cemeteries of victims of war, genocide and occupation regimes; 23) coffins containing bodies and funerary urns containing the ashes of deceased persons and ornamental funerary articles.
Concrete conditions, procedure and limitations of application of provisions of paragraph 1 of this Article shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
Exemption from import VAT shall be granted in respect of goods imported by military units of foreign states in compliance with the provisions of the Law of the Republic of Lithuania on International Operations, Military Exercises and other Military Events.
Exemption from import VAT shall be granted with respect to imported ships and aircraft specified in Article 43

(1)and

(2)of this Law (with the exception of aircraft for private use), conventional and requisite equipment incorporated therein and spare parts.

Import VAT shall not be chargeable on goods sent in non-commercial consignments of negligible value (packages with documents, postal packages or postal parcels). A consignment shall be considered of negligible value if the customs value thereof is less than LTL
A consignment shall be treated as non-commercial if all the conditions listed below are satisfied: 1) the receiver of the consignment is a natural person; 2) the items of property contained in the consignment are clearly intended for personal needs, i.e. neither the quantity of goods nor their character gives grounds to presume that the items of property are intended for economic activities; 3) the receiver of the consignment receives it from the sender free of charge; 4) the consignment contains no goods subject to excise duty under the Law of the Republic of Lithuania on Excise Duties.
Other cases of exemption of imports from import VAT are also established in Section Four of Chapter XII of this Law. CHAPTER VI CASES OF APPLICATION OF ZERO-RATE OF VAT TO SUPPLIES OF GOODS AND SERVICES Article
Export of Goods
Unless otherwise established in this Chapter, zero-rate of VAT shall be charged on the supplies of goods, provided the goods are exported.
Zero-rate of VAT shall also be charged on the supplies of goods when these are: 1) intended to be exported and placed in a free zone or in a free warehouse; 2) intended to be exported and produced for temporary storage in places of temporary storage under customs control; 3) delivered to duty-free shops. Article
Goods Exported by Passengers
Zero-rate of VAT shall be applied to goods exported by persons who have their permanent address or usually reside outside the Republic of Lithuania (hereinafter - foreign passenger), which they have acquired in the Republic of Lithuania and the value whereof exceeds the minimum amount prescribed by the Government of the Republic of Lithuania. A foreign passenger must prove that he has his permanent address or usually resides outside the Republic of Lithuania by presenting a document of the type established by the Government of the Republic of Lithuania.
The provisions of paragraph 1 of this Article shall be implemented by refunding the above-mentioned foreign passengers the amount of VAT they have been charged on the goods acquired by them in and exported from the Republic of Lithuania. The procedure for applying the said provisions and cases of the application thereof shall be established by the Government of the Republic of Lithuania. Article
Ships and Aircraft
Zero-rate of VAT shall be charged on the supply, maintenance, repairs and/or modification/modernisation as well as hiring of: 1) sea-going ships used for carrying passengers and/or transport of cargo on international routes and/or for the supply of other services for reward; 2) sea-going fishing ships; 3) ships used for rescue or assistance at sea.
Zero-rate of VAT shall be applied to the supply or hiring of aircraft in the case of supply or hiring of the aircraft to taxable persons who receive more than a half of their annual income from transporting for reward passengers and/or cargo on international routes, also maintenance and repairs of aircraft proceeding on international routes (except for aircraft operating on such routes, which are intended for personal needs).
Zero-rate of VAT shall be charged on the supply of conventional and requisite equipment to the ships and aircraft specified in paragraphs 1 and 2 of this Article and installation thereof in the ships and aircraft, maintenance and repairs of the installed equipment, also supply of spare parts for the above-mentioned ships and aircraft. The provisions of this paragraph shall not be applicable where the aircraft is used for personal needs.
Zero-rate of VAT shall also be applied to: 1) supply of ship maintenance services specified in paragraph 1 of this Article which are subject to port charges, also other direct ship maintenance services; 2) supply of the services of maintenance of aircraft operating on international routes, which are subject to airport or air navigation charges, also other services of direct maintenance of the aircraft. The provisions of this paragraph shall not be applicable where the aircraft is used for personal needs. Article
Fuelling and Provisioning of Ships and Aircraft
Zero-rate of VAT shall be applied to the supply of goods for the fuelling and provisioning of ships specified in Article 43

(1)of this Law, also of war ships leaving the country's territory.

Zero-rate of VAT shall be applied to the supply of goods for the fuelling and provisioning of aircraft operating on international routes (with the exception of aircraft used for personal needs operating on the said routes).
Goods within the meaning used in paragraphs 1 and 2 of this Article shall be goods (food products, etc.) intended for use by passengers and/or crew members on board the above-specified ships or aircraft, also as fuel (motor fuel) and lubricants. The procedure of fuelling and provisioning shall be established by the Government of the Republic of Lithuania or an institution authorised by it. Article
Transport Services and Related Transactions
Zero-rate of VAT shall be applied to the supply of services of transport of goods which are exported or carried in transit through the territory of the Republic of Lithuania as well as to any ancillary services directly related thereto.
Zero-rate of VAT shall be charged on the supply of services of transport of imported goods, also on the supply of any services ancillary to transport and agency services, directly related thereto, if the specified transport and other services: 1) are related to the transportation of the imported goods to the first place of destination within the customs territory of the Republic of Lithuania within the meaning of subparagraph 2 of Article 15

(13)of this Law, and/or 2) are related to the transportation of imported goods from the first place of destination to another place of destination within the customs territory of the Republic of Lithuania, if the destination is known at the time the tax becomes chargeable (customs debt is incurred).

The provisions of paragraphs 1 and 2 of this Law shall also be applicable, according to the above procedure, to the supply of transport and related ancillary services in respect of goods constituting postal consignments sent into and dispatched from the Republic of Lithuania or transported through the territory of the Republic of Lithuania in transit.
The issue of TIR and ATA Carnets shall be subject to zero-rate of VAT.
Zero-rate of VAT shall be applicable to transportation of passengers on international air and water routes, also to the transportation of passenger luggage. Article
Insurance and Financial Services Related to Export Zero-rate of VAT shall be charged on the insurance services, also on the granting of financial guaranty and security, when the above services are supplied by insurance companies, banks or other credit institutions, whereas these insurance services or financial guaranties or securities are directly linked to the export of goods not specified in Chapter IV of this Law. Article
Goods and Services Intended for Diplomatic Missions, Consular Institutions and Representations of International Organisations as well as the Staff of the Representations and Institutions and their Family Members
Zero-rate of VAT shall be applicable to the supply of goods and/or services included in the list approved by the Government of the Republic of Lithuania or an institution authorised by it, which are intended for use in the official activities of foreign state diplomatic missions or consular institutions. Zero-rate of VAT shall also be applied to the supply of goods and services specified in the list approved by the Government of the Republic of Lithuania or an institution authorised by it, intended for the personal use of diplomatic staff members of the representations or institutions, consular officers, members of administrative technical personnel and their family members residing together, where the above-mentioned persons are not citizens of the Republic of Lithuania and have a permanent address or usually reside outside the Republic of Lithuania.
The provisions of paragraph 1 of this Article shall also be applied mutatis mutandis to the representations of international organisations as well as the diplomatic staff members, members of administrative technical personnel of the representations and their family members residing together, if this is provided for in the international agreements of the Republic of Lithuania.
The provisions of paragraphs 1 and 2 of this Article shall be implemented by refunding the amount of VAT paid by the missions or institutions specified in paragraphs 1 and 2 as well as their diplomatic staff members, consular officers, members of administrative technical personnel and/or their family members when purchasing the goods and/or services referred to in paragraphs 1 and
The procedure of application of the above provisions shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
The provisions of paragraph 1 of this Article shall be applied on the grounds of parity. Where the procedure of refund of the VAT (or comparable tax) applied in the foreign state with respect to the diplomatic mission or consular institution of the Republic of Lithuania (list of goods for which the tax is refundable; the amount of tax subject to refund in a year's time, etc.) is less or more favourable than the procedure applied to the diplomatic mission or consular institution of that state in the Republic of Lithuania, the Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish with respect to the diplomatic mission or consular institution of that state in the Republic of Lithuania an accordingly less or more favourable procedure for the refund of the VAT.
The provisions of this Article shall also apply to the goods and services acquired in the Republic of Lithuania by the armed forces of foreign states in accordance with the procedure and in the cases established by the Government of the Republic of Lithuania. Article
Supply of Gold to the Bank of Lithuania Zero-rate of VAT shall be applied to the supply of gold to the Bank of Lithuania. Article
Goods and Services Purchased with Certain Funds
Zero-rate of VAT shall be charged on purchases of goods and/or services that are paid for with the technical assistance funds, also funds received under the international agreement of the Republic of Lithuania where the funds received under the agreement may not be used for the payment of VAT.
The procedure for implementing the provisions of paragraph 1 of this Article shall be established by the Government of the Republic of Lithuania or an institution authorised by it. Article
Goods Supplied to Recipients of Sponsorship
Zero-rate of VAT shall be applicable to the supply of goods to the recipients of sponsorship registered in the Republic of Lithuania, who are specified in the Law of the Republic of Lithuania on Charity and Sponsorship, if the goods are exported as sponsorship by the above-mentioned recipients of sponsorship to organisations functioning abroad which themselves are entitled to receive sponsorship donations under the Law of the Republic of Lithuania on Charity and Sponsorship.
The provisions referred to in paragraph 1 of this Article shall be implemented by refunding to the recipients of sponsorship registered in the Republic of Lithuania the amount of the VAT which they paid for the goods purchased and exported abroad. The procedure of application of the above provision shall be established by the Government of the Republic of Lithuania or an institution authorised by it. Article
Services consisting of Work on Movable Property Zero-rate of VAT shall be charged on the supply of services consisting of work on movable property, where services are supplied to the purchaser of services/customer established abroad, provided the property declared under temporary importation for processing arrangements has been imported for the purposes of undergoing such work and later it or the property obtained after the completion of such services will be transported out of the territory of the country. Should it transpire upon the completion of temporary importation for processing arrangements that the property will not be transported out of the territory of the country, the amount of VAT on the supplied services shall be recalculated applying the standard rate of VAT or the reduced rate of VAT, where applicable . Article
Agency Services in Transactions Specified in this Chapter and Transactions outside the Borders of the Republic of Lithuania
Zero-rate of VAT shall be applied to the services of agents who act in the name and for the account of another, taking part in: 1) the transaction of supply of goods or services, in which zero-rate of VAT is applied under Articles 41-51 of this Law; 2) the transaction of supply of goods or services, in which the supply of goods or services is considered, according to the provisions of this Law, to have been effected outside the territory of the country.
Other cases where, due to transactions performed outside the territory of the country, zero-rate of VAT is charged on the services supplied by travel agents shall be specified in Article 104 of this Law. Article
Supply of Goods under Customs Control inside the Territory of the Country
Zero-rate of VAT shall be charged on the supply of the following goods under the customs control: 1) goods that must be produced to customs to be assigned customs approved treatment; 2) goods placed in temporary storage in the place of temporary storage under the customs control; 3) goods placed in a free zone or placed in a free warehouse; 4) goods which are placed under the arrangements for temporary importation or placed under inward processing or under customs warehousing or under customs-controlled processing arrangements or imported under a declaration for transit arrangements; 5) supply of goods to duty-free shops.
Zero-rated VAT shall be charged on the supply of the services of agents who act in the name and for the account of another when taking part in the supply of goods transactions specified in paragraph 1 of this Article.
Where the goods specified in paragraph 1 of this Article that have been placed under customs control arrangements are started to be used or are lost and under the Customs Code customs debt on importation will not be incurred for the goods, the taxable person who is using/has consumed or has lost the goods must calculate the amount of VAT thereon applying the standard rate of VAT or the reduced rate of VAT, where applicable, and pay the amount into the budget, except in the cases where: 1) the goods have been lost due to force majeure or criminal activities of third persons and this has been proved in the manner established by the Government of the Republic of Lithuania, or 2) goods of such type are used/have been consumed in such a manner that VAT on the purchase or importation thereof could be deductible subject to the provisions of this Law, or refunded under the provisions of Chapter XIII of this Law, if the goods were acquired or imported by the person who has started to use/has consumed them. Article
Goods and Services Linked to Production of Goods Intended for Export (Re-export)
Zero-rate of VAT may be applied to goods supplied to the foreign taxable person who has concluded a transaction with another taxable person of the Republic of Lithuania and the latter is using the goods belonging to the foreign taxable person for the production of goods intended for export/re-export, as well as to the services supplied to the foreign taxable person when goods intended for export/re-export are produced using goods belonging to him. Should it transpire that the goods will not be exported/re-exported, the amount of VAT payable for the services supplied shall be recalculated by applying the standard rate of VAT or the reduced rate of VAT where applicable.
The provisions of paragraph 1 of this Article shall be applicable only in cases where the supplies of goods and services are paid for by the foreign taxable person, regardless of whether payment is effected directly or through the VAT payer who concluded a transaction with him/it relating to production of goods intended for export/re-export. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish additional conditions and restrictions for the application of provisions of paragraph 1 of this Law. Article
Goods the Supply whereof in the Territory of the Country is Exempt from VAT Zero-rate of VAT may not be applied to goods, supply whereof within the territory of the country would be in all cases exempt from VAT pursuant to the provisions of this Law. Article
Furnishing Proof Justifying Application of Zero-rate of VAT
The VAT payer who applied zero-rate of VAT to the exported goods must possess documents proving that the exported goods have been recognised as actually removed from the customs territory of the Republic of Lithuania. The procedure and time limits of issuance or execution of the documents shall be established by the Government of the Republic of Lithuania or an institution authorised by it.
The VAT payer who applied zero-rate of VAT in the cases specified in Article 41, paragraph 2 must possess the relevant customs documents proving that the goods have been produced for temporary storage in places of temporary storage under customs control, placed under free zone arrangement, placed in a free warehouse or delivered into a duty-free shop.
The VAT payer who applies zero rate of VAT in other cases specified in this Chapter must hold documents proving that the transaction constituting supply of goods or services referred to in this Chapter has been effected.
Notwithstanding other provisions of this Article, the tax administrator shall have the right to request, in the manner laid down in the Law on Tax Administration, to furnish other additional proof for ascertaining whether the application of zero-rate of VAT is justified. If the taxpayer is unable to justify the application of zero-rate of VAT to the supply of goods or services, such supply of goods or services shall be subject to the standard rate or reduced rate of VAT where applicable .
Notwithstanding other provisions of this Article, the tax administrator shall have the right, on his own initiative, acting by himself or through the law enforcement institutions authorised for the purpose, to gather additional proof allowing him to ascertain whether the application of zero-rate of VAT was justified. Upon receipt of proof of unjustified application of zero-rate of VAT, such supply of goods or services shall be subject to the standard rate or reduced rate of VAT where applicable . CHAPTER VII VAT DEDUCTIONS Article
Right to VAT Deduction
Only VAT payers shall have the right to VAT deduction.
Input and/or import VAT shall be deductible in accordance with the provisions of this Law.
The VAT payer may opt not to exercise the right to VAT deduction. Article
Activities, on the Goods and/or Services Intended for which VAT on Purchases and/or VAT on Importation is Deductible
A VAT payer shall have the right to deduct input and/or import VAT on goods and/or services, provided that the goods and/or services are intended for use in the following activities of the VAT payer: 1) supply of goods and/or services on which VAT is chargeable; 2) supply of goods and/or services outside the territory of the country where, under the provisions of this Law, such supply of goods and/or services would not be exempt from VAT if effected within the territory of the country. The above condition shall not apply with regard to the supply outside the territory of the country of insurance services and/or financial services specified in Article 28 of this Law.
In order to fully or partly deduct the input and /or import VAT on goods and/or services intended for use in the activities specified in subparagraph 2 of paragraph 1 of this Article, a VAT payer must possess documents proving that the supply of goods and/or supply of services may be considered, according to the criteria determined in this Law, as having taken place outside the territory of the country. If this is not proved, the supply of goods and/or services shall be considered to have taken place within the territory of the country.
Supply of goods and/or services, exempt from VAT under the provisions of this Law, shall not become activities on which VAT is chargeable even where the VAT payer calculates VAT thereon, unless the provisions of this Law allow the VAT payer a right of option for taxation. Article
VAT Deduction in Case of Mixed Activities
Where a VAT payer is engaged not only in the activities specified in Article 58

(1)of this Law, he must attribute (in so far as it is possible to do so on the basis of accounting data) total input and/or import VAT on goods and/or services among the activities specified in Article 58

(1)of this Law and other activities, having regard to the activities for the use in which the goods and/or services are intended. Input and/or import VAT on goods and/or services intended for use only in the activities specified in Article 58

(1)of this Law shall be deductible. 2. Input and/or import VAT which, on the basis of accounting data, is not directly attributable either to the activity specified in Article 58

(1)of this Law or any other activity shall be distributed between the two groups of activities proportionately, in accordance with the procedure laid down in Article 60 of this Law. Article 60. Proportionate Distribution of Input and/or Import VAT 1. That part of input and/or import VAT specified in Article 59

(2)of this Law, which corresponds to the proportion (in percentage) of consideration (excluding the VAT itself), received or receivable by the VAT payer for the supplies of goods and services specified in Article 58

(1)of this Law, in the total amount of consideration (excluding the VAT itself) received or receivable by the VAT payer for the supplies of any goods and services shall be attributable to the activities specified in Article 58

(1)of this Law. In the cases and according to the procedure determined by the Government of the Republic of Lithuania or an institution authorised by it, when calculating the above proportion, the amounts of subsidies or grants received and used by the VAT payer shall be added to the amount of consideration received by the VAT payer for the supply of goods or services. However, in calculating the above proportion account shall not be taken of the consideration received by the VAT payer for: 1) supply of capital assets used in the economic activities of the VAT payer; 2) supply of property immovable by its nature and supply of financial services specified in Article 28 of this Law in so far as these are incidental transactions and the VAT payer normally is not engaged in the type of activity.

Where, in the opinion of the VAT payer, determination of the part (in percentage) of deductible input and/or import VAT on the specific unit of tangible capital assets, according to the criterion of distribution specified in paragraph 1 of this Article would not reflect the actual application of the assets, he/it shall have the right to file an application with the local tax administrator requesting permission to apply another criterion of distribution (for buildings, structures - according to actual use of their space; for equipment - according to the use of capacity; or any other criterion which, in the opinion of the VAT payer, reflects the actual proportions of use of the said asset). Having considered the submitted request and calculation, the local tax administrator shall grant the VAT payer the right to apply the requested (or already applied) criterion of distribution, if he ascertains, that the request is justified and that the results of distribution according to the criterion specified in paragraph 1 of this Article and according to the distribution criterion requested by the VAT payer differ substantially to the disadvantage of the VAT payer, provided that the application of the criterion requested by the VAT payer will not interfere with the control of justifiability and adjustment of VAT deduction. The criterion based whereon the distribution of the input and/or import VAT on the specific unit of tangible capital asset was effected shall not be subject to any later change.
Input and/or import VAT on goods and/or services linked to the specific unit of tangible capital assets used for mixed activities (maintenance of the unit, etc.), shall be distributed applying the same criterion of distribution which is applied in respect of input and/or import VAT on the unit itself.
The local tax administrator shall have the right to compel a VAT payer, according to the procedure established and in the cases specified by the Government of the Republic of Lithuania or an institution authorised by it, to use a particular criterion of attribution of input and/or import VAT on specific goods and/or services to the activities specified in Article 58

(1)of this Law. 5. The calculation of the proportion (in percentage) of the input and/or import VAT , proportionately attributable to the activities specified in Article 58

(1)of this Law, shall be based on the relevant indicators of the previous calendar year or, in the absence of indicators of the previous calendar year - on the VAT payer's forecasts of the current calendar year indicators. The established proportion shall be used throughout the entire calendar year. At the close of the calendar year, the proportion (in percentage) of input and/or import VAT , attributable to the activities specified in Article 58

(1)of this Law, must be recalculated having regard to the actual indicators for the calendar year and adjustments of VAT deductions must be effected in accordance with the provisions of Chapter VIII of this Law. 6. Where it is established when calculating the proportion (in percentage) of the input and/or import VAT, proportionately attributable to the activities specified in Article 58

(1)of this Law, that not less than 95% of the proportionately distributable input and/or import VAT is attributable to these activities, the total amount of input and/or import VAT shall be deemed attributable only to the activities specified in Article 58

(1)of this Law. 7. The amount of input and/import VAT, attributable to the activities specified in Article 58

(1)of this Law, which has been calculated according to the procedure laid down in paragraphs 1-6 of this Article, may be deducted by the VAT payer. Article

VAT Deduction in Respect of Tangible Capital Assets Acquired by a Natural Person
A natural person, who is a VAT payer, upon the acquisition or importation of tangible capital assets, shall have the right to attribute them or part thereof for the purposes of his economic activities. The attribution of tangible capital assets or part thereof for the purposes of the economic activities shall be declared in accordance with the procedure established by the central tax administrator. The deductible proportion of input and/or import VAT on the tangible capital assets attributed for the purposes of the economic activities, as well as the deductible proportion of input and/or import VAT on other goods and/or services related to these assets shall be determined in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it.
Tangible capital assets acquired by a natural person prior to his registration as a VAT payer, or part thereof may also be attributed for the purposes of his economic activities in accordance with the procedure established in paragraph 1 of this Article. The deductible proportion of input and/or import VAT on other goods and/or services related to such assets shall be determined in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it.
The Government of the Republic of Lithuania or an institution authorised by it shall approve the list of categories of tangible capital assets covered by the provisions of this Article. Article
Non-deductible Input and Import VAT, as well as Input and Import VAT the Deduction whereof shall be Limited
Unless otherwise provided in Chapter XII of this Law, input and/or import VAT on the goods and/or services acquired and/or imported, which is directly or proportionally attributed to the activities other than those specified in Article 58

(1)of this Law, shall not be deductible. 2. The following shall not be deductible: 1) input and/or import VAT on goods and services intended for entertainment and representation, if it is not allowed, subject to legislation regulating taxation of profit/income, to subtract from the received income, when calculating the taxable profit/income, expenses relative to their acquisition; 2) input and/or import VAT paid on behalf of another person in the cases specified in subparagraph 2 of Article 15

(7)of this Law; 3) input or import VAT on a passenger car designed for the transportation of no more than 8 persons (excluding the driver), or a motor vehicle of the said class attributed to the category of off-road vehicles, provided this car is not supplied or leased, or it is not used to provide services of passenger transport for reward or driving instruction services. The same limitations shall apply to the deduction of input VAT on the lease of cars of the specified categories. These limitations shall not apply to motor vehicles of the specified categories, provided they are attributed to special purpose motor vehicles under legal acts regulating the classification and coding of vehicles; 4) input VAT on the service of passenger transport by motor vehicles specified in subparagraph 3 of this paragraph, provided the VAT payer does not take part in the transaction for the supply of this service as an undisclosed agent. 3. Chapter XII of this Law shall also provide for other cases when input and/or import VAT on goods and/or services shall not be deductible. Article 63. Goods and/or Services Acquired and/or Imported prior to Registration as a VAT Payer 1. A VAT payer shall have the right, pursuant to the provisions of this Chapter and limitations laid down in this Article, to deduct input and/or import VAT on the goods and/or services acquired and/or imported prior to the day of his registration as a VAT payer, provided they will be used by that VAT payer for the activities specified in Article 58

(1)of this Law.

Only that proportion of input VAT on services acquired prior to registration as a VAT payer and constituting the VAT payer’s intangible capital assets shall be deductible, which corresponds to the non-depreciated/non-amortised share of the assets’ value before registration as a VAT payer, calculated in accordance with legal acts regulating the taxation of profit/income.
The proportion of input and/or import VAT on tangible capital assets other than those specified in paragraph 4 of this Article, acquired or imported prior to registration as a VAT payer, which corresponds to the of non-depreciated/non-amortised share of the assets’ value before registration as a VAT payer and calculated in accordance with legal acts regulating the taxation of profit/income, shall be deductible.
The proportion of input and/or import VAT on tangible capital assets specified in Article 67 of this Law and acquired or imported prior to registration as a VAT payer, which corresponds to the number of years, on the day of registration as a VAT payer remaining to the end of the 10-year or 5-year period specified in Article 67

(2)of this Law (the beginning of this term shall be the calendar month when assets have been acquired or imported), shall be deductible.

The provisions of this Article shall not apply to the acquired and/or imported goods and/or services consumed for the capital assets manufactured by the VAT payer himself prior to registration as a VAT payer (including material improvements of buildings/structures prior to registration as a VAT payer), as well as the capital assets acquired by the natural person prior to his registration as a VAT payer.
A taxable person who has been registered as a VAT payer late through his fault (i.e. a person should have filed an application to be registered as a VAT payer but he has failed to do so in accordance with the prescribed procedure or has done it late, or a person has filed an application to be registered as a VAT payer but he has not been registered as such on the decision of the tax administrator, on the grounds provided in this Law and legal acts implementing it) shall have no right to deduct any proportion of input and/or import VAT on the goods and/or services acquired and/or imported prior to the day of registration. Article
Documents the Amounts of VAT Specified wherein shall be Deductible
Input VAT shall be deductible only in the case where a VAT payer holds a VAT invoice or any other accounting document specified in this Law, which, in accordance with the prescribed procedure, may or must serve as an invoice for the supply of goods and/or services or payment on account (except for a cash-register receipt the VAT on purchases specified wherein shall be deductible under the provisions of paragraph 3 of this Article). This amount of VAT shall be specified in the accounting document held, and the VAT payer shall be indicated as the purchaser of goods and/or services, unless otherwise provided in this Article. The accounting document shall have all the requisite details prescribed by this Law and other legal acts, and the blank of this document shall be acquired by the supplier of goods/services in accordance with the procedure established by legal acts and shall conform to the requirements laid down by legal acts in respect of this blank. The input VAT calculated in accordance with the procedure established in Article 95 of this Law in respect of the goods and/or services acquired from foreign taxable persons shall be deductible on the basis of the document specified in that Article. Where the VAT payer has deducted input VAT on the payments on account made to the supplier of goods and/or services, the amount of input VAT that is deductible on the basis of the VAT invoice or any other accounting document specified in this Law, which serves as an invoice for such a supply of goods and/or services shall be respectively reduced by the amount (amounts) of VAT previously deducted.
Unless otherwise provided in this Article, where accounting documents specified in paragraph 1 of this Article are issued in several copies, the amount of input VAT shall be deductible only where the VAT payer has the original copy of this document, while in the case when the original copy is lost – the copy certified by the parties to the transaction or in accordance with the procedure established legal acts.
The amounts of VAT specified in cash-register receipts shall be deductible in accordance with the procedure and limitations laid down by the Government of the Republic of Lithuania or an institution authorised by it. Where a VAT payer is also issued by the supplier of goods and/or services a VAT invoice or any other document serving as an invoice, input VAT shall be deductible only on the basis of the VAT invoice or the other document serving as an invoice; however, the VAT payer must hold both the cash-register receipt and the VAT invoice or the other document serving as an invoice.
The Government of the Republic of Lithuania or an institution authorised by it shall have the right to determine cases when the amount of VAT specified in a VAT invoice or any other document serving as an invoice shall be deductible in proportions by several VAT payers, as well as the procedure pursuant to which such amounts of VAT shall be deductible.
The amount of import VAT shall be deductible, provided it is specified in the customs declaration for importation of the prescribed form or any other document serving as a customs declaration for importation, and the VAT payer holds documents supporting the payment of import VAT. Documents supporting the payment of import VAT shall not be required, provided import VAT may be included in output VAT the procedure established in Article 94 of this Law.
The amount of input VAT in respect of the tangible capital assets manufactured by the VAT payer himself shall be deductible on the basis of the document specified in this Law, invoicing such a supply of goods.
Amounts of input VAT on objects of the right of ownership that are taken over as contribution to the company or as a result of the reorganisation of another VAT payer, as well as amounts of input VAT on the material improvement of the immovable property by nature taken over by the owner of this property in accordance with the procedure established in Article 9

(5)of this Law shall be deductible on the basis of documents invoicing such a supply of goods and/or services.

No VAT payer shall have the right to deduct the amounts of VAT calculated and specified in documents invoicing the private use of goods and/or services by the VAT payer.
On the grounds established by the Law on Tax Administration, the amounts of input VAT specified in accounting documents held by the VAT payer: 1) shall not be deductible without taking into account that this document conforms to all the requirements laid down in this Article; 2) shall be deductible without taking into account that this document conforms not to all the requirements laid down in this Article. CHAPTER VIII ADJUSTMENTS OF VAT DEDUCTIONS Article
General Rules of Adjustment of VAT Deductions
If, after filing of the VAT return for a tax period, a VAT payer cancelled purchase of a certain amount of the acquired goods, additional price reductions were obtained from the supplier of goods or services, or the VAT amount payable to the supplier of goods or services has decreased for any other reason, also if a refund of the import VAT was made to the VAT payer and the above amounts of the input and/or import VAT were deducted, the VAT deductions shall be adjusted, by increasing accordingly in the VAT return for the tax period in which the above circumstances became known, the VAT amount payable into the budget/reducing the refundable VAT amount from the budget.
In the event of deduction by mistake of a higher input and/or import VAT , the VAT deductions must be adjusted, by increasing accordingly in the VAT return for the tax period in which the above mentioned mistake was made, the VAT amount payable into the budget/reducing the VAT amount refundable from the budget.
In the event of deduction by mistake of a lower input and/or import VAT, the VAT deduction may be adjusted in the tax period in which the above circumstances became known , by reducing accordingly in the VAT return the VAT amount payable into the budget/increasing the VAT amount refundable from the

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