Foreign persons who intend to do business (carry out economic activities) in Lithuania.This publication might be useful as it explains:
The legislation is available in the website of the Register of Legal Acts www.e-tar.lt. In event of change of the legislation, please see the version of the document as amended to date.
If the foreign person, who does not need to be identified for VAT purposes under Article 71 of the Law on VAT, acquires in Lithuania goods (except the new means of transport or the goods which are subject to excise duties) from another Member State for the activities on which the input/import VAT could be deductible, the limit for the acquisition is not applied. That means that the foreign person has to register as VAT payer notwithstanding the taxable amount of the acquisition.
Only in such cases, where the foreign person, who does not need to be identified for VAT purposes under Article 71 of the Law on VAT, acquires in Lithuania goods (except the new means of transport or the goods which are subject to excise duties) from another Member State for the activities on which the input/import VAT may not be deductible, the threshold of EUR 14 000 is calculated and if the threshold is not exceeded the foreign person does not need to register as VAT payer in Lithuania.
* The foreign person does not have an obligation to register as VAT payer in Lithuania if he acquires new means of transport or goods subject to excise duties from another Member State but nevertheless such a person has an obligation to pay VAT on such goods not later than 5 working days from the delivery of such goods to Lithuania.
A branch of a Latvian company is engaged in economic activity in Lithuania – it provides reinsurance services. These services are exempted in Lithuania therefore there is no obligation for the company to register as VAT payer. However, in May 2018, it acquired, for its own business needs, from a Finnish company, which is a VAT payer in Finland, computer hardware for EUR 15 000. In this case the value of goods acquired during the calendar year exceeds EUR 14 000 therefore the Latvian company which has acquired the computer equipment is under obligation to register as VAT payer in Lithuania.
If the Latvian company is registered as VAT payer in Lithuania, then it has to account for VAT in Lithuania and declare that VAT in VAT return (form FR0600).
The Latvian company is not registered as a VAT payer in Lithuania, but having regard to the fact that this is a single computer equipment set acquired which caused the threshold being exceeded, the Latvian company is liable to pay the 21% VAT from the value of the acquired computer equipment. The Latvian company has to indicate that VAT in the VAT accounting form (form FR0608).
In case the value of relevant goods (except goods subject to excise duties) supplied by foreign person from another Member State and transported to Lithuania during the calendar year was below EUR 35 000, such person can register as VAT payer voluntarily. In this case the foreign person has to produce the permit issued by competent authorities of his home state (where so provided by respective legal acts), authorizing him to regard Lithuania as place of supply.
A Estonian company sells to Lithuanian non-taxable natural persons clothing ordered from catalogues, i.e. it is engaged in distance selling. The Estonian company transports the goods to Lithuanian customers.
The total value of goods of the Estonian company supplied to the Lithuanian customers in 2018 is EUR 30 000, i.e., it does not exceed the threshold value of EUR 35 000 which entails the duty to register as VAT payer in Lithuania.
In this case where the Estonian company does not register as VAT payer voluntarily for the purpose of the distance selling (it may register by submitting to the tax administrator the permit issued by competent authority of its home state and by completing the Application form for registration as a VAT payer), the sales of the clothing will be treated as carried out in Estonia and therefore subject to Estonian VAT rules.
In case the total value of goods supplied by the Estonina company to the Lithuanian customers during the calendar year exceeds the amount of EUR 35 000, the Estonian company would be under obligation to register as VAT payer, and will be obliged to tax the sale of the clothing with Lithuanian VAT at the rate of 21%. The Estonian company will also have an obligation to submit the VAT return (form FR0600).
Article 95 (2)-(4) of the Law on VAT provides for the cases where the obligation to calculate and pay VAT to the budget for the supplies of goods and services lies within the customer established in Lithuania.
Taxable persons established in Lithuania (irrespective whether they are registered as VAT payers or not) should calculate and pay VAT to the budget for services (e.g. consultants, lawyers, auditors, accountants services, telecommunication services, electronically supplied services, etc.), which are provided to him by the foreign persons who are not established in Lithuania and which are defined in Article 13(2), subparagraph 1.Taxable persons established in Lithuania and registered there as VAT payers should also calculate and pay VAT to the budget for the following goods acquired from foreign person who is not established in Lithuania:
Persons from the territories outside the area of the EU are registered through their branch in Lithuania, and where they do not have such branch – through the fiscal agent appointed to act in Lithuania.
The requirement to appoint a fiscal agent to act in Lithuania is not applicable to persons from Member States.
The requirement to appoint a fiscal agent also does not apply to persons from third countries and third territories where the provisions of the mutual assistance instruments are applicable, broadly equivalent to its scope of Council Directive 2010/24 / EC on mutual assistance for the recovery of claims relating to taxes, duties and other measures (hereinafter referred to as "Directive 2010/24 / EU") of March 16 2010; Council Regulation (EU) No 904/210 on administrative cooperation and combating fraud in the field of value added tax of October 7 2010.
Such persons may be registered as VAT payers directly, i.e. they personally (or their authorized representatives) may submit the Application to Register as VAT payer / cancel the registration as a VAT payer / Add / Change registered data (hereinafter - Application form FR0388).
The requirements for the person wishing to act as the fiscal agent are set out in the rules adopted by the Order No. 221 of 4 July 2002 of the Minister of Finance of the Republic of Lithuania.
According to this Order the person, wishing to act as fiscal agent, has to be engaged in certain activity (legal, accounting, auditing, consulting on the tax matters), has to be registered as VAT payer for the period not less than 3 years (the 3 year term is not applied in cases when the taxable person is engaged in auditing or is an attorney at law), etc.
A a fiscal agent is held jointly and severally liable with a foreign person for the VAT obligations.
Foreign persons willing or obligated to be registered as VAT payers have to submit the Application to Register as VAT payer / cancel the registration as a VAT payer / Add / Change registered data (hereinafter - Application form) electronically via the e-portal My STI.
However note should be taken that foreign person willing to register as VAT payer in Lithuania prior to registering as VAT payer has also to register as taxpayer in Lithuania. In order to register as taxpayer the foreign legal person has to submit an Application of a Foreign Legal Entity for Registration / Deregistration in / from the Taxpayers' Register (form FR0227). Foreign natural persons should submit Natural Person‘s Application for Registration in the Taxpayer‘s Register (form REG812).
The application to register as taxpayer in Lithuania can be submitted together with the Application FR0388, i.e. the foreign person does not need to wait until he is register as taxpayer in order to submit the application to register as VAT payer.
More information about foreign persons’ registration in the register of taxpayers is available here.
It is worth to note that tax authorities cannot deregister the foreign person from the register of VAT payers ex officio if the foreign person is involved in the process of producing long term fixed assets.
The link to the original publication by the State Tax Inspectorate.