Value-Added Tax (VAT) in Lithuania

The Value-Added Tax (VAT) is a fundamental component of Lithuania’s tax system, much like in most European Union countries. In Lithuania, this tax is referred to as “Pridėtinės vertės mokestis” (PVM). VAT is imposed on goods and services at each stage of production and distribution, ultimately borne by the final consumers. Lithuania’s VAT system is comprehensive, encompassing various rates and regulations aimed at ensuring stable revenue for the state budget while supporting specific sectors of the economy.

VAT rates in Lithuania

The standard VAT rate in Lithuania is 21%, applicable to most goods and services. This is the default rate unless other preferential conditions apply. However, Lithuania, like many other countries, has introduced reduced rates to support certain key sectors of the economy or to meet basic social needs.

9% Rate

The 9% VAT rate applies to the following categories:

• Passenger transportation,
• Thermal energy,
• Hotel services,
• District heating,
• Books and e-books,
• Firewood,
• Accommodation,
• Admission to cultural and artistic events.

5% Rate

The 5% VAT rate covers:

• Pharmaceutical products,
• Medical equipment for disabled persons,
• Food intended for medical use,
• Technical aids for disabled persons,
• Newspapers and periodicals.

0% Rate

The 0% VAT rate applies to:

• Intra-community and international transportation.

VAT registration in Lithuania – When is it required?

VAT registration is mandatory for companies meeting specific conditions. For foreign businesses and those engaged in international trade, the registration process can be more complex.

Entities must register for VAT in Lithuania under the following circumstances:

• Importing goods from non-EU countries.
• Exporting goods from Lithuania to non-EU countries.
• Sales within Lithuania – This applies to both intra-community supplies and domestic sales.
• Bringing goods into Lithuania from other EU countries (intra-community acquisition of goods).
• Storing goods in Lithuania.

The VAT registration threshold for foreign enterprises is €10,000. Once this threshold is exceeded, the business must account for VAT locally in the recipient country or through the VAT OSS (One-Stop Shop) system.

VAT registration process in Lithuania

The VAT registration process in Lithuania typically takes between 1 to 2 months. This process begins with obtaining and submitting documents with an Apostille, which can be time-consuming. Subsequently, the company must register in the taxpayer registry by submitting form FR0227 (for foreign VAT taxpayers) or REG812 (for foreign individuals). This can be done online through the Mano VMI service or by mailing the documents. Therefore, the duration of the process depends on the time taken to gather the required documents and to complete the taxpayer registration.

VAT filing requirements

In Lithuania, most businesses are required to file VAT returns monthly. Smaller companies with annual turnovers not exceeding €300,000 can opt for quarterly returns, which allows for less frequent reporting and reduces administrative burdens. The smallest firms, with annual turnovers below €60,000, may file semi-annual returns, significantly simplifying the reporting process.

All VAT returns must be submitted electronically by the 25th day of the month following the end of the reporting period. For instance, the return for January must be filed by February 25th. Electronic submission of VAT returns is mandatory, enhancing the efficiency and transparency of the process.

Failure to submit VAT returns or late submission incurs financial penalties. The penalty for not submitting a return ranges from €200 to €390. Additionally, unpaid tax is subject to daily interest at a rate of 0.03%. Adhering to these deadlines is crucial to avoid additional costs and issues with the tax authority.

Tax representative – Lithuania

Non-EU companies must appoint a tax representative in Lithuania who will be responsible for compliance with VAT regulations. This representative is jointly liable for the company’s tax obligations.

Invoicing rules

When issuing a VAT invoice in Lithuania, the VAT amount must be expressed in euros. If the invoice is issued in another currency, the VAT amount must be converted to euros using the exchange rate set by the European Central Bank on the date the invoice is issued. If the ECB has not set a rate for the given currency, the exchange rates of the Bank of Lithuania should be used.

Invoices must be issued in Lithuanian or bilingually, with Lithuanian being one of the languages. Otherwise, the tax authority may request a translation of the document.

Intrastat in Lithuania

Businesses operating in Lithuania must also comply with Intrastat reporting requirements for imports and exports of goods. The basic threshold for exports is €400,000, and for imports, it is €550,000. Intrastat declarations must be submitted by the 10th day of the month following the reporting period.

You can find the current Intrastat thresholds in other EU countries here.

Summary

Lithuania’s VAT system is well-organized and tailored to support both the domestic economy and international trade. The standard VAT rate is 21%, but reduced rates of 9%, 5%, and 0% aim to support key sectors and lower costs for consumers. VAT registration, return filing, and invoicing in Lithuania are strictly regulated and require a thorough understanding of the rules. Non-EU companies must also appoint a tax representative to ensure compliance with local regulations. Given the complexity and potential for changes in legislation, consulting with VAT experts regularly is advisable to maintain compliance and avoid penalties: Contact us – amavat®.