VAT in Lithuania or just Value-Added Tax. It is an important part of doing business, just like in any other member-state of the European Union. Therefore knowing how to deal with VAT is an important part of accounting in Lithuania.
On the other hand, you could avoid all of the inconveniences and outsource. We’ve been providing accounting services in Lithuania for more than 2 decades. We are also at the vanguard of innovation in the industry. Learn more about how we can be of help to you.
What is VAT?
Value-Added Tax is an EU-specific tax. It is added at every stage of the production and distribution of goods and services. From purchasing timber to selling a chair made from it to a customer. The tax is typically charged as a percentage of the price of the goods or services. Usually, the consumer pays this tax as a price of a product they purchase.
There is a reason why this tax exists in the first place. It is the EU’s initiative to ensure the tax burden spreads fairly through its economies. Businesses only pay VAT on the value that they add to goods/services at each stage of the production process. VAT is an indirect tax. It means that it is collected by businesses and remitted to the government on behalf of the consumer.
What is the VAT rate in Lithuania?
The standard VAT rate in Lithuania is 21%. This rate applies to most goods and services, with some exceptions that are subject to reduced rates or exemptions. Some examples of such goods in Lithuania are books, newspapers, and certain food items. Other things, such as exports, may be exempt from VAT in general.
What are the requirements for registering for VAT in Lithuania?
To register for VAT in Lithuania, your business must have a registered legal address in the country and must have reached the VAT registration threshold. Right now it’s €45,000 in annual turnover. Businesses that exceed this threshold must register for VAT within 30 days. Additionally, if you never established business in Lithuania, but have a taxable presence in the country, such as through a permanent establishment, you also must register it for VAT.
What is the deadline for submitting VAT returns in Lithuania?
The deadline for submitting VAT returns in Lithuania is the 15th day of the month following the reporting period. For example, a VAT return for January would be due on February 15th. Your business must submit a VAT return even if it has not made any sales or has no VAT to pay.
What are the requirements for issuing invoices for VAT in Lithuania?
Businesses in Lithuania have to issue VAT invoices for all taxable supplies of goods and services. The invoices must include the name and address of the supplier and the recipient, the date of the invoice, and a description of the goods or services supplied. Additionally, the invoice must show the VAT rate, the amount of VAT charged, and the total amount of the invoice, including VAT.
How can you calculate VAT in Lithuania?
To calculate VAT in Lithuania, multiply the value of the taxable supply (the value of the goods or services, excluding VAT) by the VAT rate. For example, if you sell a product for €100 and the VAT rate is 21%, the amount of VAT charged would be €21 (100 x 0.21). If you choose to use our services, our software has an in-built VAT calculator, so you won’t have to bother with calculations every time.
What are the rules for charging imports VAT in Lithuania?
Businesses in Lithuania have to charge VAT on imported goods and services in the same way as on domestic supplies. You would need to calculate VAT here based on the value of the imported goods or services, including any import duties and taxes. Additionally, businesses must submit an Intrastat declaration, to the State Tax Inspectorate, for all intra-EU acquisitions of goods. Our software submits it automatically.
What are the rules for claiming back VAT in Lithuania?
Businesses in Lithuania can claim back VAT paid on goods and services that are used for their business. To di it, you must submit a VAT return to the State Tax Inspectorate and provide documentation. This would be VAT invoices, to support the claim. Businesses that are registered for VAT are eligible to reclaim the VAT that they paid on their purchases and import of goods and services they used in their business.
What are the rules for distance selling in Lithuania?
Businesses in Lithuania that sell goods to consumers in other EU countries are subject to the rules for distance selling. Under these rules, the business is required to register for VAT in the country where the consumer is located and charge VAT at the rate applicable in that country. The other option is viable if your company is selling goods and services to private customers in another EU-member state through e-markets. In this case there is no need to register VAT in that country — you can pay VAT to the tax inspectorate in Lithuania.
What are the rules for keeping records on VAT in Lithuania?
In Lithuania, your business would have to keep records of its value-added tax (VAT) transactions for ten years. These records must include information such as the date of the transaction, the names and addresses of the parties involved, the goods or services provided, and the amount of VAT charged. Businesses must also keep detailed records of their VAT payments and refunds, including any invoices and receipts. Additionally, businesses must submit VAT returns to the Lithuanian Tax Authority regularly, typically on a monthly or quarterly basis. They must also submit an annual VAT declaration.
As you can see, there are a lot of things to keep in mind if your company has to deal with the Value-Added Tax in Lithuania. Therefore it might be a good idea to outsource accounting. Local companies well versed in national and relevant supranational regulations are a good choice. Tezaurus is exactly such type of company. Read more about our accounting approach, or contact us right away!