Lithuania’s Artists Tax system – World Observatory on the Social Status of the Artist
Tax status and tax advantages
Artists tax status and distribution of their income
The income of the residents, including artists, is taxed according to procedure established by the Law on the Income Tax of Individuals of the Republic of Lithuania, enforced on 01 January 2003. It should be noted that no particular tax status is granted to the artists. The income of the artists may be distributed in the following mode:
1) Royalties
Following the definition provided in the Law on the Income Tax of Individuals of the Republic of Lithuania for the tax purposes, royalties are defined as the payment for the right to use the work of art granted by the copyright licence contract; the payment for the granted related rights, as well as the payment for the right to use the object of industrial property and franchise granted by the copyright licence contract; the payment for the provided information on industrial, commercial or scientific know-how, as well as the compensation for the violation of copyright or related rights.
2) Income for the performer’s activities
Following the definition provided in the Law on the Income Tax of Individuals of the Republic of Lithuania for the tax purposes, “performer’s activities” are defined as the performer’s (actor, singer, musician, conductor, dancer or any other resident acting, singing, reading, reciting or otherwise performing literary, art or folklore pieces or circus acts) activities in preparation for public performance and execution of public performance. The residents who take part in the process of creation of the work of art or preparation for the public performance, however, are not present in the public performance of the work of art or public appearance, are not qualified as the “performers”.
3) Income derived from creation
The said Law defines “creation” as the creation of the works that may be the object of copyright and the assignation of property rights pertaining to the own created works.
Royalties and tax system
In Lithuania the following types of income are taxed by applying preferential income tax rate of 15 per cent: royalties received by the resident; revenue generated for the performer’s activities, for the creation (including income derived in performing individual activities of this type, provided the resident does not deduct provided exemptions). The income derived from creation as individual activity shall be subject to the income tax rate of 33 per cent if the resident has deducted the provided exemptions. The compensations for the violation of copyright or related rights are not subject to taxation.
VAT taxation procedure
The artists are subject to the same VAT taxation procedure as the rest of the natural persons. The artists are required to register as the VAT payers and pay the estimated VAT to the budget in accordance with the set procedure, if the gross amount for the provided products and (or) services during the performance of business activities have exceeded LTL 100,000 per twelve last months (per year), starting to calculate from the month during which the said limit was exceeded. Attention is to be paid to the fact that all VAT payers, following the procedure set by the law, are entitled to include to the VAT invoice the purchase and (or) import VAT for the acquired and (or) imported products and (or) services if the said products qualify for the VAT-taxed product supply and (or) provisions of services beyond the boundaries of the country on the condition that if such supply would take place in Lithuania, it would not be taxed. The Law on Value Added Tax provides for the voluntary registration as the VAT payer if the limit of LTL 100,000 is not exceeded.
Special attention should be paid to the fact that in case the VAT payer engages in the trade of works of art that have been acquired without VAT or imported or purchased from the authors or their successors with VAT included, he/she is entitled to estimate VAT from the margin, i.e. to apply a particular VAT taxation scheme.
Exemptions or special provisions regarding import duties on educational, scientific and cultural resources
Pursuant to the Law on Customs Tariffs of the Republic of Lithuania, articles of non-commercial purpose brought in the personal luggage of the passengers as well as the educational, scientific and cultural resources (books, publications, other types of information, visual and audio media), scientific means and equipment are not subject to customs duty.
The Resolution n°268 “Concerning the Regulatory Procedure of Product Export and Import in the Republic of Lithuania,” adopted by the Government of the Republic of Lithuania on 24 March 1997, does not provide for any import tariffs for imported goods such as works of art, collectibles, antiques and other cultural goods. Following the procedure set forth in the third Paragraph of the Law on Value Added Tax of the Republic of Lithuania, works of art, collectibles, and antiques are taxed with value-added tax.
Exemptions or special provisions regarding import duties on scientific and cultural resources, scientific means and equipment
Pursuant to the Resolution n°268 “Concerning the Regulatory Procedure of Product Export and Import in the Republic of Lithuania,” adopted by the Government of the Republic of Lithuania on 24 March 1997, import duty is not imposed if “not-for-profit organisations or institutions (educational institutions, scientific institutions, libraries, museums and other educational, scientific and cultural enterprises and organisations) import for non-commercial purposes educational, scientific and cultural resources (books, newspapers, magazines/journals, other publications, informational, visual and audio media), scientific means and equipment, following the Decree n°537/115 “Concerning the Approval of the Form and Issuing Procedure of the Documents Required for the Obtaining of Duty Exemptions for the Imported Educational, Scientific and Cultural Resources, Means and Equipment for Non-commercial Purposes” issued by the Minister of Education and Science on 19 April 1999.”
Export duties and permit for exporting works of art, collectibles, antiques and other movable cultural valuables
At present, no export duties or taxes are imposed on any products in the Republic of Lithuania. However, it should be noted that in case of exporting (even for a temporary period) from the Republic of Lithuania works of art, collectibles, antiques and other movable cultural valuables (refer to the List approved by the Government), the permit issued by the Department of Cultural Heritage Protection is required following the procedure prescribed in the Resolution n°1186 “Concerning the Approval of Procedure for the Export of Movable Cultural Valuables and Antiques from the Republic of Lithuania” issued by the Government of Lithuania on 1st October 2001.
Regional or interregional customs duties
Regional or interregional customs duties agreements governing the import or export of cultural products do not exist except for the free trade agreements with the EU, EFTA and some other countries under which no customs duties are in essence imposed on the non-food products from these countries or groups of countries.
Adhesion to the European Union
After the Republic of Lithuania joins the European Union, the aforementioned legal acts of the Republic of Lithuania shall essentially become void and be replaced by the legal acts of the European Union regulating the procedures of import, export and taxation with import and export customs duties and taxes of cultural products.
Pursuant to the EU legal acts, the procedure of exemption from the customs duties is established in cases of importing educational, scientific and cultural resources, scientific instruments and equipment (Annexes I and II of the Regulation n°918/83 provide detailed lists of the said products). In essence, these products are exempted from the payment of customs duties but the exemption is permitted only after meeting certain conditions and requirements.
Provisions on inheritance tax in respect of works of art
Taxation of inherited property is regulated by the Law on Inherited Property Tax of the Republic of Lithuania. Inherited works of art are taxed following the same procedure as that applied to other inherited property.The residents are to pay the inheritance tax estimated on the taxable value of the inherited property. If the taxable value does not exceed LTL 0.5 million, it shall be taxed by applying a tariff of 5% of the inheritance tax. Whereas if the taxable value exceeds LTL 0.5 million, it shall be taxed by applying a tariff of 10% of the inheritance tax.
The Law provides for the privilege applied on the inheritance when it is inherited by a person whose spouse died, by children (adopted children), parents (adopting parents), custodians (caregivers), foster-children (wards), grandparents, grandchildren, brothers, and sisters as well as in cases when the taxable value of the inheritance does not exceed LTL 10,000.
If you like movies, as I do, you schould try Free Movie Guide.