REPUBLIC OF LITHUANIA

LAW ON VALUE ADDED TAX

5 March 2002 No IX-751

Vilnius

(As last amended on 12 January 2006 No. X-487)

CHAPTER I

GENERAL PROVISIONS

Article 1. Scope of the Law

1. This Law establishes the imposition of the value added tax (hereafter  VAT) and the obligations of taxable persons, VAT payers and other persons incidental to the payment of the tax.

2. The provisions of this Law have been harmonised with the EU legal acts specified in Annex 2 to this Law.

Article 2. Definitions

1. “Goods subject to excise duty” shall mean ethyl alcohol and alcoholic beverages, manufactured tobacco, energy products (except coal, coke and lignite) as defined in the Law of the Republic of Lithuania on Excise Duty.

2. “Taxable person” shall mean any taxable person of the Republic of Lithuania or a foreign state.

3. “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.

4. “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.

5. “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.

6. “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 property and/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 5 of this Article;

2) activities of state and local government authorities as they are defined in paragraph 39 of this Article, even where they collect dues, fees or payments in connection with these activities;

7. “Electronic means” shall mean electronic equipment intended for data processing (including digital compression) and storage of data, employing wires, radio transmission, optical technology or other electromagnetic means.

8. “Territory of the European Communities” shall mean the territory in which the provisions of the Sixth Council Directive 77/388/EEC of 17 May 1977 on the harmonisation of the laws of the member states relating to turnover taxes – common system of value added tax: uniform basis of assessment (hereafter – Directive 77/388/EEC) shall be applicable.

9. “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 for a period exceeding one year (according to the groups of capital assets listed in Annex 1 to the Law on  Profit Tax).

10. “Importer” shall mean a person who is liable to pay the set customs debt on importation for the imported goods in the territory of the country or would be liable to pay customs debt on importation if import duties, agricultural or other charges were levied on the imported goods.

11. “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.

12. “Movable” shall mean any property except for that referred to in paragraph 18 of this Article.

13. “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, or

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.

14. “Reduced rate of the VAT” shall mean the rate of VAT fixed in this Law below the standard rate,  except for the zero-rate.

15. “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.

16. “New means of transport” shall means the means of transport referred to in Article 35 of this Law, which fulfil at least one of the following conditions:

1)  the motorised land vehicle was supplied no more than 6 months, the vessel and the aircraft – no more than 3 months  after the date of first entry into service (according to the criteria for determining the first entry into service approved by the Government of the Republic of Lithuania or an institution authorised by it.

2) the motorised land vehicle has travelled more than 6 000 kilometres, the vessel has sailed for more than 100 hours, or the aircraft has flown for more than 40 hours.

17. “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.

18. “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.

19. “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.

20. “Subdivision” shall mean an established place through which a taxable person of one state is engaged in economic activities in another state.

21. “Material improvement of the building/structure” shall mean construction works which extends the useful life of the building or structure or improves its useful properties.

22. “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. In the cases when profit generating activity constitutes a substantial part of activities of the person conforming to the definition of the non-profit making person, for the purposes of this Law such a person shall not be considered as non-profit making person, even though profit-making is not the purpose of the person’s activities.

23. “A good” shall mean any thing (including notes and coins of numismatic interest), also electricity, gas, heat and other types of energy. A computer medium the contents whereof is comprised of nonstandardised software shall not be treated as a good. Nonstandardised software shall be the software that has not been developed for mass consumption to be used by the consumers independently following its introduction and limited training necessary in order to perform standardised operations or functions.

24. “Importation of goods” shall mean:

1) the entry into the territory of the European Communities of non-Community goods or the actions which brought about the entry thereof;

2) the entry into the territory of the European Communities of Community goods from  third territories or the actions which brought about the entry thereof.

25. “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.).

26. “Intra-Community transport of goods” shall mean transport where the place of departure and the place of arrival are situated within the territories of different Member States. The transport of goods where the place of departure and the place of arrival are situated within the territory of the country shall be treated as intra-Community transport of goods  where the place of departure and the place of arrival are situated within the territories of two different Member States.

27. “VAT deduction” shall mean the proportion of input and/or import VAT, deductible under the provisions of this Law.

28. “VAT payer” shall mean a taxable person identified for purposes of value added tax by the tax administrator, including any other identification for value added tax purposes, provided the person has been issued with an appropriate identification number, except for the identification of persons for flat-rate VAT scheme purposes.

29. “VAT invoice” shall mean a document serving as an invoice in respect of  goods or services supplied and in respect of advance payments made, which meets all requirements prescribed by this Law for  such a document for it to serve as an invoice. Where such a document is issued after the arising of an obligation to issue in any other Member State, it shall be treated as the VAT invoice, provided that it meets the conditions imposed by that Member State on the issue of VAT invoice in such instance.

30. “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.

31.  “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;

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.

32. “Standard rate of VAT” shall be 18 %.

33. “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.

34. “Telecommunication services” shall be deemed to be services relating to the transmission, emission or reception of signals, writing, images or sound or information of any nature by wire, radio, optical or other electromagnetic systems, including the related transfer or assignment of the right to use capacity for such transmission, emission or reception as well as provision of access to global information networks.

35. “Means of transport” shall mean means of transport intended for the transport of persons or goods provided that at least one of the following conditions is fulfilled:

1) motorised land vehicles the capacity of which exceeds 48 cubic centimetres or the power of which exceeds 7.2 kilowatts;

2) vessels exceeding 7.5 metres in length, except for the vessels used for navigation on the high seas and for carrying passengers and/or cargo on international routes and/or the provision of other services for reward, also fishing vessels and vessels used for rescue and assistance at sea;

3) aircraft the take-off weight of which exceeds 1550 kilograms which are used  for carrying passengers and cargo or for the provision of other services for reward by means of air transport on international routes.

36. “Third territories” shall mean the territories specified in the list approved by the Minister of Finance based on the Directive 77/388/EEC, excluded from the area of application of the provisions of the Directive.

37. “Third country” shall mean any territory other than the territory of the European Communities or a third territory as these are defined in paragraphs 8 and 36 of this Article.

38. “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.

39. “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, provided they are not carried out on such a small scale as to be negligible:

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, placing in a warehouse, also provision of port (sea, etc.) services and granting of the right to use airports;

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 travel and tourist agency services;

7) supply of telecommunication services;

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.

40. A Member State (or territory of a Member State) shall mean the territory of a European Union Member State except for the third territories. The territory of a Member State shall also mean the territories transactions concluded in which or intended for which, based on the provisions of Directive 77/388/EEC, shall be treated as transaction originating in that Member State or intended for that Member State.

41. Other concepts shall be used in this Law within the meaning defined in the Law of the Republic of Lithuania on Tax  Administration (hereafter – the Law on Tax Administration), the Customs Code of the European Communities (hereafter – the Customs Code), as well as the Civil Code of the Republic of Lithuania (hereafter – the Civil Code) to the extent it is in conformity with this Law (with the exception of the cases authoritative under the Civil Code), however, for the purposes of this Law, only the State Tax Inspectorate shall be treated as tax administrator.

Article 3. Scope of VAT

1. 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 condition specified above shall not apply with respect to supplies for consideration of new means of transport dispatched or transported by the supplier, purchaser or the third party on behalf of any one of them out of the territory of the country but within the European Community.

2. The following acquisitions of goods for consideration within the territory of the country from another Member State shall be subject to value added tax:

1) acquisitions of goods from a taxable person in the performance of his/its economic activities, i.e. acting as such, with respect to whom the provisions of Article 24 of Directive 77/388/EEC are not applicable, by a taxable person who concluded the transaction in the performance of his/its economic activities, i.e. acting as such, or  a legal person who is not a taxable person, provided that the supply of goods is not treated as having been effected within the territory of the country in the meaning of Article 12 (2 or 3) of this Law;

2) acquisitions of new means of transport effected by any person;

3) acquisition of goods for which excise duties become chargeable under the Law of the Republic of Lithuania on Excise Duties by any person except for a natural person who is not a taxable person.

3. The scope of import VAT shall be importation of goods where under the provisions of this Law the goods are treated as imported  within the territory of the country.

4. In addition to the supply of goods (supply of services) indicated in paragraph 1, acquisitions of goods specified in paragraph 2 and importation of goods referred to in paragraph 3 of this Article, the emergence of the circumstances indicated in Article 53 of this Law shall also be subject to value added tax.

5. In derogation of subparagraph 1 of paragraph 2 of this Article, the following shall not be treated as acquisition of goods subject to value added tax;

1) acquisitions of goods from any other Member State where zero-rated VAT would be applied under Articles 43, 44 or 47 of this Law to such supply of goods if effected within the territory of the country;

2) acquisitions from any other Member State of second-hand goods, works of art, collector’s items or antiques, within the meaning of this Law, where the vendor is a taxable dealer who is engaged in the supply of goods or where the vendor is an organised of public sales by public auctions and the goods acquired have been subject to tax in the Member State of departure of the dispatch or transport in accordance with the provisions comparable to the provisions of Section Three of Chapter XII of this Law;

3) acquisition of means of transport from any other Member State where the vendor is a taxable person engaged in the supply of the goods and the supplies of  goods acquired have been subject to tax in the Member State of departure of the dispatch in accordance with the special arrangements applied in the Member State with respect to second-hand means of transport.

Article 4. Supply of Goods

1. 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.

2. The actual handing over of goods, pursuant to a contract of lease or any other contract for the transfer of goods providing for payment on deferred terms or by instalments shall also constitute supply of goods for the purposes of  this Law, if under the terms of the transaction the major portion of risk and benefit relating to ownership of goods as well as ownership shall pass to the person to whom the goods have been handed or to the third party upon payment of the final instalment.

3. 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. The provisions of this paragraph shall be applied only where the amount of consideration for determining or transferring the rights in rem, passing of a member share or security corresponds to the open market value of the property immovable by its nature.

Article 4¹. Intra-Community Acquisition of Goods

1. Intra-Community acquisition of goods for consideration shall mean acquisition, according to the terms and conditions of the transaction, of the right to dispose as owner of the goods dispatched or transported by the supplier, purchaser or a third party on behalf of any one of them  to a Member State other than that from which the goods are dispatched or transported.

2. Where a non-taxable legal person acquires goods that are dispatched or transported from a third territory or third county and imports those goods into a Member State other than the Member State of arrival of the goods dispatched or transported, the legal person shall be deemed to have acquired the goods from the Member State of import.

3. The transfer by a taxable person or any other person on his behalf of goods from his undertaking to another Member State for business purposes shall also be treated as intra-community acquisition of goods for consideration, unless the importation is effected according to the terms and conditions of paragraph 2 of Article 5¹ of this Law.

4.  The appropriation of goods by the forces of the states parties to the North Atlantic Treaty, for their use or for the use of the civilian staff accompanying them, which they have not acquired subject to the general rules governing taxation on the domestic market of the Member State, where the importation of these goods could not benefit from the exemption from import VAT under paragraph 3 of Article 40 of this Law, shall also be deemed to be an intra-Community acquisition of goods.

5. For the purposes of this Law, the dispatch or transport of goods under a contract, which would also constitute supply of goods within the meaning of paragraph 2 of Article 4 of this Law, shall be deemed to be intra-Community acquisition of goods for consideration.

Article 5.  Private Use of Goods by a VAT Payer

1. 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.

2. 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.

3. 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).

4. 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.

5. 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.

6. 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 5¹ . Intra-Community Transport of Goods

1. Supplies of goods effected for consideration shall be the transfer by the taxable person of goods from his undertaking from the Member State where the place of departure of goods is situated to another Member State if  the goods are transferred by the taxable person himself or by another person on his behalf.

2. In derogation of  provisions of paragraph 1 of this Article, the following shall not be treated as supply of goods:

1) the transfer of goods to another Member State where the supply of the goods will be effected (which will be subject in the Member State to the provisions equivalent in essence to those of paragraph 3 of Article 12 of this Law);

2) the transfer of goods to another Member State where the goods will be installed or assembled and where supply of the goods will take place (which in that Member State will be subject to the provisions equivalent in essence to those of paragraph 2 of Article 12 of this Law);

3) the transfer of goods intended for the purposes of supplies effected on board vessels,  aircraft and/or on trains during intra-Community passenger transport and where the supply  of  the goods will take place in another Member State (which in that Member State will be subject to the provisions equivalent in essence to those of Article 12¹ of this Law);

4) the transfer of goods to another Member State when the goods are transferred for the purpose of supply on which zero-rated VAT is charged subject to the provisions of Chapter VI of this Law (with the exception of Article 53);

5) the transfer of goods to another Member State for the purpose of work on the goods (repair, maintenance, adaptation, etc.), processing and/or alteration provided that the goods, after being worked upon, are re-dispatched to that taxable person in the Member State from which they  had initially been dispatched or transported;

6) the transfer of goods to another Member State for the purpose of temporary use of the goods in question for the supply of services by the taxable person established within the Member State and therefore the goods are temporarily transferred (i.e. until they are needed in another Member State for the provisions of the services in question);

7) temporary transfer of goods for a period not exceeding 24 months to another Member State in which the import of the same goods from a third country with a view to temporary use would be eligible for the arrangements for temporary importation with full exemption from import duties;

transmission of natural gas and electricity via natural gas and electricity supply systems to another Member State (to which provisions equivalent in essence to those laid down in paragraph 6 of Article 12 of this Law will be applied in the other Member State).

3. Where the conditions specified in paragraph 2 of this Article are no longer satisfied, the transfer of goods to another Member State shall be considered as the supply of goods for consideration as indicated in paragraph 1 of this Article. The supply of goods shall be deemed effected if the above conditions are satisfied.

Article 6. Manufacture of Tangible Capital Assets by a VAT Payer himself

1. 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.

2. 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 7. 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 other transfer of non-standardised software;

2) lease;

3) assignment of intangible property and title, except for the cases provided in paragraph 3 of Article 4 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 8. Supply of Services for Private Use of a VAT Payer

1. For the purposes of this Law,  supply of services for consideration shall also constitute supply of services for private use of a VAT payer, as it is defined in paragraph 2 of this Article.

2. The following shall be treated as supply of services for private use  of 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 paragraph 2 of Article 5 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.

3) the services have been rendered free of charge and not in relation to the VAT payer’s economic activities.

3. 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 9. Special Rules Applied in respect of Certain Transactions

1. 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.

2. 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).

3. 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)).

4. 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 10. 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 11. Agency

1. 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.

2. 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 12. Criteria for Determination of  the Place of Supply of Goods (except for the Goods Supplied on Board Ships, Aircraft or Trains during the Transport of  Passengers Effected in the Community)

1. 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, on behalf of any one of them, the third party). In the cases where the supplied goods were dispatched from a third territory or third country, the supply of goods, when the goods are supplied by the importer, and any subsequent supply shall be deemed to have been effected within the territory of the country, provided that the goods were imported in the Republic of Lithuania. The provisions of this paragraph shall not be applicable and the supply of goods shall not be regarded as having taken place in the territory of the country if the goods are dispatched or transported to another Member State where the supply of goods will be considered to have been effected because of the relevant requirements of legal acts of the Member State or in view of the right granted to the supplier of the goods in the application of the provisions, equivalent in essence to the provisions of paragraph 3 of this Article. The supplier of goods (if under the provisions of this paragraph the place of supply of his goods supplied and transported to another Member State according to the conditions laid down in paragraph 3 of this Article would be within the territory of the country) who himself wishes to consider another Member State as the place of supply of the goods supplied by him must apply to the local tax administrator in the manner prescribed by the central tax administrator with a request to grant him such right. The granted right may not be relinquished earlier than upon the lapse of 24 months after the granting thereof.

2. Where the goods supplied (regardless of who is transporting them) have to assembled or installed, with or without trial run, by or on behalf of the supplier, the place of the supply shall be deemed to be the territory of the country where the goods are installed or assembled.

3. The supply of goods shall also be deemed to have been effected in the territory of the country where the following conditions are fulfilled:

1) the goods are transported by the supplier or any other person on his behalf from any other Member State into the territory of the country (i.e. transport ends in the territory of the country). Where the transport of the supplied goods dispatched into the territory of the country started in a third territory or third state and the supplier thereof imported them in another Member State, the goods shall be deemed dispatched from that other Member State;

2) the purchaser of goods is one of the persons indicated in subparagraph 1 of paragraph 1 of Article 71¹ of this Law or a natural person who is not a taxable person;

3) the supply is of goods other than  new means of transport and other than goods supplied after assembly or installation.

4. By way of derogation from paragraph 3 of this Article, the supply of goods indicated in paragraph 3 of this Article shall not be deemed to have been effected in the territory of the country where the following conditions are fulfilled:

1) the supply is of goods other than goods subject to excise duty;

2) the total value, less value added tax, of the supplies of goods other than products subject to excise duty effected by the supplier under the conditions laid down in paragraph 3 of this Law transported into the Republic of Lithuania in the current calendar year does not exceed LTL 125 000;

3) the total value, less value added tax, of the supplies of goods other than products subject to excise duty effected by the supplier under the conditions laid down in paragraph 3 of this Law transported into the Republic of Lithuania in the previous calendar year did not exceed LTL 125 000;

4) the supplier of the goods has not established his business in the Republic of Lithuania (i.e. he has his permanent address or usually resides (if he is a natural person) outside the Republic of Lithuania) or has not established a subdivision in the Republic of Lithuania;

5) the competent authority of the place of dispatch of the goods has not granted the supplier of the goods the right to apply the provisions of paragraph 3 of this Article.

5. The provisions of paragraph 3 of this Article  shall not be applied to the supplies of second-hand goods, works of art, collector’s items and antiques to which   special tax arrangements laid down in Section Three of Chapter XII of this Law or arrangements equivalent to them in principle in another Member State are applicable  as well as in the cases of supplies of means of transport to which special transitional provisions are applicable to second-hand means of transport in the Member State of departure of the dispatch or  transport.

6. In derogation of other provisions of this Article, the supply of natural gas and electricity shall be deemed effected in the territory of the country  only in the following cases:

1) when the goods are acquired by a taxable person established in the Republic of Lithuania (i.e. if its principal place of business (if it is not a natural person), subdivision (through which the above goods are acquired), or his permanent address or the place where he usually resides (if he is a natural person) is in the Republic of Lithuania), the  main purpose for which it/he acquired natural gas and/or electricity is resale of the natural gas and/or electricity to other persons and if the consumption of the said goods for its/his own needs is negligible;

2) when the goods are acquired by a person not indicated in subparagraph 1 of this paragraph – if the actual consumption of the said goods is effected in the Republic of Lithuania or, in case the said goods are not actually consumed, the registered office of the purchaser (if the purchaser is not a natural person), the subdivision (through which the said goods are acquired) or the place where the purchaser (if he is a natural person) has his permanent address or usually resides is in the Republic of Lithuania.

7. If the case of goods not  dispatched or  transported, the supply of goods shall be deemed to have been effected in the territory of the country in case the goods were in the territory of the country when the supply of the goods took place.

Article 12¹. The Place of Supply of Goods on Board Ships, Aircraft or Trains during the Transport of  Passengers Effected in the Community

1. In the case of goods supplied on board ships, aircraft or trains during the transport of passengers effected in the Community the place of supply of goods shall be deemed to be effected in the territory of the country if the part of transport or the point of the departure of the transport of passengers is within the territory of the country.

2. For the purposes of this Article:

1) ships, aircraft or trains shall be considered as providing transport of passengers within the Community if the transport or a part thereof is effected within the Community;

2) a transport of passengers or a part thereof shall be considered as effected in the Community if the point of departure and the point of arrival of the transport of passengers or a part thereof is within the Community;

3) the point of departure of the transport of passengers or of a part thereof shall mean the first point of passenger embarkation foreseen within the Community (where relevant after a leg outside the Community);

4) the point of arrival of the transport of passengers or of a part thereof shall mean the last point of disembarkation foreseen within the Community of passengers who embarked in the Community (where relevant before a leg outside the Community).

3. In the case of a return trip on board the ship, aircraft or by train, for the purpose of this Law the return leg shall be considered to be a separate transport.

Article 12² . The Place of the Intra-Community Acquisition of Goods

1. The intra-Community acquisition of goods shall be deemed to have been effected in the territory of the country when the dispatch or transport of the goods ended.

2. The intra-Community acquisition of goods shall also be deemed to have been effected within the territory of the country in the case when the person acquiring the goods is a VAT payer identified for purposes of value added tax in the Republic of Lithuania, his identification number is indicated when acquiring the goods and the goods are dispatched from one Member State to another, unless it is established that acquisition has been subject to tax in the Member State where the transport of the goods ended.

3. In derogation of provisions of paragraph 2 of this Article, when the goods dispatched from one Member State into another Member State are acquired by a VAT payer identified for purposes of value added tax  in the Republic of Lithuania for the needs of a subsequent supply effected within that other Member State to a person for whom VAT is chargeable in that other Member State on the goods supplied, whereas the VAT payer from the Republic of Lithuania declares the transactions in the statement of inter-Community supply of goods according to the procedure laid down in this Law, the acquisition of goods from another Member State shall not be considered as having been effected within the territory of the country.

Article 12³. The Place of Import of Goods

1. The place of import of non-Community goods shall be the territory of the country within which the goods are when they enter the Community, except where on entry into the Community territory the non-Community goods are not in free circulation, but are produced to customs and, where applicable, placed in temporary storage, placed in a free zone or a free warehouse, or placed under customs warehousing arrangements or inward processing arrangements, or placed under the arrangements for temporary importation with total exemption from import duty or under external transit arrangements. In the latter cases the place of import of non-Community goods shall be the territory of the country only provided the goods are  within the territory of the country when the above-mentioned  procedures and arrangements cease to apply.

2. The place of import of non-Community goods shall also be the territory of the country in the cases where at the moment of their entry into the Community these goods are  outside the territory of the country, however they are not in free circulation but are produced to customs and placed in temporary storage or placed in a free zone or a free warehouse or placed under customs warehousing arrangements or inward processing arrangements or under the arrangements for temporary importation with total exemption from import duty or under external transit arrangements and within whose territory these goods are when they cease to be covered by those arrangements or procedures.

3. The place of import of Community goods shall be the territory of the country if the goods are within the territory of the country at the moment of their entry into the Community, except where the goods are subject to the regime which, if these were non-Community goods, would allow to place them under customs warehousing arrangements for being placed in temporary storage, to place them in a free zone or a free warehouse for inward processing arrangements, or to place them under the arrangements for temporary importation with total exemption from import duty or under internal transit arrangements. In the latter cases the place of import of the Community goods referred to above shall be the territory of the country within which the goods cease to be covered by the said regime or internal transit arrangements under which they have been placed.

4. Similarly, the place of import of Community goods shall be the territory of the country when, on entry into the Community, the goods are outside the territory of the country but, on entry into the Community, they are placed under the arrangements which, if these were non-Community goods, would allow to place them under customs warehousing arrangements for placing them in temporary storage, to place them in a free zone or a free warehouse, to subject them to inward processing arrangements, or to place them under the arrangements for temporary importation with total exemption from import duty or under internal transit arrangements and within whose territory the goods cease to be covered by the regime under which they were placed or within which the goods cease to be covered by the internal transit arrangements.

Article 13. The Place of Supply of Services (with the Exception of Transport Services)

1. Unless otherwise established in this Article or Article 13¹, the place where a service is supplied shall be deemed to be the territory of the country if the supplier has established his business within the territory of the county, i.e. the supplier of service has a fixed establishment (if it is not a natural person) or if he has his permanent address or usually resides (if he is a natural person) in the Republic of Lithuania, except where the service is performed through the subdivision in a foreign state. The place of the service shall also be within the territory of the country where the service is supplied by a foreign taxable person through its/his subdivision established within the territory of the country. The provisions of this paragraph shall not apply where the services specified in paragraph 6 of this Article are supplied by the supplier established within the territory of the country or the subdivision of a foreign taxable person established within the territory of the country to a taxable person established in another Member State or to any person established outside the Community.

2. Unless otherwise established in this Article or Article 13¹, the place where the services of agents who act in the name and for the account of another, when they procure for their principal goods or services or supply goods or services shall be situated within the territory of the country, where the principal transaction (i.e. supply of goods or services) has taken place under this Law within the territory of the country, except in cases where the services of agents are supplied to a VAT payer identified for purposes of value added tax  in another Member State and he indicated the identification number when acquiring the services. Where the principal transaction under this Law has taken place in another Member State and the services of agents are supplied to a  VAT payer identified for purposes of value added tax  in the Republic of Lithuania while he indicated the identification number when acquiring the services, the place where the services are supplied shall be deemed to be the territory of the country.

3. 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 territory of the country only provided that the property with which the services are connected is situated or will be constructed within the territory of the country. 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 hiring, sale and/or purchase of property immovable by its nature,  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.

4. 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 the supply of ancillary services necessary for the supply of the said services, where the services specified in this paragraph should not be considered as electronically supplied services, shall be  deemed to be the territory of the country only provided that  the services are physically carried out within the territory of the country.

5. By way of derogation from the provisions of paragraph 1 above, the place of the supply of the services of valuation of movable property, also work thereon (repair, maintenance, adjustment, etc.), processing and alteration shall be deemed to be the territory of the country if the services are physically carried out within the territory of the country, except in the cases where the person who purchases the services is a VAT payer identified for purposes of value added tax  in another Member State and he indicated the identification number when purchasing the services, while upon the performance of the services, the property is dispatched or transported outside the territory of the country. When the services are physically carried out within another Member State,  and the purchaser of the services has identified for purposes of value added tax in the Republic of Lithuania and indicated the identification number when acquiring the services, while upon the supply of the services the property is dispatched or transported  from that other Member State where the services are physically carried out, the place of the supply of the services shall also be deemed to be the territory of the country.

6. The place of the supply of services listed in this paragraph shall be deemed to be supplied within the territory of the country if they are supplied by the supplier of the services established outside the territory of the country or the supplier of the services established within the territory of the country through the subdivision in a foreign state to taxable persons of the Republic of Lithuania (with the exception of cases where the services are supplied to the subdivisions of the persons located outside the territory of the country) or to foreign state taxable persons located within the territory of the country. 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 subparagraph 3 of paragraph 2 of this Article), technical control and analysis, market survey, public opinion polling and other similar services;

3) development, sale and other transfer of non-standardised software, data processing, transmission of information (where such services should not be considered as electronically supplied services;

4) insurance and financial services (with the exception of the hire of safes);

5) the supply of staff (with the exception of teaching and training of staff);

6) advertising services;

7) telecommunications services;

electronically supplied services (inter alia such as: website supply, web-hosting, distance maintenance of programmes and equipment, supply of software and updating thereof, making databases available, supply of music, films and games,  supply of distance teaching, etc. If the supplier and the purchaser communicate by electronic means, but the good or the service is supplied not electronically, the communication shall not be considered as electronically supplied services);

9) radio and television broadcasting services;

10) the hiring out of movable tangible property, with the exception of all forms of transport;

11) obligation to refrain from performing the activities specified in this paragraph or from exercising any of the rights specified in the said paragraphs;

12) the granting of the right to access natural gas and electricity supply systems, to transport natural gas and/or electricity by natural gas and electricity supply systems and to other services directly related thereto;

13) the services of agents when they procure for their principal any of the services referred to in this paragraph.

7. In derogation of paragraph 1 of this Article, the place of the supply of electronically supplied services shall also be deemed to be within the territory of the country  in the case when they are supplied to  the person who is not a taxable person, who has its seat (if it is not a natural person) or has his permanent address or usually resides (if he is a natural person) within the Republic of Lithuania by the person who has established his business outside the territory of the Community or when the service is supplied through a subdivision situated outside the territory of the Community.

8. In derogation of paragraph 1 of this Article, the place  where the services of telecommunications and radio and television broadcasting services are supplied shall be within the territory of the country also when the services are performed for a non-taxable person who has a fixed establishment (if it is not a natural person) or has his permanent address or usually resides  within the Republic of Lithuania (if he is a natural person), by the person who has established his business or has a fixed establishment outside the Community territory or if the service is supplied through a subdivision established outside the territory of the Community and the effective use of the supplied service takes place within the territory of the country.

9. By way of derogation from the provisions of paragraph 1 above, the place of supply of the services of hiring out of forms of transport shall be considered as situated within the territory of the country if the services are supplied by the person who has established his business or has a fixed establishment outside the Community territory or if the service is supplied through a subdivision established outside the territory of the Community and the effective use of the hired transport takes place for the most part within the territory of the country.

10. In derogation of paragraph 1 of this Article the place of supply of the services of hiring out of forms of transport shall not be considered as situated within the territory of the country if the services are supplied by the person who has established his business in the territory of the country or a foreign person through a subdivision established in the territory of the country and the effective use of the hired transport takes place for the most part outside the territory of the Community.

11. By way of derogation from the provisions of paragraph 1 above, the place of supply of the services of development, sale and other transfer of non-standardised software shall be within the territory of the country shall also be deemed to be within the territory of the country when they are supplied to  the person who is not a taxable person, who has its seat (if it is not a natural person) or has his permanent address or usually resides (if he is a natural person) within the Republic of Lithuania by the person who has established his business outside the territory of the Community or when the service is supplied through a subdivision situated outside the territory of the Community and the effective use of the supplied service takes place within the territory of the country.

Article 13¹. The Place of Supply of Transport Services

1. The place where transport services (intra-Community transport services excluded) are supplied shall be deemed the territory of the country in case the services are actually supplied within the territory of the country. Where the services are actually supplied both within and outside the territory of the country, the part of the service supplied within the territory of the county shall be deemed to be proportionate to the part of the route running within the territory of country.

2. The place of the supply of services in the intra-Community transport of goods shall be deemed to be within the territory of the country where the place of departure is situated within the territory of the country, except where the purchase of the services is  a VAT payer identified for purposes of value added tax in another Member State and he indicated the identification number when acquiring the services.

3. The place of the supply of services in the intra-Community transport of goods shall be deemed to be within the territory of the country also where the place of departure of intra-Community transport of goods is not within the territory of the country but the purchaser of the services is the VAT payer identified for purposes of value added tax in the Republic of Lithuania  and he indicated the identification number when acquiring the services.

4. The place of the supply of services ancillary to the intra-Community transport of goods (loading, unloading, handling, organisation of transport of goods  by special stationary transport installations and other ancillary services necessary when transporting goods by certain means of transport or stationary transport installations) shall be deemed to be within the territory of the country when they are actually performed within the territory of the country except where the purchaser of services ancillary to the intra-Community transport is identified for purposes of value added tax in another Member State and he indicated the identification number when acquiring the services.

5. The place of the supply of services ancillary to the intra-Community transport shall be deemed to be within the territory of the country also where the services are actually supplied in another Member State, but the purchaser of the services is the VAT payer identified for purposes of value added tax within the Republic of Lithuania and he indicated the identification number when acquiring the services.

6. The place of the supply of services of agents who act in the name and for the account of another, when they procure or supply services of intra-Community transport of goods or services ancillary to intra-Community transport shall be deemed to be within the territory of the country, when the services which are purchased or supplied though agency shall be deemed supplied within the territory of the country, except where the purchaser of the services is the VAT payer identified for purposes of value added tax in another Member State and he indicated the identification number when acquiring the services.

7. The place of the supply of services of agents who act in the name and for the account of another, when they procure or supply services of intra-Community transport of goods or services ancillary to intra-Community transport, which are deemed to be supplied in another Member State shall also be deemed supplied within the territory of the country when the purchaser of the services is the VAT payer identified for purposes of value added tax in another Member State and he indicated the identification number when acquiring the services.

CHAPTER II

CHARGEABLE EVENT AND TAXABLE AMOUNT

Article 14. Chargeable Event

1. Unless otherwise provided in this Article, VAT on the good or service supplied within the territory of the country shall become chargeable upon the issue, in the manner established in this Law, of the VAT invoice.

2. In the case not specified in paragraph 1 of this Article or where the VAT invoice is not issued for the goods or service supplied, VAT shall become chargeable upon the occurrence of that of the events specified below, 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.

3. Where, in accordance with the provisions of this Law, VAT on the good delivered or service supplied by a foreign taxable person is chargeable on 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.

4. 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.

5. By way of derogation from other provisions of this Article, in the cases where goods are supplied as specified in paragraph 2 of Article 4 of this Law, VAT shall become chargeable upon the delivery of the goods.

6. 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 upon the issue, in accordance with the procedure laid down in this Law, of the VAT invoice for the supply of goods or services during the appropriate accounting period, and in case the invoice is not issued – upon the receipt of consideration for the amount of goods or services supplied during the accounting period. If the invoice for the supply of goods or services during the accounting period  has not been issued by the 10^th day of the month following the month when the goods or services were supplied and the consideration has not  been received either, VAT shall become chargeable on the day following the expiry of the 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  has been 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,  under the provisions of this Law, VAT shall become chargeable on 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.

7. 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.

8. 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).

9. The VAT payer who supplies agricultural products for the supply whereof a VAT invoice must be issued by the purchaser of agricultural products according to the procedure prescribed by this Law and other legal acts, shall have the right to choose a special procedure for determining the chargeable event, under which VAT on the supplied agricultural products becomes chargeable upon the payment of consideration for it. Where consideration is paid in instalments, VAT shall be chargeable on each instalment at the moment of payment thereof. Where subsidies or grants are payable for the supplied agricultural products, which are included in the taxable amount of the agricultural products, VAT  shall become chargeable on the part of the taxable amount upon payment by the purchaser of an appropriate amount. VAT payer must declare his choice to apply the special procedure for determining the chargeable event specified in this paragraph to the  local tax administrator in the manner prescribed by the central tax administrator and it shall be applied when calculating VAT on the agricultural products supplied starting from the next tax period after the filing of the application.  VAT payer shall have the right to renege on his choice, but not earlier than after the lapse of 24 months from the beginning of the tax period when the application of the procedure was started, whereas VAT on the agricultural products which were supplied but the tax whereon was not calculated shall be calculated for the first tax period from which the application of the general procedure for the determination of the tax period had been resumed.

10. VAT on intra-Community supply of goods subject to the provisions of Chapter VI of this Law shall become chargeable upon the issue of the VAT invoice for the supply of the goods but not later than from the 15^th day of the next month following the month when the goods were dispatched.

11. VAT shall become chargeable on intra-Community acquisition of goods upon the issue of the VAT invoice by the supplier of the goods but not later than from the 15^th day of the next month following the month when the goods were dispatched.

12. Import VAT shall become chargeable upon the entry of the goods from the third country territory into the territory of the country. Where the goods imported into the territory of the Community are subjected to actions, procedures or arrangements  specified in paragraph 1 or 3 of Article 12³ of this Law, VAT shall become chargeable upon cessation of the application of the said actions, procedures or arrangements within the territory of the country.

13.  Import VAT shall become chargeable on the goods on which import duties, agricultural or other levies and charges are imposed on the Community level under the relevant Community legal acts when the import duties, agricultural or other  levies and charges become chargeable under the above legal acts. When goods are not subject to any import duties, agricultural or other levies and charges, import VAT shall become chargeable when under the relevant provisions of the Customs Code import debt to the customs would be chargeable within the territory of the country, if the goods were subject to the said duties or levies and charges.

14. When VAT becomes chargeable under paragraph 7 of Article 53 of this Law, VAT must be calculated upon the occurrence of the chargeable event specified in the Article.

Article 15. Taxable Amount

1. 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.

2. In the cases specified in paragraph 2 of Article 5, Article  5¹ or subparagraph 2 of paragraph 2 of Article 8 of this Law the acquisition price of the transferred or used object of the right of ownership or of the goods dispatched or transported into another Member State, 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 or goods dispatched or transported into another Member State were used in the economic activities of the taxable person, the taxable amount shall be equal to the share of the acquisition price of the object of the right of ownership (good) calculated taking into account to what extent it is used up by the occurrence of the chargeable event.

3. In the case specified in subparagraphs 1 and 3 of paragraph 2 of Article 8 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 or accordingly supplying services. 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.

4. 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).

5. 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.

6. 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.

7. 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.

8. 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 un-returned 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.

9. 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.

10. For the purposes of the cases of supply of goods or services indicated in paragraph 2 of Article 9 of this Law the taxable amount  shall be the value of the object of the right of ownership which is transferred. For the purposes of the cases of supply of goods or services indicated in paragraph 3 of Article 9 of this Law the taxable amount  shall be the part of value of the object of the right of ownership deduction of the value added tax on which should be adjusted according to the procedure prescribed by Chapter VII of this Law.

11. For the purposes of paragraph 4 of Article 9 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).

12. 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.

13. In intra-Community acquisition of goods the taxable amount shall be established on the basis of the same rules as used to determine the taxable amount of supply of the same goods within the territory of the country. For the purposes of paragraphs of 3 and 4 of Article 4¹ of this Law the taxable amount shall be the acquisition price i.e. the  purchase price of the specified goods  (excluding the VAT itself) or the cost of manufacture for himself (excluding the VAT itself). Where the good was used in the economic activities of the taxable person, the taxable amount shall be equal to the part of the acquisition price thereof determined taking into account what part of the good had been used up in the economic activities of the taxable person on the occurrence of the chargeable event. In case of acquisition of a good in respect of which application of the circumstances specified in paragraph 1 of Article 53 of this Law was discontinued in the Member State and this was no reason for the VAT on importation to become chargeable in the Member State,  the taxable amount in respect of the imported goods shall also include the services  which in the other Member State were subject to zero-rate of VAT or exempt from VAT under the provisions equivalent in essence to the provisions of Article 53 of this Law on charging zero-rate of VAT on the supply of services and were not included in the acquisition price.

14. Where services of intra-Community transport of goods are supplied and part of the transport route crosses Community extraterritorial waters, the taxable amount of the service shall be reduced by the part proportionate to the extraterritorial part in the entire route.

15. 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 established on the basis of the Customs Code and the legal acts regulating the application thereof (and in case of Community goods the entry whereof in the Community territory is considered as importation – to the value of goods established subject to the provisions of the Customs Code and the legal acts on the establishment of the customs value) :

1) the paid or payable duties, taxes and other charges due outside the Community or outside the Republic of Lithuania and duties levied on the goods within the Community and taxes on the goods and other charges due in the Community or 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 territory of the country. For the purposes of this Article, first place of destination within the customs territory of the country 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 country;

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 Community, if that place is known when the chargeable event occurs.

16. When goods have been temporarily exported from the Community and are re-imported having undergone outside the Community repair, processing or adaptation or after having worked up or reworked abroad, in derogation of paragraph 15 of this Law their taxable amount shall be the value of the relevant services supplied outside the Community territory, established subject to the provisions of this Law.

17. Price discounts and rebates allowed at the time when VAT on importation became chargeable shall not be included in the taxable amount of the imported goods.

18. The provisions of paragraph 8 of this Article shall be applied mutatis mutandis with respect to the packing of imported goods.

19. 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) or it is proved that the VAT on the goods acquired from another Member State has been paid in the Member state where the transport of the goods ended, the taxable amount in respect of the good or service shall be reduced accordingly.

20. Where the taxable amount of imported goods is expressed in the currency other than the national currency of the Republic of Lithuania, the taxable amount shall be assessed in the national currency in compliance with the provisions of the Customs Code and the regulating legal acts.

21. In the cases other than those indicated in paragraph 20 of this Article, where information for the determination of the taxable amount is expressed in a currency other than the national currency of the Republic of Lithuania, the taxable amount shall be assessed in the national currency at the exchange rate established by the Bank of Lithuania recorded at the time the tax becomes chargeable, or, where the consideration payable by the purchaser change due to the circumstances specified in Article 83 of this Law, on the day of recording of the circumstances.

22. When VAT becomes chargeable under Article 53 of this Law, VAT shall be calculated on the taxable amount assessed in compliance with the rules laid down in this Article.

Article 16. Taxable Amount in Case of Agency Services

1. 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.

2. 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 17. Calculation of the Taxable Amount on the Decision of the Tax Administrator

1. 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.).

2. 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.

3. The provisions of this Article shall not apply to the supply of goods or services effected for consideration fixed by state or municipal institutions and agencies or in the international agreements of the Republic of Lithuania.

CHAPTER III

RATES OF VAT

Article 18. Application of the Rate of VAT

The rate of VAT applicable to the supply or intra-Community acquisition 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.

Article 19. Rates of VAT

1. In the cases of supply of goods and services, and intra-Community acquisition of goods which are not provided in paragraphs 3, 4 and 5 of this Article and Chapters IV and V of this Law, standard rate of VAT shall be applied.

2. 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.

3. 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 (including brochures, leaflets and similar printed manner, children’s picture, drawing or colouring books, music printed or in manuscript, maps and hydrographic and similar charts, excluding globes, calendars, note books and other similar printed matter), newspapers and periodicals, except for publications publicising eroticism and violence, which have been recognised as such by an institution authorised by legal acts and printed matter 4/5 of which is devoted to paid advertising;

3) pharmaceuticals (including pharmaceutical products for veterinary purposes), products used for contraception and sanitary protection (personal hygiene) for women, special purpose food products for children, special medicinal purpose food products and special medicinal body and dental care products,  also medical equipment, aids and other appliances normally intended to alleviate or treat disability. The groups of medicinal products indicated in this subparagraph, on which VAT is chargeable at the reduced rate 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 if they meet the requirements of legal acts in force in the Republic of Lithuania;

6) chilled meat and edible offal (with the exception of meat and edible offal of poultry) if it meets the requirements of legal acts in force in the Republic of Lithuania and  conforms to the Lithuanian standards if such standards have been approved;

7) chilled, frozen and deep frozen meat and edible offal of poultry if it conforms to the requirements of the legal acts in force in the  Republic of Lithuania and Lithuanian standards  if such standards have been approved;

services to agriculture supplied by agricultural companies and co-operative societies – agricultural entities to their members (according to the list of agricultural services approved in Annex 1 to this Law);

9) live, fresh and frozen fish if it conforms to the requirements of the legal acts in force in the  Republic of Lithuania and Lithuanian standards  if such standards have been approved;

10) attendance of various artistic and cultural as well as sporting events with respect to which provisions of Article 23 of this Law shall not be applied.

4. Reduced 9% rate of VAT shall be applied to supplies of services relating to construction, renovation and insulation of residential houses 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.

5. Zero-rate of  VAT shall be charged on the supplies of goods and services as well as intra-Community acquisition of goods  specified in Chapter VI of this Law.

CHAPTER IV

SUPPLIES OF GOODS, SERVICES AND INTRA-COMMUNITY ACQUISITIONS EXEMPT FROM VAT

Article 20. Goods and Services Related to Health Care

1. Personal and public health care services provided by persons who have acquired, according to the procedure established by legal acts, the right to provide the above services shall be exempt from VAT.

2. 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.

3. 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.

4. The supply of human organs, blood (conserved blood and blood components) and breast milk as well as dental prostheses supplied by dentists and dental technicians shall be exempt from VAT.

5. 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 21. Social Services and Connected Goods

1. 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.

2. 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.

3. 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 22. Education and Training Services

1. 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.

2. 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..

3. 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.

4. 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 23. Cultural and Sports Services

1. 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.

2. 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.

3. 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.

4. 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 24. Activities not Specified in Articles 20, 21, 22 and 23

1. 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 as well as the goods supplied by the persons to their members (where supply of the goods is connected with the supply of services) and no consideration  is obtained for the above services in addition to membership fees.

2. Supply of services by religious communities, associations 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 as well as the goods supplied by the persons to their members (where the supply of the goods is connected with the supply of services), where, save for donations,  no additional consideration is received for the goods and services, shall be exempt from VAT.

3. Certain supply of staff by religious communities, associations and centres provided for the activities indicated in Articles 20, 21 or 22 of this Law shall be exempt from VAT.

4. Supplies of goods and/or services by non-profit making legal persons, engaged in the activities specified in Articles 20, 21, 22 and 23 of this Law or paragraphs 1, 2 or 6 of this Article 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.

5. Services supplied by independent groups whose activities are exempt from or are not subject to value added tax for the purpose of rendering their members the services directly necessary for the exercise of their activity, where these groups merely claim for their members exact reimbursement of their share of the joint expenses.

6. The supply of services and of goods closely linked to the protection of children and young persons by bodies governed by public law or other organisations recognised as charitable.

7. If it is established that due to the application of provisions of this Article the goods and/or services supplied by legal persons indicated in this Article 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 for the application of this Article.

Article 25. Postal Services

1. The postal services supplied by the supplier of universal postal services and the supply of goods incidental thereto shall be exempt from VAT.

2. 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.

3. The provisions of this Article shall not be applicable to the sending of postal parcels.

Article 26. Radio and Television

1. Supply to the public of public information services by non-profit making legal persons – radio and/or television broadcasters shall be exempt from VAT.

2. The provisions of paragraph 1 of this Article shall not be applicable to the sale of broadcasts, advertising services and other  commercial activities.

Article 27. Insurance Services

All types of insurance and re-insurance services, except for those indicated in Article 46 of this Law as well as insurance and reinsurance transactions, including related services performed by insurance brokers and agents, shall be exempt from VAT.

Article 28. Financial Services

1. Granting of credit, also management of the granted credit by the taxable person granting it shall be exempt from VAT.

2. Unless otherwise provided in Article 46, the granting of financial guarantee or other security for money, also management  of the granted  guarantee or suretyship shall be exempt from VAT  if performed by the taxable person granting the guarantee or surestyship.

3. 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.

4. 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.

5. 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.

6. 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.

7. A taxable person providing services specified in paragraphs 1 to 4 of this Article shall have a right of option to calculate VAT on the services according  to the procedure established by this Law where the purchaser/customer is a VAT payer, and the excise of that option shall be valid not less than 24 months from the day of declaration of the option with respect to all transactions concluded by him. The taxable person shall declare this option in the manner prescribed by the central tax administrator.

8. A detailed list of services indicated in paragraphs 1-4 of this Article shall be determined by an institution authorised by the Government of the Republic of Lithuania.

Article 29. 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 30. 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 31. Letting and Leasing of Property Immovable by its Nature

1. 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;

2. 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. A 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 not in the case where the property is let or leased to the VAT payer and this option shall be valid not less than 24 months with respect to all transactions concluded by him. The taxable person shall declare this option in the manner prescribed by the central tax administrator.

4. Termination for 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 32. Sale or Other Transfer of Property Immovable by its Nature

1.  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.

2. 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.

3. A taxable person shall have a right of option for calculating VAT in the manner established in 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 and this option shall be valid not less than 24 months from the day of declaration of the option with respect to all transactions concluded by him. The taxable person shall declare his option in the manner prescribed by the central tax administrator. The taxable person who sells or in any other manner transfers the  property immovable by its nature to the VAT payer may choose to calculate the VAT under the conditions laid down in paragraph 2 of Article 4 of this Law if the supplier thereof when acquiring it calculated the VAT on it or not to calculate the VAT  if when acquiring it the supplier did not calculate the VAT on it, regardless  of whether or not the choice of 24 months to calculate the VAT was declared.

Article 33. Special Cases of Exemption of Supplies of Goods or Services from VAT

1. 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 and used by no less than 99% 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 has not been deducted on the said  goods as it is not deductible according to the provisions of paragraph 2 of Article 62 of this Law.

2. Other cases when supplies of goods and services are exempt from VAT are specified in Section Four of Chapter XII of this Law.

Article 33¹. Special Cases of Exemption of Supplies of Goods or Services from VAT

1. The intra-Community acquisitions of goods shall be exempt from VAT where:

1) the supply of the same goods within the territory of the country would be in all circumstances exempt from VAT or zero-rate of  VAT would be charged thereon under the provisions of this Law, or

2) under this Law import of the same goods would be in all circumstances exempt from VAT.

2. The intra-Community acquisition of goods shall be exempt from VAT, where the foreign taxable person acquiring the goods would in all circumstances be entitled to full reimbursement of the paid value added tax pursuant to the provisions of Chapter XII  of this Law.

3.  The acquisition of goods from any other Member State  (other than the Member State in which he is identified for value added tax purposes)  by a taxable person  who is established outside the territory of the country, identified for value added tax purposes in any Member State (the Republic of Lithuania excluding), if in the territory of the country the acquisition of  goods is effected for the purpose of a subsequent supply of the goods to the VAT payer who is liable under this Law for the calculation and payment of VAT due shall be exempt from VAT.

4. Other cases when intra-Community acquisitions of goods are exempt from VAT shall be set forth in Article 53.

CHAPTER V

EXEMPTIONS ON IMPORTATION

Article 34. 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 or zero-rate of VAT would be charged thereon.

Article 35. Goods Imported and Supplied to another Member State

1. Goods shall be exempt from VAT on importation where it is known at the moment of importation that they are intended to be and will be dispatched or transported to another Member State, whereas the supply of the imports of goods from the Republic of Lithuania  to another Member State is charged zero-rate of VAT  under the provisions of Chapter VI of this Law.

2. The provisions of this Article shall be applicable where the importer is identified for purposes of value added tax in the Republic of Lithuania  while the goods are dispatched or transported to another Member State within a period not exceeding 1 month from the occurrence of the chargeable event specified in paragraphs 12 or 13 of Article 14 of this Law.

3. The procedure for implementing this Article shall be established by the Customs Department under the Ministry of Finance of  the Republic of Lithuania  (hereafter – Customs Department) in conjunction with the Central Tax Administrator.

Article 36. Goods Intended for Diplomatic Missions, Consular Posts and Representations of International Organisations as well as the Staff of the Representations and Posts and their Family Members

1. Goods imported for use in the official activities in the Republic of Lithuania  of foreign state diplomatic missions or consular posts 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 the  members of diplomatic missions and consular posts 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. Goods intended for use by foreign state diplomatic missions or consular posts or their members in other Member States in compliance with the conditions and restrictions prescribed by that Member State  shall also be exempt from import VAT. The goods indicated in this paragraph shall be exempt from import VAT only where they are brought in under the arrangements which qualify for exemption from customs duties.

2. Exemption from import VAT shall be granted to goods imported by international organisations or their representations as well as members of the organisations or their representations. Importations of goods specified in this paragraph shall be exempt from VAT within the limits and under the conditions laid down by the international conventions establishing the organisations or by the agreements established by any Member State and an international organisation.

3. 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.

4. Pending the entry into force in the Republic of Lithuania of the multilateral treaty on the Status of the North Atlantic Treaty Organisation, National Representatives and International Staff, signed in Ottawa on 20 September 1951,  but not longer than until 1 May 2004, the provisions of this Article shall also be applicable to supplies of goods intended for the implementation of NATO Security Investment Programme according to the procedure established by the Government of the Republic of Lithuania or an institution  authorised by it.

Article 37. 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 38. Imported Gold

Gold imported by the system of European central banks and the European Central Bank shall be exempt from import VAT.

Article 39. Reimported Goods

Reimported goods shall be exempt from VAT where all the following conditions are met:

1) goods are reimported by the person who exported them;

2) goods are reimported in the state in which they were exported;

3) goods qualify for exemption from customs duties.

Article 40. Special Cases of Exemptions on Importation

1. 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;

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) State and institutional recognition awards, other badges of honour and distinction;

12) gifts received or intended to be offered as gifts during official visits and goods sent by foreign state and international institutions in token of friendship and goodwill;

13) articles intended for use by the official guests of the Republic of Lithuania  and their delegation members 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;

24) goods the customs value whereof does not exceed LTL 75, with the exception of ethyl alcohol, alcoholic beverages, manufactured tobacco, liquid perfume, cosmetic preparations and toiletries containing ethyl alcohol;

25) catches of fish and fish products produced from it, also processed (manufactured) fish products (if the fish caught and fish products received are processed on the same fishing vessel) imported into ports by sea fishing undertakings.

2. The provisions of paragraph 1 of this Article shall apply mutatis mutandis in case of importation of Community goods the entry whereof into the Community territory is within the scope of VAT. The specific conditions, procedure and limitations of application of provisions of subparagraphs 1-23 and 25 of paragraph 1 of this Article shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

3. Exemption from import VAT  shall be granted in respect of goods imported by military units of NATO countries intended for the use of the units or accompanying civilian  personnel when the units take part in joint military operations, exercise or any other joint military event. The specific conditions of application of provisions of this paragraph shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

4. 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 160. 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.

5. Natural gas and electricity imported via the natural gas and electricity supply systems shall be exempt from import VAT.

6. 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 AS WELL AS SPECIAL

RULES RELATING TO INTERNATIONAL TRADE

Article 41. Export of Goods outside the Territory of the Community

1. Unless otherwise established in this Chapter, zero-rate of VAT shall be charged on the supplies of goods, provided the goods are exported by or on behalf of the supplier outside the territory of the Community.

2. Unless otherwise established in this Chapter, zero-rate of VAT shall be charged on the supplies of goods when these are dispatched or transported outside the territory of the Community by or on behalf of the purchaser established outside the territory of the country, with the exception of goods transported by the purchaser himself for the equipping and provisioning of pleasure boats and private aircraft or any other means of transport for private use. In the case of the supply of the goods to be carried in the personal luggage of travellers, zero-rate of VAT shall be charged in the manner laid down in Article 42.

Article 42. Goods Exported by Passengers

1. Zero-rate of  VAT shall be applied to goods exported by persons who have their permanent address or usually reside outside the Community territory  (hereinafter – foreign passenger), which they have acquired in the Republic of Lithuania and the value whereof exceeds the threshold established by the Government of the Republic of Lithuania. A foreign passenger must prove that he has his permanent address or usually resides outside the Community by presenting a document of the type specified by the Government of the Republic of Lithuania.

2. 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 43. Ships and Aircraft

1. 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.

2.  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 passengers and/or cargo on international routes or supply of other services for reward, also maintenance and repairs of aircraft proceeding on international routes (except for aircraft operating on such routes, which are intended for personal needs).

3. 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, supply of spare parts for the above-mentioned ships and aircraft, also lease of spare parts when the spare parts are installed in the above-mentioned ships and aircraft. The provisions of this paragraph shall not be applicable where the aircraft is used for personal needs.

4. Zero-rate of VAT shall also be applied to:

1) supply of the services necessary for the supply of the ships specified in paragraph 1 of this Article with direct ship and their cargo maintenance services  and for meeting the direct needs thereof;

2) supply of the services necessary for direct maintenance of aircraft operating on international routes and maintenance of the cargo thereof, also for meeting the direct needs. The provisions of this paragraph shall not be applicable where the aircraft is used for personal needs.

Article 44. Fuelling and Provisioning of Ships and Aircraft

1. Zero-rate of VAT shall be applied  to the supply of goods for the fuelling and provisioning of ships specified in paragraph 1 of Article 43 of this Law, also of war ships leaving  and sailing outside the country’s territory.

2. Zero-rate of  VAT shall be applied to the supply of goods for the provisioning of aircraft to taxable persons who receive more than a half of their annual income from transporting passengers and/or cargo on international routes.

3. Goods within the meaning of this Law 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 45. Transport Services and Related Transactions

1. Zero-rate of VAT shall be applied to the supply of services, including  transport and any ancillary services, when the above-mentioned services are directly related to the export of goods outside the territory of the Community.

2. Zero-rate of VAT shall be charged on the supply of services of  transport, also on the supply of any services ancillary to transport where the services are directly related to the goods, which are placed under the arrangements, procedures or regime specified in  paragraphs 1 or 3 of Article 12³ of this Law as well as to the imports of goods into the Community territory that are being taken to the VAT warehouse.

3. Zero-rate of VAT shall be charged on the supply of services of  transport, also on the supply of any services ancillary to transport where the services are related to importation of goods within the Community territory and the taxable amount of the goods must be included in the taxable amount of the imports of goods under the provisions of paragraph 15 of Article  15 of this Law or the equivalent provisions of the Member State into which the goods will be imported.

4. The provisions of paragraphs 1, 2 and 3 of this Article shall also be applicable to the transportation of post into the Community territory for dispatch from it or for transportation in transit and for related ancillary services.

5. The issue of TIR and ATA Carnets shall be subject to zero-rate of  VAT.

6. Zero-rate of VAT shall be applicable to transportation of passengers on international routes, also to the transportation of passenger luggage irrespective of the type of the means of transport. For the purposes of this provision international route shall mean transportation where the place of departure is within the territory of the country and the place of arrival is outside the territory of the country, also transportation where the place of departure is outside the territory of the country and the place of arrival is within the territory of the country, transportation where both the place of departure and the place of arrival is outside the territory of the country.

7. Zero-rate of VAT shall be applicable to transportation of goods to and from the islands of the Azores and Madeira as well as dispatch or transport of goods between those islands.

8. The provisions of this Articles  shall not be applicable to the services specified in Chapter IV of this Law, except for the insurance and financial services referred to in Article 46 of this Law.

Article 46. Insurance and Financial Services Related to Export

Zero-rate of VAT shall be charged on the insurance services as well as financial services specified in Article 28 of this Law, when the above services are directly linked to the export of goods not specified in Chapter IV of this Law outside the Community territory.

Article 47. Goods and Services Intended for Diplomatic Missions, Consular posts and International Organisations or their Representations  as well as the Staff of the Missions and Institutions and their Family Members

1. Zero-rate of VAT shall be applied to the supplies of goods and/or services intended for use in the official activities of foreign state diplomatic missions or consular posts in the Republic of Lithuania. Zero-rate of VAT shall also be applied to the supply of goods and services intended for the personal use of members of the diplomatic missions or consular posts, with the exception of ancillary staff, 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 list of goods and services for which the VAT shall not be refundable shall be drawn up by the Government of the Republic of Lithuania or an institution authorised by it.

2. Zero-rate of VAT shall be applicable to the goods or services supplied to the international organisations recognised by the Republic of Lithuania or their representations and members, if this is provided for in international agreements under which the international organisations are established or in the international agreements of the Republic of Lithuania with the relevant international organisation. In this case the provisions  of paragraph 1 of this Article shall be applied mutatis mutandis

3. 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 post of the Republic of Lithuania  is less or more favourable than the procedure applied to the diplomatic mission or consular post 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 post of that state in the Republic of Lithuania an accordingly less or more favourable procedure for the refund of the VAT.

4. The provisions of this Article shall also be applied to the goods and services acquired in the Republic of Lithuania  by  the military units of NATO countries other than the Republic of Lithuania, intended for the use of the units or accompanying civilian  personnel when the units take part in joint military operations, exercise or any other joint military event.

5. Zero-rate of VAT shall be applicable to the supply of goods and services to foreign state diplomatic missions or consular posts established in other Member States, members of these missions or institutions, also military units of NATO countries other than the Member State of destination,  intended for the use of the units or accompanying civilian personnel. The provisions of this paragraph shall be applied in accordance with the terms and limitations established in that other Member State.

6. Zero-rate of VAT shall be applicable to the supplies of goods and services to international organisations recognised as such by any other Member State or their representations as well as to members of the said organisations or representations. The provisions of this paragraph shall be applied in accordance with the terms and limitations established by the international agreements whereunder the international organisations are established or by any other international agreements concluded by any other Member State with the international organisations.

7. The procedure for implementing the provisions of this Article  shall be laid down by the Government of the  Republic of Lithuania

Article 48. Supply of Gold to the System of the European Central Banks and the European Central Bank

Zero-rate of VAT shall be applied to the supply of gold to the system of the European central banks and the European Central Bank.

Article 49. Goods Supplied to Another Member State

1. Zero-rate of VAT shall be charged on goods supplied to a VAT payer identified for VAT purposes in another Member State and dispatched from the territory of the country to another Member State, irrespective of who – whether the supplier of goods, the purchaser of goods or a third party on order from either of them -  dispatches the goods.

2. Zero-rate of VAT shall be charged on new means of transport supplied to any person and dispatched from the territory of the country to another Member State.

3. Zero-rate of VAT shall be charged on goods subject to excise duty supplied to a legal person unspecified in paragraph 1 of this Article and dispatched from the territory of the country to another Member State, when the goods, pursuant to the provisions of the Law of the Republic of Lithuania on Excise Duties, are transported with a document of excisable goods or with a simplified document of excisable goods.

4. Zero-rate of VAT shall be charged to transportation of goods in transit to another Member State which, pursuant to the provisions of this Law, shall be regarded as supply of goods, provided that upon the delivery of these goods to another person they, under the provisions of paragraphs 1-3 of this Article, might qualify for the zero rate of  VAT.

5. Zero-rate of VAT shall not be charged on goods taxable under a special scheme provided for in Section Three of Chapter XII of this Law, which are dispatched to another Member State.

Article 50. Goods Supplied to Recipients of Sponsorship

1. Zero-rate of VAT shall be charged on the supply of goods to the recipients of sponsorship identified for VAT purposes 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 legal persons and other organisations outside the territory of the European Communities which, under the Law of the Republic of Lithuania on Charity and Sponsorship, are entitled to receive sponsorship donations.

2. The provisions referred to in paragraph 1 of this Article shall be implemented by refunding to the recipients of sponsorship identified for VAT purposes in the Republic of Lithuania the amount of the VAT which they paid for the goods purchased and exported from the territory of the European Communities. The procedure for the application of the above provisions shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

Article 51. Work on and Processing of Movable Property

Zero-rate of VAT shall be charged on the supply of services consisting of work on movable property (repair, maintenance, modification etc), manufacturing and processing of movable property where services are supplied to the purchaser of services established outside the territory of the country and having no branch within the territory of the country, provided that the acquisition and importation of the property into the territory of the European Communities was effected for the purposes of  such maintenance, manufacturing or processing and where later it will be exported outside the territory of the European Communities. Should it transpire that the property will not be taken out of the territory of the European Communities, the amount of VAT on the supplied services of maintenance, manufacturing or processing shall be recalculated applying the standard rate of VAT or the reduced rate of VAT, where applicable.

Article 52. Agency Services in Transactions Specified in this Chapter and Transactions outside the Borders of the Republic of Lithuania

1. Zero-rate of VAT shall be applied to the services of agents who act in the name and for account of another, taking part in:

1) a transaction of supply of goods or services, in which zero-rate of VAT is applied under Articles 41-45, 47, 48, 50 and 51 of this Law, or

2) a 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 European Communities.

2. 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 53. Supply of Goods under Customs Control inside the Territory of the Country

1. Zero-rate of VAT shall be charged on the following transactions:

1) supply of goods which are placed in temporary storage in the place of temporary storage under the customs control;

2) supply of goods which are placed in a free zone or placed in a free warehouse;

3) supply of goods which are placed under customs warehousing or  under customs-controlled processing arrangements or imported under a declaration for transit arrangements with exemption from import duty;

4) supply of goods which are placed in temporary storage under the customs control, in a free zone or a free warehouse as well as supply of goods which are placed under customs-controlled processing arrangements or temporary importation for processing arrangements with exemption from import duty where the above circumstances are still in effect  during the supply;

5) supply of goods which are placed under temporary importation arrangements with  total exemption from  import duty, which are under external transit arrangements or are under internal transit procedure where the above circumstances are still in effect during the supply;

6) supply of goods where the goods are  transported to a free warehouse;

7) supply of goods placed under the arrangement of a free warehouse within the territory of the supply  country where this circumstance is still in effect during the supply.

2. Imported goods which are transported to a free warehouse shall be exempt from VAT.

3.  Intra-Community acquisition of goods shall be exempt from VAT in those cases where the supply of goods within the territory of the country may be subject to zero VAT where appropriate circumstances emerge under paragraph 1.

4. A free warehouse shall be premises and/or territory where the competent authority of a Member State in question (the central tax administrator in the Republic of Lithuania) has granted the right to hold goods with a deferred payment of VAT if the goods supplied, imported or acquired from another Member State are intended for:

1) selling them in a special shopping area of an international seaport or airport and at the Republic of Lithuania and third countries border crossing point where the goods will be supplied to passengers who are departing to third territories or third countries if zero VAT were applied to such supply of goods under the general provisions of this Law;

2) supplying them during the passage to the passengers travelling by air or sea to a destination outside the territory of the European Communities.

5. Zero VAT rate shall be applied to supply of agency/agent’s services where the agent is acting in the name and for account of another in services supply transactions specified in paragraph 1 of this Article.

6. Zero VAT rate shall be charged on supply of services such as handling and packaging of goods, directly relating to the goods referred to in paragraphs 4, 5 and 7 of paragraph 1 of this Article, and of services of a similar nature.

7. Where the goods which are, under provisions of paragraphs 1-3 of this Article, exempt from VAT or to which the zero rate VAT is applied and which are within the territory of the country are no longer be subject to the situations listed in paragraph 1 of this Article, and this would not be a reason for an obligation to arise to calculate VAT within the territory of the country, VAT for these goods must be calculated on the following taxable amount:

1) when transactions specified only in subparagraphs 1-3 and 6, paragraph 1 of this Article were entered into or imports or acquisition in question from another Member State were effected  – on the taxable amount of the goods on which, following the procedure prescribed by this Law, VAT  would be charged had not the zero rate of VAT been applied to the supply, import or acquisition of the goods from another Member State or  had they not been exempted from VAT accordingly,  also on the taxable amount of the services to the supply of which, subject to the provisions of this Law,  the zero rate of VAT  was applied;

2) when transactions covered by subparagraphs 4, 5 and 7 of paragraph 1 of this Article were concluded – on the taxable amount of goods on which in the case of the last of such transactions  the VAT would be calculated following the procedure prescribed by this Law, where the zero rate of the VAT  were not  applied to  the supply of goods, also on the taxable amount of the services to the supply of which the zero rate of the VAT was applied pursuant  to the provisions of this Law, where the value of these services has not been included into the value of the last transaction of the supply of these goods.

8.  The obligation to calculate VAT in the prescribed manner shall fall on the person whose acts or omissions cause the goods to cease to be covered by the arrangements and situations listed in paragraph 1 of this Article  (where the person  concludes a transaction for the supply of goods which causes the goods to cease to be covered by  the arrangements and situations listed in paragraph 1  for the supplier of goods). It shall be considered that the goods cease to be covered by the arrangements and situations listed in paragraph 1 if the goods have been consumed or lost, with the exception of cases where the goods have been lost as a result of force majeure or a criminal activity of third parties if this has been proved following the procedure  established by the Government of the Republic of Lithuania  or an institution authorised by it.  An obligation to calculate VAT shall not arise where the goods, which ceased to be covered by the arrangements and situations listed in paragraph 1, have been transported out of the territory of the European Communities or have been transported to another Member State when such taking out is regarded as supply of goods to another Member State under  Article 5¹ of this Law.

9. When applying the provisions of subparagraph 1, paragraph 4 of this Article, relating to the passage of passengers by air or sea, the place of destination of a traveller shall be the nearest place of disembarkation from an aircraft or a sea vessel after embarkation in the territory of the country, and when applying the provisions of subparagraph 2, paragraph 4 of this Article, the destination shall be the first stop within the territory of the country where an aircraft or a sea vessel stops for the disembarkation and/or embarkation of passengers.

Article 54 shall be repealed from 1 May 2004

Article 55. 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 56. Furnishing Proof Justifying Application of Zero-rate of VAT

1. The VAT payer who applied zero-rate of VAT pursuant to Article 41 of this Law must possess documents proving that the goods have been transported from the territory of the European Communities. The VAT payer who applied the zero-rate of VAT pursuant to Article 49 must posses proof that the goods have been transported from the territory of the country, and in the cases where the zero rate of VAT is applied to the supply of goods to a VAT payer identified for VAT purposes in another Member State – also proof that the person for whom the goods have been dispatched is a VAT payer identified for VAT purposes in another Member State.

2. A VAT payer who applied the zero rate of VAT in the cases listed in subparagraphs 1-5, paragraph 5 of Article 53 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 appropriate customs procedures have been completed.

3. . The VAT payer who applies the zero rate of VAT in other cases specified in this Chapter must hold documents proving that the transaction constituting supply of goods, acquisition of goods from another Member State or a transaction of the supply of services referred to in this Chapter has been effected.

4. 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 the zero-rate of VAT is justified. If the taxpayer is unable to justify the application of the zero-rate of VAT to the supply of goods, the acquisition of goods from another Member State or the supply of services, such supply of goods, acquisition of goods from another Member State or the supply of services shall be subject to the standard rate or reduced rate of VAT where applicable.

5. 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 the zero-rate of VAT is justified. Upon receipt of proof of unjustified application of the zero-rate of VAT to the supply of goods, acquisition of goods from another Member State or the supply of services, such supply of goods, acquisition of goods from another Member State or the supply of services shall be subject to the standard rate or reduced rate of VAT where applicable.

CHAPTER VII

VAT DEDUCTIONS

Article 57. Right to VAT Deduction

1. Only VAT payers other than those who are subject to the provisions of Section Five, Chapter XII of this Law shall have the right to VAT deduction. VAT payers who have been identified for VAT purposes as such solely on the grounds of intra-Community acquisition of goods but are not engaged in any economic activity shall have no right to VAT deduction. Those and other persons shall have the right to VAT deduction only where they, following the procedure prescribed by this Law, supply new means of transport to another Member State.

2. Input and/or import VAT may be deductible in accordance with the provisions of this Chapter.

3. The VAT payer may opt not to exercise the right to VAT deduction

Article 58. Activities where the Input and/or Import VAT on Goods and/or Services Intended for which is Deductible

1. 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 and/or financial services specified in Article 28 of this Law.

2. Persons supplying new means of transport to another Member State who are not VAT payers as well as persons who have identified for VAT purposes as VAT payers solely on the grounds of the acquisition of goods from other Member States and are not engaged in any economic activities shall have the right to deduct the amount of VAT paid, following the procedure prescribed by this Law, during the acquisition or importation of new means of transport but not higher than the provisional 18 percent  amount calculated on  the taxable amount of a new means of transport  which is being supplied  to another Member State.  The persons in question shall acquire the right of deduction of the above amount not before the supply of a new means of transport is effected.

3. 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 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.

4. 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, except in the cases where the provisions of this Law allow the VAT payer the right of option for taxation and the VAT payer has declared such an option  in accordance with the procedure prescribed by this Law.

Article 59. VAT Deduction in Cases of Mixed Activities

1. Where a VAT payer is engaged not only in the activities specified in paragraph 1, Article 58 of this Law, he must distribute  (in so far as it is possible to do so on the basis of accounting data) the total input and/or import VAT on goods and/or services among the activities specified in paragraph 1, Article 58 of this Law and other activities, having regard to the activities for 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 paragraph 1, Article 58 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 paragraph 1, Article 58 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

Version of paragraph 1 applicable until 1 May 2004

1. The share of input and/or import VAT  specified in paragraph 2, Article 59  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 paragraph 1, Article 58 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 paragraph 1, Article 58 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) the supply of capital assets used in the economic activities of the VAT payer;

2) the 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 this type of activity.

1. The share of input and/or import VAT specified in paragraph 2, Article 59  of this Law, which corresponds to the proportion (in percentage) of income, excluding the VAT itself , of the VAT payer, from the supplies of goods and services specified in  paragraph 1, Article 58 of this Law  in the total amount of the VAT payer’s  income, excluding the VAT itself,  from any kind of the activities shall be attributable to the activities specified in paragraph 1, Article 58 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 and grants received and used by the VAT payer shall be added to the income of the VAT payer from any kind of activities. However, in calculating the above proportion, account shall not be taken of the income received by the VAT payer for:

1) the supply of capital assets used in the economic activities of the VAT payer;

2) the supply of property immovable by its nature and the 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

2. Where, in the opinion of the VAT payer, determination of the part (in percentage) of the 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 did 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 the 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 calculations made by the VAT payer, 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 is not going to interfere with the control of justifiability and adjustment of VAT deduction. The criterion on the basis of which 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.

3. 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.

4. The local tax administrator shall have the right to order, according to the procedure established and in the cases specified by the Government of the Republic of Lithuania or an institution authorised by it, that a VAT payer uses a particular  criterion of attribution of input and/or import VAT on specific goods and/or services intended for the activities specified in paragraph 1, Article 58  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 paragraph 1, Article 58 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 agreed with the local tax administrator. The established proportion shall be used throughout the entire calendar year. At the close of the calendar year, the proportion of input and/or import VAT, attributable to the activities specified in paragraph 1, Article 58 of this Law, must be recalculated having regard to the actual indicators for the calendar year and adjustments of VAT deductions must be made 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 paragraph 1, Article 58 of this Law, that at least 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 paragraph 1, Article 58 of this Law.

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

8. The proportion of input and/or import VAT (in percentage) provided for in this Article which may be deducted must be expressed in whole numbers.

Article 61. Special Provisions Concerning Deduction of VAT on Tangible Capital Assets of a Natural Person

The Government of the Republic of Lithuania or an institution authorised by it shall have the right to determine the proportion of deductible VAT on acquisition and

importation of tangible capital assets of a natural person who is a VAT payer as well as the deductible proportion of input and/or import VAT on the goods  and/or services related to these assets.

Article 62. Non-deductible Input and Import VAT, as well as Input and Import VAT the Deduction whereof shall be Limited

1. 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  paragraph 1, Article 58 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, paragraph 2, Article 15 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 that 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 may 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 that they will be used by that VAT payer for the activities specified in paragraph 1, Article 58 of this Law.

2. Only the 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.

3. 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.

4. 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 paragraph 2, Article 67 of this Law (the beginning of this term shall be the calendar month when assets have been acquired or imported), shall be deductible.

5. The provisions of this Article shall not apply to the acquired and/or imported goods and/or services used 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).

6. A taxable person who has been identified for VAT purposes late through his fault (i.e. a person should have filed an application to be identified for VAT purposes 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 identified for VAT purposes but he has not been identified for VAT purposes as such by 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 64. Requirements  for Deductible VAT Amounts

1. Input VAT shall be deductible only in the case where a VAT payer holds an appropriate invoice. This amount of VAT must be specified in the invoice held, and the VAT payer must be indicated as the purchaser of goods and/or services, unless otherwise provided in this Article.  The invoice held must meet all the requirements set out in this Law and the implementing legislation, with the exception of requisite details: the VAT invoice  the VAT specified wherein is deductible must contain the requisite details listed in subparagraphs 1-16, paragraph 1, Article 80 of this Law, and where this document is in writing – the form of this document must  be acquired by the supplier of goods/services in accordance with the procedure established by legal acts and must meet the requirements laid down by legal acts for the form. 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 shall be respectively reduced by the amount/amounts of VAT previously deducted.

2. 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 by legal acts.

3. Input VAT, calculated according to the procedure set out in this Law for the acquisitions from another Member State, may be deductible provided that output VAT calculated on these goods has been entered, in accordance with the procedure determined by the central tax administrator, in the record  book of acquisitions from another Member State on which output VAT  has been calculated, the amount of output VAT has been declared in the tax return in accordance with the procedure prescribed by this Law, and the VAT payer possesses a VAT invoice documenting supply of goods which conforms to the  requirements set for the VAT invoice documenting supply of goods to a VAT payer identified for VAT purposes in another Member State. Where a VAT invoice has not been received but the obligation to calculate  output VAT has arisen under Article 14 of this Law,  input VAT may be deducted where the other requirements set out in this paragraph are met. The same procedure of deduction shall apply to the amounts of input VAT for goods and services where, under the provisions of this Law, the obligation to deduct output VAT on the supply of goods and services  falls on the purchaser.

4. 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 may be deductible in proportions by several VAT payers, as well as the procedure pursuant to which such amounts of VAT shall be deductible.

5. 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.

6. 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 VAT invoice, documenting such supply of goods.

7. 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 paragraph 4, Article 9 of this Law, shall be deductible on the basis of the VAT invoice documenting such supply of goods and/or services.

8. 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.

9. On the grounds established by the Law on Tax Administration, the amounts of input VAT specified in VAT invoices held by the VAT payer:

1) may not be deductible without taking into account that the VAT invoice conforms to all the requirements laid down in this Article;

2) may be deductible without taking into account that the VAT invoice does not conform to all the requirements laid down in this Article.

10. Where VAT  for agricultural products is calculated in accordance with the special procedure set out in paragraph 9, Article 14 of this Law, the input VAT may be deductible provided that the VAT  payer possesses an invoice for purchase of agricultural products documenting the supply of agricultural products, which conforms to the requirements set out in this Law and other legal acts, and a document certifying the payment of consideration which conforms to the requirements  provided for in  Article 81 of this Law.

CHAPTER VIII

ADJUSTMENTS OF VAT DEDUCTIONS

Article 65. 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.

Article 66. Adjustment of Deductions of the Input and/or Import VAT on  Goods and/or Services

1. If following the end of a calendar year and after  calculation, in accordance with the procedure laid down in Article 60 of this Law, on the basis of the actual indicators of that calendar year, of the portion/percentage of the input and/or import VAT on  goods and services attributable to  the activities specified in  paragraph 1, Article 58 of this Law, it is established that during that calendar year the amount of the input and/or import VAT, deducted according to the rate used that calendar year, was too high, the deduction shall be adjusted by increasing accordingly in the annual VAT return the VAT amount payable into the budget/decreasing the VAT amount refundable from the budget; where it is found that  that deduction was too low – by decreasing accordingly the VAT amount payable into the budget/ increasing the amount of the VAT refundable from the budget. If the difference between the sum actually deducted and the sum deductible in accordance with the actual indicators of the calendar year is not higher than 5 per cent, the VAT deduction need not be adjusted.

2.  When it becomes known that the goods and/or services the input and /or import VAT whereon (and where they were manufactured by the person himself – the input and/or import VAT on  goods and/or services used for manufacturing) was wholly or partly deducted,  have been started to be used for activities other than those specified  in paragraph 1, Article 58 of this Law or have been lost, the VAT deduction shall be adjusted in the VAT return for the tax period in which the above circumstances became known by increasing accordingly the amount of the VAT payable into the budget/reducing the amount of the VAT refundable from the budget.   Deduction of the Vat shall not be adjusted:

1) with respect  to the lost amount of goods, which is not in excess of the norms of natural loss established by legal acts, also with respect to an amount of goods lost during technological processes, if the amount of the loss is taken into account when determining  consideration for the goods and services supplied;

2) if it is proved, following the procedure established by the Government of the Republic of Lithuania or an institution authorised by it,  that the goods have been lost as a result of force majeure or a criminal activity of third persons;

3. The provisions of this Article shall not apply to tangible capital assets specified in Article 67 of this Law.

Article 67. Adjustment of VAT Deductions due to Change in the Use of Tangible Capital Assets

1. Provisions of this Article shall apply to the following:

1) assets which are immovable by nature, including material improvement of buildings/structures;

2) other types of tangible capital assets for which the requirement of at least 4 years of depreciation/amortisation has been established by legal acts regulating  taxation of profit/income.

2.  VAT deductions must be adjusted in accordance with the procedure established in this Article – in respect of property immovable by its nature – for 10 years, and in respect of property specified in subparagraph 2, paragraph 1 of this Article – for 5 years starting from the tax period in which the input and/or import VAT  on  that property was wholly or partly deducted (in the case of material improvement of a building/structure – deduction of the input VAT on purchase of tangible capital assets manufactured by the person himself  shall be adjusted for 10 years from the tax period in which improvement works were completed). If the assets were acquired or imported before identification for VAT purposes, deduction of the VAT shall be adjusted for as many years as the portion of the VAT was deducted.

3. The amount of the input or import VAT on a given unit of tangible capital assets, including material improvement of a building/construction, shall be divided by the number of years of adjustment of VAT deductions. Following the end of each calendar year, taking account of the actual use of that property in the course of activities specified in this Law, paragraph 1, Article 58,  during that calendar year, the deductible portion of the VAT on purchase and/or importation attributable to that calendar year must be calculated in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it, and the VAT deduction must be adjusted in the annual VAT return.

4.  If the deductible portion of the VAT on purchase and/or importation of property calculated according to the actual indicators attributable to that calendar year differs from the actually deducted portion of the VAT on purchase and/or importation  attributable to that calendar year by not more than 5 per cent, the VAT deduction need not be adjusted.

5. Should it transpire that  the tangible capital assets referred to in paragraph 1 of this Article have been started to be used for activities other than those specified in paragraph 1, Article 58 of this Law or have been lost, the VAT deduction must be adjusted in the VAT return for the tax period when the above circumstances become known, by increasing accordingly the amount of the VAT payable into the budget/reducing the VAT amount refundable from the budget by the deducted portion of the input or import VAT  attributable  to the period remaining until the end of  the time set for adjustment of VAT deduction. VAT deduction shall not be adjusted  if it is proved, in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it, that the assets have been lost as a result of force majeure or a criminal activity of third persons.

6. Provisions of Article 70 of this Law shall apply to tangible capital assets of a natural person who is a VAT payer.

Article 68. Special Regulations in Respect of Transfer of the Obligation of Adjustment of VAT Deductions

1. After the VAT payer carried out material improvement of a building/structure  which he uses on grounds other than the right of ownership, the obligations of adjustment of VAT deductions for him and for the owner of the building/structure shall be distributed as follows:

1) all the obligations relating to the adjustment of VAT deduction shall be met  only by the owner of the building/structure,  immediately after the VAT payer, having completed its material improvement, transfers, following the procedure stipulated in paragraph 4, Article 9 of this Law, the improvement to the owner of the building/structure by calculating the relevant output  VAT  and issuing to the owner an invoice for the purpose of value added tax, or

2) obligations relating to the adjustment of VAT deduction  shall be met,  first of all, by the VAT payer who carried out material  improvement of the building/structure and deducted the VAT on purchase of tangible capital assets manufactured by himself in such a way. When the building/structure is returned to the owner and the improvement is transferred, in accordance with the procedure set forth in paragraph 4, Article 9 of this Law, by calculating for it the output VAT and by issuing to the owner of the item an invoice for the purpose of value added tax, the obligation of adjustment of VAT deduction shall pass to the owner. The owner of the building/structure shall adjust VAT deduction for as many years as are left to the end of the 10 year period starting from the tax period in which the improvement was completed and the input VAT on such assets was deducted by the VAT payer who improved the building/structure.

2. Where the economic activity carried out by a natural person who is a VAT payer in the manner prescribed by legal acts, without establishing an enterprise (by registering a farmer’s farm etc.) is transferred in its entirety (by inheritance or in any other way) to another taxable person who is a VAT payer, it shall be considered that the person taking over the objects of ownership rights related to the above has himself wholly or partly deducted the input and/or import VAT on the objects of ownership rights (where the objects were manufactured by himself – on the goods and/or services  used in manufacturing them) and the obligation of adjustment of VAT deduction following the procedure set forth in this Chapter shall be met by him.

3. When the VAT payer transfers the property held and used in trust (and if it has been manufactured for his own use – the input and/or VAT on the goods and services used for manufacturing the property was wholly or partly deducted) to another taxable person who is a VAT payer and also in cases where the property, if manufactured by himself – the input and/or VAT on the goods and services used for manufacturing the property was wholly or partly  deducted, is transferred, under the Law on Companies of the Republic of Lithuania, to another VAT payer by division, separating the transferor who is the VAT payer. It shall be regarded in the above cases that the transferee of the property, if the property has been manufactured by himself – deducted the input and/or import VAT on the goods and/or services used for manufacturing, shall meet the obligation of adjustment of VAT deduction following the procedure set forth in this Chapter.

Article 69. Adjustment of VAT Deduction Due to Removal from the Register of VAT Payers or Liquidation

1. When removing a taxable person from the register of VAT payers or when he is being wound up due to liquidation, VAT deduction shall be adjusted in the VAT return of the person who is being removed from the register of VAT payers or who is in liquidation, in accordance with the procedure established in Articles 66 and 67 of this Law, and the deducted input and/or import VAT on goods and/or services,  capital assets included,  which will be no longer used for the activities specified in  paragraph 1, Article 58 of this Law, shall be returned to the budget.

2. VAT deduction need not be adjusted when the VAT payer, the owner of an individual/personal enterprise in liquidation intends to carry out activities referred to in paragraph 1 of Article 58 of this Law, without establishing an enterprise, and the goods and/or services acquired and/or imported by the enterprise, capital assets  included, will be used for these activities. It shall be regarded in this case that the input and/or import VAT on goods and/or services (and where they were manufactured by himself – the input and/or import VAT on goods and/or services used for manufacturing) was wholly or partly deducted by the owner of the enterprise and he/she shall meet the obligation of adjustment of VAT deduction following the procedure set forth in this Chapter.

Article 70. Adjustment of VAT Deduction due to the Change in the Use of Tangible Capital Assets of a Natural Person

The procedure for adjustment of VAT deduction on tangible capital assets of a natural person, a VAT payer, a share whereof has been assigned, following the procedure laid down in this Law, for carrying out economic activities by this person, shall be determined by the Government of the Republic of Lithuania or an institution authorised by it.

CHAPTER IX

OBLIGATION TO CALCULATE VAT AND PAY IT INTO THE BUDGET. IDENTIFICATION FOR VAT PURPOSES AND OBLIGATIONS OF VAT PAYERS

Article 71. Obligation to Calculate and/or Pay VAT into the Budget and Compulsory Identification for VAT Purposes

1. The obligation to be identified for VAT purposes and calculate VAT and pay it into the budget shall be met by the taxable persons who are supplying goods and services within the territory of the country, with the exception of cases where only such goods and/or services are supplied within the territory of the country the obligation to calculate and pay into the budget VAT on which, under Article 95 of this Law, shall be met by the purchaser established within the territory of the country. A person who is obliged be identified for VAT purposes must file an application to be identified for VAT purposes.

2. In derogation from paragraph 1 of this Article, a taxable person of the Republic of Lithuania need not file an application  to be identified for VAT purposes  nor calculate, in accordance with the procedure set out in this Law, VAT on supplies of goods, with the exception  of new means of transport supplied to other Member States,  and/or services and pay it into the budget if the total amount of consideration for  supplies of goods and/or services in the performance of economic activities (during previous 12 months) has not exceeded LTL 100 000.  Calculation of VAT must commence from the month during which the above threshold was exceeded. VAT on supplies of goods and services the consideration for which  amounted to the specified  sum of  LTL 100 000 shall not be calculated. When calculating the specified amount of LTL 100 000  no account shall be taken of:

1) the consideration for supply of goods and/or services  the input and/import VAT on which, under the provisions of paragraph 1, Article 62 of this Law,  should not be deductible if the taxable person  were a VAT payer;

2) consideration for  supply of capital  goods used in the economic activities of the;

3) payments on account;

4) consideration for supply of immovables by nature and supply of financial services specified in Article 28 of this Law where the transactions are sporadic and the taxable person  does not, as a rule, engage in this type of activity.

3. A foreign taxable person must be identified for VAT purposes through a subdivision within the territory of the country and where there is no such subdivision, through an appointed fiscal representative in the Republic of Lithuania. The requirement to appoint a fiscal representative shall not apply to taxable persons established in other Member State who may be identified for VAT purposes directly. A foreign taxable person need not be identified for VAT purposes if, within the territory of the country, he is engaged only in the following activities:

1) supply of goods and/or services on which, under this Law, no VAT is chargeable;

2) supply of goods and/or services which, under this Law, are not subject to VAT;

3) supply of goods and/or services on which, under this Law, the zero-rate VAT would be charged, except the activities specified in Article 49, subparagraphs 1-3, 6 and 7, paragraph 1 and paragraphs 5 and 6, Article 53 of this Law.

4. Failure to file an application to be identified for VAT purposes or refusal to be identified for VAT purposes shall not release him from the obligation to calculate the VAT on the supply of goods and/or services by him and pay it into the budget where this is obligatory pursuant to the provisions of paragraphs 1-3 of this Article.

5. The subdivision of a foreign taxable person or the fiscal representative  appointed by him shall bear joint and several liability with the foreign taxable person for his performance of tax obligations in respect of VAT. The procedure for  appointing the fiscal representative  of a foreign taxable person and the requirements for a person who could become a  fiscal representative  of a foreign taxable person shall be approved by the Government of the Republic of Lithuania or an institution  authorised by it.

6. Any person who has specified the VAT in the document recording the supply of goods and/or services on which  VAT was not chargeable must pay the specified amount of VAT into the budget.

7. Where the same person (either by himself or together with other persons who, under this Law, are related persons) controls several legal persons, all the legal persons under his control and he himself (where he himself conducts economic activities) must file applications to be identified for VAT purposes if the total amount of consideration received by them or payable to them for supplied goods and/or services  while carrying out economic activities during a year (the last twelve months) exceeded the threshold specified in paragraph 2 of this Article, irrespective of the fact that the amount of the consideration received by each such person or  part of them or payable to them is lower than the  prescribed threshold.

8. Where a person expressed a wish that provisions of paragraph 3, Article 12 of this Law should apply to the goods supplied by him which were in compliance with the provisions of paragraph 4, Article 12 of this Law, and where the competent authority of the Member State of dispatch granted him such a right, when identifying   the person for VAT purposes, the authorisation issued by another Member State must be presented.

9. The persons referred to in Article 53 of this Law who must calculate and pay VAT must do so irrespective of the fact that they are not and need not be identified for VAT purposes.

10. Persons who are not taxable persons but who are supplying new means of transport to other Member States, shall not be identified for VAT purposes, however, they must, following the procedure set out in paragraph 6, Article 92 of this Law,  submit  a return specified in that paragraph.

11. A taxable person established outside the territory of the European Communities or a person who, through a subdivision outside the territory of the European Communities, providing, within the territory of the country, electronic services to persons who are not taxable persons, and who has already been identified for VAT purposes in any Member State under the legal provisions of that Member State which are, in fact, equivalent  to the provisions of Section Five, Chapter XII of this Law, need not be identified for VAT purposes in the Republic of Lithuania but only if his obligation to be identified for VAT purposes arises solely  for the reason  of the supply of such services.

Article 71¹. Identification for VAT purposes of Persons Acquiring Goods from Another Member State

1. Where a taxable person who is not a VAT payer and who need not be identified for VAT purposes under Article 71 or Article 72 of this Law, also a legal person which is not a taxable person  and which acquires within the territory of the country goods from another Member State,  must calculate VAT on the goods acquired from another Member State and pay it into the budget and file an application to be identified for VAT  purposes, except the cases where all the conditions specified below are fulfilled:

1)      the person acquiring the goods is:

a)  a farmer acquiring goods for the economic activities in which he is engaged  which are covered by the scheme of the compensatory VAT rate specified in Section One, Chapter XII of this Law, or

b) a taxable person engaged only in the activities the input/import VAT on the goods and services intended for which  may not be deductible under this Law, or

c) a legal person which is not a taxable person;

2) the amount of  all the intra-Community acquisitions of goods by a person, except for the new means of transport or goods on which excise duties are charged, exclusive of  VAT due or paid in a Member State of departure, during the preceding year was not in excess of LTL 35 000 and it is not estimated to exceed the threshold during the current year.

2. Where the amount of intra-Community acquisitions of goods exceeded the threshold referred to in subparagraph 2, paragraph 1 of this Article, VAT shall not be calculated on the goods the amount of which did not exceed LTL 35 000, however,  where the value in question is exceeded, VAT must be calculated for all the acquisitions of goods owing to which the threshold has been exceeded.

.           3. A foreign person who, within the territory of the country, acquires from another Member State only the goods to the acquisition of which the provisions of paragraph 3, Article 33¹ of this Law apply need not file an application to be identified for VAT purposes.

4. A foreign person who must be identified for VAT purposes in the Republic of Lithuania pursuant to paragraph 1 of this Article, shall be subject to the provisions of paragraph 3, Article 71 of this Law on the method of identification.

5.  Failure to file an application to be identified for VAT purposes shall not release the person from the obligation to calculate VAT on the acquisitions of goods from another Member State, the goods/services supplied within the territory of the country and pay it into the budget if this is obligatory under the provisions of this Article and Article 71.

6.  The provisions of paragraph 7, Article 71 of this Law shall also apply mutatis mutandis when determining the obligation of the controlled taxable persons  or legal persons which  are not taxable persons to be identified for VAT purposes under paragraph 1 of this Article.

7. Any person who is not and need not be identified for VAT purposes under Article 71 of this Law or under paragraph 1 of Article 71,  and who has acquired from another Member State a new means of transport, as well as any legal person which is not and need not be identified for VAT purposes under Article 71 of this Law or under paragraph 1 of Article 71, and which has acquired  from another Member State goods  on which excise duties are charged, shall not be identified for VAT purposes and must declare VAT in a VAT return and pay it following the procedure set  out in Article 92 of this Law.

Article 72. Voluntary Identification for VAT Purposes

1. A person of the Republic of Lithuania who is carrying out or intends to carry out an economic activity, shall be entitled to file an application to be identified for VAT purposes irrespective of the fact that the total amount of consideration does not come up to the threshold referred to in paragraph 2, Article 71 of this Law, except for the case when he is carrying out or intends to carry out only such an activity in which input and/or import VAT on goods and/or services used could not be deductible under the provisions of paragraph 1, Article 62 of this Law unless otherwise provided in Chapter XII of this Law.

2. A person who is acquiring or intends to acquire goods from another Member State shall be entitled to file an application to be identified for VAT purposes irrespective of whether the total value of the goods acquired  and the goods which he intends to acquire does not exceed  the threshold referred to in subparagraph 2, paragraph 1, Article 71¹ of this Law, except for the case where the goods acquired or which he intends to acquire are new means of transport or goods on which excise duties are charged.

Article 73. Surestyship or Guarantee for Discharge of Tax Obligations by a Taxable Person who has been Identified for VAT purposes

1. In cases determined by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to ensure the discharge of tax obligations, including justification of carrying over and refund of the excess amount of VAT, the local tax administrator must require that, when identifying a taxable person for VAT purposes either compulsorily or voluntarily, a document of a suretyship or guarantee for up to one year, issued by an appropriately licensed banking or insurance undertaking established and operating in the Republic of Lithuania  be submitted under which the person offering a suretyship or the guarantor undertake to discharge tax obligations relating to VAT of the taxable person who is being identified for VAT purposes  if he fails to discharge these obligations or if discharges them unsatisfactorily.

2. The procedure for determining and adjustment of the amount of suretyship or guarantee referred to in this Article and of submitting and cancellation of a surestyship or guarantee documents shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

Article 74. VAT Payer’s Identification Number

A taxable person who has been identified for VAT purposes shall be issued a VAT payer’s identification number. The procedure for setting a VAT payer’s identification number shall be determined by the Government of the Republic of Lithuania or an institution authorised by it.

Article 75. Removal of the VAT Payer from the Register

1. A person shall have the right to file an application to be removed from VAT payers or he may be removed from them on the initiative of the local tax administrator if, while he was not a VAT payer, an obligation to be identified for VAT purposes would not have arisen pursuant to Articles 71 and 71¹ of this Law.

2. Where a person, identified for VAT purposes of his own free will pursuant to paragraph 2, Article 72 of this Law or because he chose of his own free will to have the goods, meeting the requirements of paragraph 4, Article 12, supplied by him be covered  by arrangements set in paragraph 3, Article 12,  he may not be removed from VAT payers earlier than after the passing of 24 calendar months from his registration, save in cases where the person goes into liquidation.

3. VAT payers who, according to the evidence available to the local tax administrator, are not carrying out economic activities or are not making any intra-Community acquisitions, may be removed from the Register on the local  tax administrator’s initiative.

Article 76. Procedure of Registration of VAT Payers

Persons shall be identified for VAT purposes in accordance with the procedure prescribed by the Law on Tax Administration and other legal acts. An application to be identified for VAT purposes may be filed electronically in accordance with the requirements  set by the central tax administrator.

Article 77. Obligations of VAT Payers and Other Persons

A VAT payer must:

1) keep accounts and have in his possession all the documents required under this Law;

2) comply with the requirements of this Law and other legal acts for the execution of  the supply of goods and services;

3) produce VAT returns required under this Law, statements about intra- Community supplies of goods and other statements and pay into the budget the VAT that has become chargeable and VAT payments on account calculated in the manner prescribed by this Law, following the  procedure and deadlines set in this Law.

2. A person not  referred to in paragraph 1 of this Article who acquires from another Member State a new means of transport  and/or excisable goods for which, under this Law, he must pay VAT, must comply with the requirements specified in  Article 92 of this Law about informing the tax administrator, submission of tax returns and payment of VAT.

3. A person not referred to in paragraph 1 of this Article who is supplying to another Member State a new means of transport must comply with the requirements specified in Article 79 concerning the formalities relating to the supply and the requirements set in Article 92 concerning submission of statements to the tax administrator and submission of returns.

4. Every person must communicate to the  local tax administration the information about all the changes concerning his activity or acquisition of goods from other Member States which affect his tax obligations prescribed by this Law not later than within five days from the moment such circumstances emerge.

Article 78. Accounts and Keeping of Documents

1. Taxable persons must keep accounts in accordance with the procedure prescribed by legal acts and in such a manner that it would be possible to determine correctly from them the obligations of this person relating to the VAT.

2. The accounts for the activities indicated in paragraph 1, Article 58 of this Law, and of any other activities must be kept separately.

3. Taxable persons must keep separate records for intra-Community dispatching of goods for purposes referred to in subparagraphs 5-7, paragraph 2, Article 5¹ of this Law. The requirements for the recording of those cases shall be determined by the central tax administrator.

4. Taxable persons must keep separate accounts for goods imported into the territory of the country by a person identified for VAT purposes in another Member State or imported on his behalf for supply of services referred to in paragraph 5, Article 13 of this Law, as well as for the services supplied, including the goods used. The requirements for keeping these accounts shall be determined by the central tax administrator.

5.   Taxable persons must keep  registers of VAT invoices  received and issued; all the received and issued VAT invoices  as well as the received VAT invoices drawn up not on a standard form, except for the VAT invoices referred to in Article 80, paragraph 7 of this Law, must be included in the register.  The requirements for  keeping,  storing and making available of these registers shall be determined by the central tax administrator.

6. The central tax administrator shall have the right to determine other requirements for registers of accounts used for calculation, their completion and keeping.

7. Taxable persons must ensure that VAT invoices issued by them or by purchasers or a third party on their behalf, VAT invoices received by them are stored following the procedure set out in this Article.  VAT invoices documenting supply of goods or services within the territory of the country as well as invoices received by taxable persons established in the Republic of Lithuania must be stored, for a period of ten years from their issuance. Taxable persons must store documents in the original form in which they were issued and sent, whether paper or electronic, must ensure that throughout the storage period the authenticity of the origin and integrity of the  content of the invoices, as well as their readability be guaranteed. However, when the services referred to in paragraph 6, Article 14 of this Law are supplied, the invoices in writing sent by the taxable persons may be stored only by electronic means. When VAT invoices are in electronic form, the data guaranteeing the authenticity of the origin and integrity of the content must also be stored. Taxable persons of the Republic of Lithuania must store these documents within the territory of the country unless they are stored in the electronic form. Where taxable persons of the Republic of Lithuania store these documents by electronic means and guarantee full on-line access to  the data contained therein, i.e. to have  electronic access to them to read them or use them in any other way in accordance with the requirements of the Law on Tax Administration,  the documents may be stored outside the territory of the country. Taxable persons of the Republic of Lithuania must notify the local tax administrator about the storage place of the documents where the documents are stored outside the territory of the country.  VAT invoices documenting supply of goods and services within the territory of the country as well as VAT invoices and other related data received by taxable persons of the Republic of Lithuania may not be stored in territories where Council Directive 76/308/EEC of 15 March 1976 on Mutual  Assistance for the Recovery of Claims Resulting from Operations Forming Part of the System of Financing  the European Agricultural Guidance and Guarantee Fund and of the Agricultural Levies and Customs Duties and Council Regulation (EC) No 1798/2003 of 7 October 2003 on Administration of Co-operation in the Field of Value Added Tax do not apply  in the area of value added tax.

8. Legal persons who are not taxable persons, when making intra-Community acquisitions, natural persons who are not taxable persons, when making intra-Community acquisitions of means of transport, as well as legal and natural persons who are not taxable persons making intra-Community supplies of means of transport must store VAT invoices related to the above activities for a period of ten years from their issuance.

Article 79. Documenting Supply of Goods and Services in the VAT Invoice

1. A taxable person (other than a taxable person of the Republic of Lithuania  who is covered by provisions of paragraph 2, Article 71) must document the effected supply of goods or rendering of services in a VAT invoice or must ensure that the effected supply of goods or rendering of services is documented on his behalf by the purchaser of these goods or services or a third party. A VAT invoice shall be issued when documenting:

1) supply of goods or rendering of services to another taxable person or a legal person  which is not a taxable person. Where the taxable person supplying the goods and/or services is not a taxable person of the Republic of Lithuania, this requirement  shall apply only to the goods and services which have been supplied and rendered within the territory of the country;

2) supply of goods within the territory of the country pursuant to paragraph 3, Article 12 of this Law;

3) supply of goods to which, under Article 49 of this Law zero rate of VAT  applies.

2. A VAT invoice must be issued without delay upon the supply of goods or services; however, in cases of long-term services, i.e. services which are supplied  over a certain  continuous period (telecommunications, lease etc.) as well as in cases of long-term supply of electricity, gas, heating and other types of energy a VAT invoice may be issued for the whole amount of  services rendered or goods supplied  throughout the month  a  VAT invoice may be issued not later than by the 10^th day  of the month following the month during which the services or goods were supplied. The central tax administrator shall have the right to determine other cases when all the supplies of goods or services are to be documented in a summary invoice issued at the time determined by the central tax administrator.

3. VAT payers of the Republic of Lithuania must also document by an invoice  supply of goods and services to natural persons who are not taxable persons where supply of  goods or services was effected within the territory of the country, with the exception of cases determined by the Government of the Republic of Lithuania or an institution authorised by it.

4. Where in any of the cases referred to above in paragraphs 1-3 of this Article, before the supply of  goods/services a payment on account is received, due to which an obligation arises to calculate VAT pursuant to  provisions of Article 14, such receipt of the payment on account must be documented in a VAT invoice.

5. Following the procedure determined by the Government of the Republic of Lithuania or an institution authorised by it, goods or services jointly supplied by several  VAT payers may be documented in a summary invoice.

6. In the event of intra-Community supply of new means of transport, VAT invoices must be also issued by persons who are not VAT payers, irrespective of the fact to what person the supplies are made.

7.  Supply of goods or services may be documented by a third party in the name and on behalf of the supplier of goods or services. Supply of goods or services may be documented in the name and on behalf of the supplier of goods or services by the purchaser of these goods or services only in cases where there is an agreement at the outset between the supplier and the purchaser provided that the agreement  meets the requirements set by the central tax administrator.

8. If there is a request that the VAT invoice of the supply of goods or services should be documented in the name and on behalf of the supplier of goods or services by the purchaser or a third party established in the territory where the provisions of Council Directive of 15 March 1976 on Mutual Assistance for the Recovery of Claims Resulting from Operations Forming Part of the System of Financing the European Agricultural Guidance and Guarantee Fund and of the Agricultural Levies and Customs Duties and Council Regulation (EC) No 1798/2003 of 7 October 2003 on Administration of Co-operation in the Field of Value Added do not apply, the central tax administrator  shall have the right  to determine additional conditions and requirements  the meeting of which  shall make such a documentation of the supply of goods and services possible.

9. VAT invoices in respect of agricultural supplies by the VAT payers identified for VAT purposes in the Republic of Lithuania shall be issued in all cases by the purchaser  of agricultural produce if he is a VAT payer of the Republic of Lithuania.

10.  VAT invoices may be issued on a printed form or, by a prior consent of the purchaser, by electronic means on condition that, under the requirements determined by the central tax administrator, the authenticity of the origin and integrity of the contents of such invoices are guaranteed. Until 31 December 2005, issuing of  VAT invoices by electronic means by taxable persons supplying  goods or services within the territory of the country who wish to must shall be subject to prior notification of the local administrator in accordance with the procedure determined by the central tax administrator.

11. Supply of goods and services specified in Article 5, 6, 8 and 9 of this Law shall also be documented  in the VAT invoice.

Article 80.  Details on the VAT Invoice

1. The following details shall be given in  the VAT invoice:

1)      the date of issue of the VAT invoice;

2) VAT invoice series and number  which uniquely identify the VAT invoice;

3) the VAT identification number  under which  the taxable person supplied the goods or services;

4) the VAT identification number under which  the goods were supplied or services rendered to the purchaser (customer). Where the taxable person of the Republic of Lithuania supplies goods or services within the territory of the country – the VAT identification of the purchaser shall be indicated in all cases if the VAT  payer  has been identified for VAT purposes;

5) the name and seat of the supplier of goods or services or the full personal name if he is a natural person and his address;

6) the name of the purchaser of goods and services or the full name if he is a natural person and his address;

7)  the name of the goods and services supplied;

the date on which the supply of goods or services was made if the date differs from the date of issue of the invoice. Where the invoice documents receipt of the payment on account – the date of receipt of the payment must be given if it differs from the date of issue of the VAT invoice;

9) the unit price of the good or service supplied exclusive of VAT and any  discounts if they are not included in the unit price;

10) the taxable amount of goods  or services supplied to which the same rate is applied;

11) the VAT rate/rates;

12) the VAT amount in the national currency;

13) where an exemption, zero rate VAT is involved for the supply of goods and/or services or where the purchaser/customer  is liable to calculate or deduct  and pay the VAT, reference to the appropriate provision of this Law or Directive 77/388/EEC;

14) where the intra-Community supply of a new means of transport is involved – the particulars specified in paragraph 16, Article 2 of this Law about a new means of transport, i.e. entry into service, the number of kilometres travelled and hours sailed or flown);

15) reference to the appropriate provision of this Law or Directive 77/388/EEC where a special scheme of VAT  for travel agents specified in Section Two, Chapter XII of this Law is applied, or special arrangements are applicable to second-hand goods, works of art, collectors’ items and antiques specified in Section Three, Chapter XII of this Law;

16) where under this Law, the person liable to pay the VAT is a tax representative, the VAT number of the tax representative with his full name personal name if he is a natural person, and address;

17) where the supply of agricultural produce is involved – other particulars determined by the Ministry of Agriculture of the Republic of Lithuania.

2. Where pursuant to the provisions of this Law, the supply of goods and services to natural persons who are not taxable persons must be documented in the VAT invoices and  in case the supplied goods and services, the list whereof is approved by the Government of the Republic of Lithuania or an institution authorised by it and which are specified in Chapter IV of this Law, are exempt from VAT, some of the particulars specified in paragraph 1 of this Article need not be given following the procedure determined by the Government of the Republic of Lithuania or an institution authorised by it.

3. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish simplified requirements for the VAT invoices in which the supply of goods and services specified in Articles 5, 6, 8 and 9 of this Law is documented.

4. In cases where, in accordance with the procedure set out in paragraph 5, Article 79 of this Law, a summary VAT invoice documents goods and/or services supplied  jointly by several VAT payers, instead of the VAT identification number of the supplier of goods and/or services  and the VAT identification number of the VAT payer, the VAT invoice shall specify other particulars determined by the Government of the Republic of Lithuania or an institution authorised by it. In the case where  one summary VAT invoice documents  supplies of goods and/or services to several purchasers/customers, instead of the identification number/personal number  of the purchaser/customer the VAT invoice shall specify other particulars determined by the Government of the Republic of Lithuania or an institution authorised by it.

5. In the cases specified in Chapter XII of this Law, the VAT rate and amount shall not be specified in the VAT invoice.

6. When batches containing several invoices are sent to the same purchaser by electronic means at the same time the details that are common to the individual VAT invoices may be mentioned only once.

7. In retail trade in fuels (petrol, diesel fuel, liquefied gas), the cash register receipt in which  the indicated value (VAT including) of goods/services sold does not exceed LTL 500 and which contains all the particulars prescribed by legal acts  for cash register receipt as well as the particular/particulars whereby the purchaser of the goods/services may be identified shall be treated as a VAT invoice.

Article 81. Documentation of the Payment

In the case of acquisition of agricultural products for which the supplier has chosen to calculate VAT in accordance with the procedure referred to in paragraph 9, Article 14 of this Law, the purchaser, when paying the consideration, must document the payment in an accounting document; its copy shall be given to the supplier of products, while the original shall remain with the purchaser. Apart from all the requisite particulars,  the accounting document must state the following:

1) the name (full name) of the supplier of products, the identification number (personal number)  and the VAT  identification number;

2) the name (full name) of the purchaser of products, the identification code (personal number) and the VAT identification number (where applicable);

3) the date of issue of the VAT invoice, its series and number, which documents the supply of agricultural products for which the payment is being made;

4) the amount which is being paid, (excluding the VAT itself). Where the VAT amount calculated on the subsidies and grants included in the taxable amount is being paid, this amount must be specified separately;

5) the date of payment.

Article 82. Requirements for Forms of Documents

For documenting the supply of goods and services within the territory of the country  a VAT payer must obtain and use VAT invoice forms made in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it,  unless otherwise prescribed by the Government of the Republic of Lithuania or an institution authorised by it. These requirements shall also apply to a foreign taxable person if he is a VAT payer of the Republic of Lithuania.

Article 83. Credit and Debit Notes

1. Where after documenting the supply of goods or services, the taxable amount and/or quantity of the goods or services subject to taxation changes, various price reductions are granted, the goods or part thereof are returned, goods or part thereof or services are refused or where the consideration due to be paid by the purchaser/customer changes, the credit note documenting the above changes must be issued by the person who issued the initial accounting document recording the supply of goods or services. By agreement of the parties, return of the goods or refusal of services may be documented not by a credit note issued by the supplier of goods or the supplier of services but by a debit note issued by the purchaser/customer where the purchaser/customer is a VAT payer.

2. Any changes recorded in credit and/or debit notes must be entered in the VAT accounts of both the supplier of goods or services and the purchaser/customer.

3. The procedure for issuing credit and debit notes and the particulars that must be specified in them shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

Article 84. Tax Period

1. A tax period shall be a calendar month unless otherwise provided in this Article or in Section Five, Chapter XII of this Law.

2. If all the income of a VAT payer from his economic activities during the preceding calendar year did not exceed LTL 200,000, such a VAT payer shall be entitled to file an application with the tax administrator to regard a calendar half-year as the tax period. The right to file an application with a request to regard a calendar half-year as the tax period shall also be granted to newly established VAT payers who estimate that during the current calendar year the income from their economic activities is not going to exceed the threshold established in this paragraph.

3. If a calendar half-year is chosen as the tax period, the tax period may be changed at the request of a VAT payer but not before the expiry of the calendar half- year.

4.  The tax period of a natural person who is a VAT payer shall be a calendar half-year unless the natural person applies to the local tax administrator with a request to  regard  a calendar month as the tax period. The tax period may be changed into a calendar month from the start of the calendar half-year following the application. If during the tax period a natural person chooses a calendar month he may apply with a request to regard a calendar half-year again as the tax  period. However, the tax period may be changed in this way  not before the start of the calendar half-year  following the filing of the application.

5. A legal person or a foreign taxable person VAT payer shall be entitled to apply to the local tax administrator, in accordance with the procedure established by the central tax administrator, with a request to establish a tax period other than a half-year if such a tax period is more convenient for the tax payer owing to the character of the financial accounting established by  the  foreign taxable   parent company or a foreign taxable VAT payer. A different tax period shall be fixed subject to the following provisions:

1) it may not be longer than 60 days;

2) the beginning of the first tax period of the financial year  and the end of the last tax  period of a VAT payer must  coincide with the beginning and end of the relevant calendar year.

6.  In the cases determined by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to ensure performance of tax obligations, including justification of carrying over and refund of the excess amount of VAT, the tax administrator shall have the right  to establish  that the tax period of the VAT payer shall be the period specified in paragraph 1 of this Article even  though the VAT payer applied for a different tax period, according to paragraphs 2 and 5 of this Article, and/or a different tax period has been established for him.

7. The provisions of paragraphs 2 – 6 of this Article shall not apply to VAT payers in the case of intra-Community acquisitions.

Article 85. Interval for Submitting a VAT Return for the Tax Period

1. If a tax period is a calendar month, the VAT return for the tax period must be submitted not later than by the 25^th day of the next month.

2. If a tax period is a calendar half-year, the VAT return shall be submitted not later than by  the 25^th day of the first month of the next half-year.

3. If a tax period is established in accordance with Article 84 (5) of this Law, the VAT return for the tax period must be submitted not later than within 25 days following the end of the period.

4. If the provisions of Chapter XII, Section Five of this Law are applied, the interval for submitting the VAT return shall be set in Article  115⁽³⁾ of this Law.

Article 86. The VAT Return for the Tax Period

The form of the VAT return for the tax period, the particulars to be stated therein and the procedure of filling it in shall be determined by the central tax administrator.

Article 87. The Annual VAT Return and the Interval  for Submitting It

1. If following the end of a calendar year and after the actual indicators have been established, the VAT deductions  have to be adjusted following the procedure set forth in Chapter VIII of this Law, the VAT payer must submit, not later than by the 1^st day of October of the next calendar year, the annual VAT return in which the amounts  adjusting the VAT deduction must be stated.

2. The form of the annual VAT return, the particulars to be stated therein and the procedure of filling it in shall be determined by the central tax administrator.

Article 88. VAT Return of a Person Who Is Being Removed from the Register of the VAT Payers or Entity in Liquidation

1. If a taxable  person was removed from the register of the VAT payers either at his own request or on the initiative of the tax administrator, he must submit, within 20 days after his removal, a special VAT return of a person who is being removed from the register of the VAT payers or of an entity in liquidation and declare in it, following the procedure set forth in this Law, all his remaining obligations relating to the calculation and payment of VAT. If a VAT payer is in liquidation he must submit, before the liquidation, a special VAT return of a person who is being removed from the register of the VAT payers or of an entity in liquidation and declare in it, following the procedure set forth in this Law, all his remaining obligations relating to the calculation and payment of VAT.

2.  The form of the VAT return of a person who is being removed from the register of the VAT payers or of an entity in liquidation, the particulars to be stated therein and the procedure of filling it in, and if the VAT return is submitted by  VAT payers in liquidation -  the deadline for submitting the return, shall be determined by the central tax administrator.

Article 88¹ Statement of Intra-Community Supply

1. VAT payers effecting intra-Community supplies, upon the close of each quarter must, by the 25^th day of the first month of the following quarter, submit to the local tax administrator of the territory in which they are identified for VAT purposes statements of their intra-Community supplies. The statements shall provide  information about the VAT payers of other Member States to whom goods were supplied pursuant to the provisions of paragraphs 1 and 4, Article 49 of this Law, and about VAT payers to whom goods acquired  from another Member State pursuant to the provisions of paragraph 3, Article 12² were supplied in another  Member State. A statement of an appropriate quarter shall also provide information about adjustments  of the taxable amount of the supply of goods  specified  in this paragraph, effected during previous reporting periods,  made during the calendar quarter due to the circumstances referred to in paragraph 19, Article 15 of this Law.

2. A person who is being removed from the register of VAT payers or who is in liquidation must submit a statement of his intra-Community supplies following the same procedure as a VAT return and indicate in it the information  from the start of an appropriate quarter until  his removal from the VAT register or his liquidation.

3. The form of a statement of intra-Community supplies, the particulars to be give, the procedure of completing the statement and the manner of its submitting shall be determined by the central tax administrator.

Article 88². Submitting Returns and Statements

VAT returns provided in this Law as well as statements of inter-Community supplies may be made by electronic means subject to conditions determined by the central tax administrator.

Article 89. Calculation of the Amount of VAT due for the Tax Period

1. When calculating the amount of VAT due for the tax period, the deductible amount of input/import VAT shall be subtracted from the amount of output VAT on goods and/or services supplied, calculated during the tax period (with the exception of VAT which, subject to the procedure set forth in this Law,  must be withheld and paid by the purchaser of goods and/or services), also from the amount of VAT payable into the budget on the acquired goods and/or services if, under this Law, following the procedure set forth in this Law, the VAT payer is obligated to calculate or to withhold and pay this VAT, as well as from import VAT that is subject to the procedure of inclusion into output VAT established in  Article 94 of this Law.

2. If the taxable amount and/or VAT deduction had to be adjusted during the tax period, the VAT amount due, calculated subject to the procedure laid down in paragraph 1 of this Article, shall be increased or reduced by the amounts as appropriate, adjusting the taxable amount and/or VAT deduction.

3. If the output VAT chargeable during the tax period for goods and/or services for which during the previous tax period/s payments on account were  received on which the output VAT  was charged  and declared, the amount of VAT  payable to the budget shall be additionally reduced by the output VAT which was calculated and declared .

4.  If a negative figure is obtained when calculating in accordance with the procedure laid down in paragraphs 1 to 3 of this Article it shall be considered that the amount of VAT for the tax period refundable from the budget (called the VAT excess in this Law) shall be due to the VAT payer.

Article 90. Payment of the Amount of VAT Payable to the Budget

1. The VAT amount payable into the budget for a tax period, calculated subject to Article 89 of this Law must be paid into the budget no later than by the end of the interval for submitting the VAT return for the tax period as provided for in Article 85 and Article 115³ of this Law.

2. The  Government of the Republic of Lithuania or an institution authorised by it may determine that VAT payers  whose average of VAT amount payable into the budget per calendar month (in the case of VAT payers indicated in this Law, Article 84, paragraph 5 – per tax period) for three successive months exceeded the threshold fixed by the Government of the Republic of Lithuania or an institution authorised by it, shall pay into the budget, starting with the calendar month (in the case of VAT payers indicated in this Law, Article 84, paragraph 5 – with the tax period) following the month or the period when the above circumstances were  disclosed, VAT on account in the amount fixed by the Government of the Republic of Lithuania or an institution authorised by it. The amount of VAT payments on account, the procedure and intervals for their payment shall be established by the Government or an institution authorised by it.

3. If VAT payments on account were made during the tax period, the difference of the VAT amount due for the tax period and of VAT payments on account made during this tax period must be paid  into the budget  by the end of the term specified in paragraph 1 of this Article.

4. If an additional VAT amount due  is calculated in the annual VAT return, the amount must be paid no later than by the end of the interval for submitting a VAT  return  as laid down in Article 87 of this Law.

5.  If an additional VAT amount due  is calculated in the VAT return of a person who is being removed from the register of VAT payers or of an entity in liquidation, it must be paid no later than on the same day when the return of a person who is being removed from the register of VAT payers or an entity in liquidation is being submitted but not later than by the end of the set interval for submitting this VAT return if it was not submitted within the set time period.

6. In the cases determined by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to ensure adequate performance of tax obligations, the local tax administrator must  request that, before the interval for submitting a VAT return for the tax period or for paying VAT, a VAT payer submits a suretyship or guarantee document issued by a banking or an insurance company established in  and operating in the Republic of Lithuania under which the suretyship or guarantor obligate themselves to discharge  tax obligations of the VAT payer relating to VAT unless the VAT payer pays the  VAT due by the interval  established in this Article. The procedure of determining and adjustment of the amount of suretyship or guarantee referred to in this Article and of the submitting and cancellation of a suretyship or guarantee documents shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

Article 91. Carrying Forward and Refund of the Refundable VAT Amount

1. The excess of VAT amount arising for a tax period will be first of all carried forward in accordance with the procedure and within the time period laid down in the Law on Tax Administration. 

2. If after carrying forward the excess amount referred to in paragraph 1 of this Article a portion of it is left, a certain part of it may be refunded to the VAT payer where the following conditions are met:

1) he has paid into the budget and funds all the taxes, default interest, penalties, interest for overdue tax or the payment of the above  taxes, default interest, penalties has been deferred for him or he has filed an application for deferral following the procedure established by the legal acts of the Republic of Lithuania, or  a tax dispute is going on in respect of the above taxes, default interest  and penalties, or the VAT payer has applied, following the procedure prescribed by the Government of the Republic of Lithuania, to the Commission for Reviewing Applications of Tax Payers in Respect for Making Settlement in Shares and Property for making a settlement  for these taxes, default interest and penalties in shares and property after submitting all the requisite tax returns or accounts. In cases where a tax dispute is going on in respect of the request for refund of the excess VAT amount or its portion it shall be regarded that the VAT payer does not meet the requirements of this subparagraph;

2) a decision to impose a penalty on the VAT payer for a deliberate violation of tax law specified in  the Law on Tax Administration has not become effective or 3 years have lapsed from commission of such a violation.

3. The portion of the balance of the refundable excess amount of VAT specified in paragraph 2 of this Article may not exceed the amount specified in subparagraphs 1-5 below:

1) the provisional 18% VAT amount calculated on the taxable amount of goods and services in respect of which  the zero-VAT rate  is applicable declared in the VAT return  for the tax period;

2) the provisional 18% VAT amount calculated on the taxable amount of goods and services specified in the second subparagraph 2, paragraph 1, Article 58 of this Law, declared in the VAT return for the tax period;

3) the VAT amount deducted during the tax period  on  acquired capital assets, with the exception of the amount of import VAT subject to the procedure of inclusion into output VAT established in Article 94 of this Law as well as the amount of input VAT for the tangible capital assets manufactured by the taxable person himself;

4) the VAT amount deducted during the tax period on acquired and/or imported materials, raw materials and/or services intended for the production of capital assets   and/or on unfinished construction, with the exception of the amount of import VAT that was subject to the procedure of inclusion into output VAT established in  Article 94 of this Law.

5) the VAT amount deducted during the tax period for fuels, fertilisers, seeds, fodder, pesticides and herbicides acquired and/or imported. This subparagraph shall apply only to VAT payers whose income from supplies of agricultural products and/or services during the previous calendar year made up at least 50 per cent of all income.

4. The balance of the excess amount of the VAT which, subject to paragraphs 1-3 of this Article, has not been carried forward or refunded by the end of the calendar half-year may be refunded to the VAT payer after the end of the half-year provided the VAT payer  meets the conditions set in paragraph 2 of this Article and was identified for VAT purposes no later than 3 months before the end of the calendar period.

5. Where the VAT payer is in liquidation or he is being removed from the register of VAT payers, the balance of the excess amount of the VAT which has not been carried forward or refunded shall be refunded in accordance with the procedure of the Law on Tax Administration, without regard to the restrictions set forth in paragraphs 2-4 of this Article.

6. A  VAT payer who wishes to be refunded the balance of the excess amount of the VAT must file an application of the form prescribed by the central tax administrator, and other documents  at the request of the local tax administrator without which  the local tax administrator shall not review the application and sets the time period for filing of the documents. Where the required documents are not filed within the prescribed time period, the application shall not be receivable and shall be sent back to the VAT payer.

7. The time period for refunding the balance of the excess  amount of the VAT or its portion  shall be determined by the Law on Tax Administration.

8.  In cases  established by the Government of the Republic of Lithuania or an institution authorised by it, when it is necessary to justify  carrying forward or refunding of the excess amount of the VAT, the  local administrator must request that, before carrying forward and/or refunding the excess amount of the VAT or its portion, the VAT payer submits a suretyship or guarantee instrument issued by a banking or an insurance company established and operating in the Republic of Lithuania and having a banking or insurance licence respectively, under which the person submitting suretyship or guarantee obligate themselves to discharge  tax obligations of the VAT payer relating to the VAT in the event it is later established that the excess amount of the VAT or its portion has been carried forward and/or refunded  unjustifiably. The procedure for calculating the sum of a suretyship or guarantee and submitting the instrument of suretyship and guarantee shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

9.  If the refundable VAT amount is specified in the annual VAT return, the amount shall be refunded in accordance with the procedure and within the time period laid down in the Law on Tax Administration.

10.  The overpaid  amount of the VAT shall be refunded in accordance with the procedure set forth in the Law on Tax Administration.

11. Refunding of the excess amount of the VAT or its carrying forward shall be suspended when authorised criminal investigation institutions submit to the tax administrator information about instituting an investigation into the activities of a VAT payer relating to a criminal act if this is related or may be related to improper performance of the obligations of a VAT payer, including an unlawful refunding of the excess  amount of the VAT and its carrying  forward. If the criminal case is dismissed or discontinued or where a judgement of  acquittal becomes effective, the excess amount of the VAT shall be refunded/carried forward in accordance with the procedure prescribed by this Law and the Law on Tax Administration. Authorised criminal  investigation institutions must submit to the tax administrator information about instituting an investigation into the activities of a VAT payer relating to a criminal act if this is related or may be related to improper performance of the obligations of a VAT payer, including an unlawful refunding of the excess  amount of the VAT and its carrying  forward.

Article 91. Rectification of Mistakes in the VAT Return

1. Mistakes made in the VAT return shall be rectified when they come to light. The procedure for rectifying the mistakes shall be determined by the central tax administrator.

2. If the amount of the input/import VAT not deducted owing to a mistake had to be deducted three years ago starting from the moment when the above circumstances came to light, the mistake may not be rectified.

Article 92. Obligations of Taxable Persons Who Are Not Identified for VAT Purposes Related to Payment of the VAT

Article 92. Obligations of Taxable Persons Who Are Not Identified for VAT purposes  Related to Payment of the VAT

1. A taxable person who was supposed to file an application for his registration as a VAT payer under Article 71 or 71¹ but who failed to do that must, in compliance with the procedure set forth in this Article, calculate and pay into the budget the VAT on the goods and services which, under provisions of this Law, he should calculate and pay VAT as a VAT payer. The amount of the VAT payable for the goods supplied and services rendered shall be calculated according to the following formula (where paragraph 2, Article 71 of this Law applies – no VAT shall be calculated for the goods supplied and services rendered a consideration for which  amounted to LTL  1 000 000 indicated in paragraph 2, Article 71 of this Law):

The amount of the VAT due = consideration *T/(100%+T), where T means the rate(in per cent)  of the VAT established on these goods and/or services in this Law; * – a multiplication symbol.

2. A person who was supposed to file an application for his registration as a VAT payer under Article 71¹ but who failed to do that must, in compliance with the procedure set forth in this Article, calculate and pay into the budget the VAT on the goods and services which, under the provisions of this Law, he should calculate and pay VAT as a VAT payer, with the exception of cases where  the VAT on these goods and services was paid by the supplier of these goods/services in the Republic of Lithuania.

3. Taxable persons referred to in paragraph 1 and 2 of this Article must pay the amount of the VAT calculated in the above manner due for a given month into the budget by the 25^th day of the following month. They must also submit a statement of the VAT due by a person who has not been identified for VAT purposes, of a form prescribed by the central tax administrator.

4. The amount of the VAT on the goods and/or services supplied by the persons referred to in paragraph 1 of this Article, calculated in the above manner,  may not be stated separately in the accounting documents recording supply of those goods  and/or  services.

5. A taxable person who is not a VAT payer and who has to pay the VAT into the budget subject to the provisions of Article 53 of this Law, must pay the VAT due within 10 days from the emergence of the circumstances due to which the obligation to calculate the VAT arose; a person who has to pay the VAT  into the budget subject to paragraph 6, Article 71 must pay it  within 10 days from issuing the document  in which the VAT has been stated without good cause.

6. A legal person who is not and, under this Law, must not be a VAT payer, who is supplying a new means of transport must, no later than within five days from effecting the transaction, file with the central tax administrator a special return of a prescribed form. The procedure for the completion and filing of this return shall be  determined by the central tax administrator. When an intra-Community supply of new means of transport is made by a natural person who is not and, under this Law, does not have to be a VAT payer, he must, not later than within five days from effecting the transaction, submit the documents relating to the transaction determined  by the central tax administrator; the  procedure for submitting the documents shall be determined by the central tax administrator. A refund of the amount of the input/import VAT deducted pursuant to paragraph 2, Article 58 of this Law to the persons referred to in this paragraph shall not be made earlier than a proof is submitted that the VAT on the supplied new means of transport has been paid in another Member State. The deducted amount shall be refunded within the time period and in accordance with the procedure determined by the Law on Tax Administration.

7. In the case of intra-Community acquisitions by a legal person who is not and does not have, under this Law, to be a VAT payer, of products subject to excise tax or of a new means of transport, must no later than within five days from transportation of the above goods to the territory of the country, pay the VAT due on these goods. At the same time an invoice of the VAT due by a person not identified as a VAT payer, of the form determined by the central tax administrator, must be submitted.

8. In the event of an intra-Community acquisition of a new means of transport by a legal person who is not and does not have to be, under this Law, a VAT payer, he must, no later than until the 25^th day of the month following the acquisition of the new means of transport, submit the documents related to the transaction, determined by the central tax administrator. The procedure of submitting these documents shall be determined by the central tax administrator. . The tax for the intra-Community acquisition of a new means of transport shall be calculated by the tax administrator. The tax must be paid no later than within five working days from the date when the natural person was informed about the amount of the tax due.

9. Any other cases when persons who are not VAT payers must calculate and pay the VAT into the budget are listed in Chapter XI of this Law.

CHAPTER X

CALCULATION AND PAYMENT OF IMPORT VAT

Article 93. Calculation of the Amount of Import VAT Due

The amount of import VAT due shall be calculated in accordance with the procedure established by the Customs Code, this Law and the implementing legislation.

Article 94. Procedure of Payment of Import VAT

1. Import VAT shall be paid in accordance with the procedure established by the Government of the Republic of Lithuania. However, import VAT on goods imported by VAT payers may be included into the amount of their output VAT under procedures established by the Government of the Republic of Lithuania or an institution authorised by it. The Government of the Republic or an institution authorised by it shall also establish the criteria which the VAT payers wishing to include import VAT into output VAT must meet.

2. Where import VAT is not paid on account or immediately when the obligation to calculate it arises and when it is necessary to secure the discharge of obligations to the customs, the customs of the Republic of Lithuania shall have the right to require to pay a deposit or give a guarantee securing the discharge of the obligations. These provisions shall be implemented in accordance with the same procedure as used for import duties.

3.  Import VAT must be paid by the importer.

CHAPTER XI

CASES WHERE THE PURCHASER MUST CALCULATE OR WITHHOLD  AND PAY VAT ON THE GOODS AND/OR SERVICES  SUPPLIED TO HIM

Article 95. Cases where the Purchaser Must Calculate and Pay VAT for Goods and Services Supplied to Him

1. Provisions of this Article shall apply only to such supplies of goods and/or services within the territory of the country, effected by foreign taxable persons  (hereinafter in this Chapter – a foreign person) not established in the territory of the country which, under this Law:

1)      are subject  to VAT, and

2) are exempt from VAT  under Chapter IV of this Law, and

3) are not taxable  by applying the zero rate of VAT  under Chapter VI of this Law.

2. A purchaser of goods who is a VAT payer  must calculate and pay into the budget the VAT on the services  referred to in paragraphs 6 and 9, Article 13 of this Law supplied to him by a foreign person  within the territory of the country.

3. A purchaser of services/goods who is a VAT payer must calculate and pay into the budget the VAT for the supplies within the territory of the country of the following services and goods by a foreign person:

1) the services of an agent referred to in paragraph 2, Article 13 of this Law;

2) services of intra-Community transportation of goods as well as the services of an agent in procuring services of acquisitions or supplies of intra-Community transportation of goods specified in Article 13¹ of this Law;

3) ancillary intra-Community transportation of goods services as well as the services of an agent in procuring services of acquisitions or supplies of intra-Community transportation of goods specified in Article 13¹ of this Law;

4) services specified in paragraph 5, Article 13 of this Law;

5) natural gas and electricity referred to in paragraph 6, Article 12 of this Law;

6) goods installed or assembled in Lithuania

4. A purchaser of goods who is a VAT payer must calculate and pay into the budget VAT on goods supplied to him by a foreign person within the territory of the country where the supplies are made under the conditions referred to in paragraph 3, Article 33¹ of this Law.

5.  If a foreign person is engaged in the activity which is not specified in paragraphs 2 to 4 of this Article and if he has not been identified  for VAT purposes, the purchaser of the goods services supplied by him must calculate, in accordance with the procedure prescribed by this Law, and pay the output VAT for the goods and/or services supplied by  the foreign person.

6.  Where the purchaser is a VAT payer, the output VAT on the goods and/or services supplied during a tax period within the territory of the country by a foreign person shall be included into the VAT return for this tax period of the purchaser as the VAT payable into the budget.  The amounts of the output VAT calculated in this way may be deducted, following the standard procedure set forth in this Law, by the purchaser like any other output VAT.

7. Where the purchaser is not a VAT payer, he must  pay the amount of output VAT calculated in accordance with the procedure set forth in this Article into the budget until the 25^th day of month following the month when  the this tax had to be calculated. At the same time an invoice must be filed, of a form prescribed by the central tax administrator, of the VAT due by a person not identified for VAT purposes.

8. Documents issued by foreign  persons in which the supply of goods and/or services  specified in this Article is recorded the VAT  of the Republic of Lithuania shall not be indicated.

Article 96. Cases when the Purchaser Must Withhold and Pay VAT on Goods and Services  Supplied to Him

1. VAT on the objects of ownership right taken over as a property contribution into company or owing to the restructuring of another VAT payer as well as the VAT calculated on the transferred material improvement of a building/structure in the case of supply of goods referred to in paragraph 4, Article 9 of this Law, must be withheld  and paid into the budget by a VAT payer who is issued a document recording such supply of goods or services,  i.e. a VAT payer taking over the objects of the right of ownership as a property contribution or owing to the restructuring of another VAT payer, or the VAT payer – the owner of the materially improved building/structure.

2. The Government of the Republic of Lithuania or an institution authorised by it shall establish cases when, in order to ensure the discharge of tax obligations, including justification of carrying over and refund of the excess amount of VAT,  the tax administrator must inform the supplier of goods or services and the purchaser/customer that output VAT on goods and/or services supplied shall be withheld  and paid into the budget by the purchaser/customer of these goods and/or services  provided that he is a VAT payer.

3. The amounts of the VAT withheld during a given tax period which, subject to the provisions of this Article, must be paid into the budget by the purchaser/customer of the goods and/or services shall be indicated in the VAT return of that tax period as the VAT payable into the budget. These amounts of VAT may be deducted as prescribed by this Law by the purchaser/customer like any other input VAT.

4. The Government of the Republic of Lithuania or an institution authorised  by it shall  establish the procedure for the  application of this Article

CHAPTER XII

SPECIAL VAT SCHEMES

FIRST SECTION

COMPENSATORY VAT RATE SCHEME FOR FARMERS

Article 97. Application of Provisions of this Section

1. The provisions of this Section shall apply to farmers who meet all the requirements  set forth below:

1) the total amount of consideration during a year (the last 12 months) for goods and services supplied in the course of his economic activities does not exceed  the threshold specified in paragraph 2, Article 71 of this Law. Where the total amount of consideration of all the members of a farmer’s farm for the goods and services supplied in the course of their economic activities exceeds the above threshold it shall be  regarded that he does not meet this requirement

2) they have registered a farmer’s farm in accordance with the procedure  laid down in the Law of the Republic of Lithuania on the Farmer’s Farm or  have documents evidencing allotment of land for a personal farm;

3)  the registered land area of a farmer’s farm or the area of land allotted for a personal farm does not exceed the limit in hectares set by the Government of the Republic of Lithuania.

2. A farmer who meets the requirements of paragraph 1 of this Article shall have a right to be identified for VAT purposes in accordance with the regular procedure as prescribed in Chapter IX of this Law.  If a farmer has been identified for VAT purposes, the provisions of this Section may not apply to him. Neither may they apply to a farmer when at least one member of a farmer’s farm has been identified for  VAT purposes.

3. The procedure for identification of farmers for VAT purposes who are eligible for the compensatory VAT rate scheme shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

Article 98. Application of the Compensatory VAT Rate

1. Farmers to whom the compensatory VAT rate scheme applies shall have the right to receive from the purchasers/customers a compensation for:

1) agricultural products and agricultural services in accordance with the list of agricultural services in Annex I of this Law when the agricultural products/services are supplied to taxable persons who are not farmers who are eligible for the VAT compensatory rate scheme in the Republic of Lithuania;

2) agricultural products in intra-Community supply of a legal person identified for VAT purposes who is not a taxable person.

2. The amount of the compensation shall be calculated on the amount of consideration (the amount of the compensation itself excluding) paid by purchasers/customers for agricultural products and/or agricultural services  supplied by farmers  by applying the compensatory VAT rate specified in Article 100 of this Law.

3. The amount of the compensation must be stated in the accounting documents  recording the supply of agricultural products and/or services. The amount of the compensation shall be deductible by the purchaser of agricultural products and/or services who is a VAT payer, in accordance with the normal procedure as prescribed in this Law, like any other input VAT .

4. Supply of agricultural products to the VAT payers of the Republic of Lithuania by a farmer who is eligible for the compensatory VAT rate scheme shall be recorded in accordance with the procedure laid down in paragraph 9, Article 79 of this Law. Supply of agricultural products to other persons as well as supply of agricultural services  shall be recorded in an accounting document of a free form. This document shall be issued by the purchaser provided that he is a VAT payer of the Republic of Lithuania or in other cases – by the farmer himself. This accounting document must  give all the mandatory particulars under the legal acts regulating  accounting as well as supplementary particulars the list whereof shall be determined by the central tax administrator.

5. The compensation  paid to the farmers who, under this Section, are eligible for the compensatory VAT rate, shall be refunded to the purchaser, following the procedure determined by the Government of the Republic of Lithuania or an institution authorised by it, for the following:

1) intra-Community supplies of agricultural products to a taxable person who is a VAT payer or a non-table legal person which is a VAT payer;

2) agricultural products to which provisions of Chapter VI of this Law would apply  if they were supplied not by a farmer  eligible for the compensatory VAT rate and which are supplied to a taxable person  established outside the territory of the Community  where the taxable person uses these products for his activities outside the territory of the country and in respect of which,  if they were carried out in Lithuania, input/import VAT could be deducted, and/or for activities subject to a zero VAT rate pursuant to the provisions of  Chapter VI of this Law, and/or provisions of services in a Member State where their purchaser is established if this purchaser must calculate and pay VAT in respect of these services;

3) agricultural services supplied to a taxable person of a Member State or a taxable person established outside the territory of the Community where these services are used for the activities outside the territory of the country in respect of which, if they were carried out in Lithuania, the input/import VAT could be deducted, and/or for the activities subject to a zero VAT rate under the provisions of Chapter VI of this Law, and/or provisions of services in a Member State where the purchaser of the services is established if this purchaser must calculate and pay VAT in respect of  these services.

6. The provisions of subparagraphs 2 and 3, paragraph 5 of this Article shall not apply if in the country where the purchaser is established, provisions equivalent, in fact, to the provisions of paragraph 2, Article 71 of this Law apply.

Article 99. Accounts of the Compensatory VAT Rate

1. Farmers who are eligible for the compensatory VAT rate scheme shall keep their accounts of agricultural products and services supplied in accordance with the procedure established by the central tax administrator.

2. Farmers who are eligible for the compensatory VAT rate scheme shall not be entitled to VAT deductions and the requirements of this Law shall not apply to them where they are applied only in respect of VAT payers.

3. Taxable persons of the Republic of Lithuania acquiring agricultural products and/or services from farmers  who are eligible for the compensatory VAT rate scheme shall submit accounts  of such acquisitions of the form prescribed by the central tax administrator.

Article 100. Compensatory VAT Rate

The compensatory VAT rate shall be 6%.

SECTION two

TAXation Scheme for tourist services

Article 101. Application of Provisions of this Section

The provisions of this Section shall apply only to those tourist services, which are acquired by the VAT payer from third persons and subsequently provided to the final consumer in his own name (hereinafter in this Section such a VAT payer shall be referred to as a travel agent). Where the final consumer is sold a package of several tourist services purchased from third persons, which are provided during a single journey, it shall be deemed that the travel agent has supplied a single service to the final consumer.

Article 102. Taxable Amount

1. The taxable amount of any service provided by the travel agent to the final consumer shall be the travel agent’s margin calculated in accordance with the procedure established in paragraph 2 of this Article.

2. The travel agent’s margin shall be determined as the difference between the amount (exclusive of VAT itself) payable by the final consumer to the travel agent for the service provided by him and the amount (including VAT) paid or payable by the travel agent to third persons for this tourist service or services (where the final consumer is sold a package). The travel agent’s margin shall be calculated regardless of whether or not these services provided by third persons are subject to VAT.

Article 103. Characteristics of VAT Deduction

1. A travel agent shall have no right to deduct the input VAT referred to in Article 102 (2) of this Law, which has been paid or is payable to the third persons for the tourist services acquired from them.

2. Input and/or import VAT not indicated in paragraph 1 of this Article shall be deductible in accordance with the general procedure established in this Law.

Article 104. Transactions outside the Community

Services provided by a travel agent shall be subject to the zero-rate of VAT where the travel agent acquires from third persons and provides to the final consumer tourist services, which are provided by these third persons outside the Community. Where a travel agent acquires from third persons and provides to the final consumer  services a part of which is provided by third persons outside the Community, the zero-rate VAT shall apply only to this part of the services.

Article 105. Characteristics of the Invoicing of Services Provided by a Travel Agent

A service provided by the travel agent to the final consumer shall be invoiced in accordance with the standard procedure established by this Law; however, the document invoicing the service shall not specify the rate and amount of VAT.

Section three

Taxation Scheme for second-hand goods, works of art, collectors’ items and antiques

Article 106. Application of the Provisions of this Section

1. A VAT payer supplying second-hand goods, works of art, as well as collectors’ items and/or antiques within the meaning of this Article shall calculate VAT on the supplied second-hand goods, works of art, collectors’ pieces and antiques in accordance with the procedure established in this Section. The provisions of this Section shall apply to VAT payers who, in the course of their economic activities, are continuously engaged in the supply of second-hand goods, works of art, as well as collectors’ items and/or antiques.  Where the VAT payer is supplying his own second-hand fixed assets, it shall be deemed that in respect of such transactions, the fixed assets  meet the requirements for the regular  engagement in the supply of second-hand goods.

2. The provisions of this Section shall apply in the case when a VAT payer supplies second-hand goods, works of art, as well as collectors’ items and/or antiques acquired  within the territory of the Community without VAT, as well as second-hand goods, works of art, collectors’ items and/or antiques the acquisition of which  was covered  by  this special  scheme or second-hand means of transport the acquisition of which  in the Member State of dispatching was covered by special  transitional provisions applicable  in that Member State in respect of second-hand means of transport. Moreover, the VAT payer shall also have the right to opt to apply the provisions of this Section to the following transactions:

1) supplies of works of art, collectors’ items and/or antiques, which he has imported himself and in respect of which import VAT has been calculated in accordance with the prescribed procedure;

2) supplies of works of art acquired from their creators or their successors in title, in the supply whereof VAT was calculated in accordance with the procedure established by this Law;

3)  supplies of  works  of art acquired from taxable persons (persons who are not covered by this special scheme)  in the supply whereof VAT was calculated by these persons applying the reduced rate of VAT established for works of art in any Member State.

3. For the purposes of this Section the organiser of the sale by public auction  shall be the taxable person who when conducting its economic activities offers goods in sales by public auction in his own name but for the account of the seller of the good and hands over the good to the purchaser who offered the highest price also in his own name but for the account of the seller of the good.

4. The provisions of this Section shall also apply to organisers of sales by public auction supplying second-hand goods, works of art, collectors’ items and/or antiques by public auction, provided that such goods are sold by public auction in the name of the organiser of the sale by public auction but for the account of the seller of the good, who is:

1) a non-taxable person;

2) a taxable person whose supply of these goods is exempt from VAT under the provisions of this Law, paragraph 1, Article 33 of this Law;

3) a taxable person who has not been identified for VAT purposes and, under paragraph 2, Article 71 of this Law, must not be identified for VAT purposes. This provision shall apply only in the case of the supply of fixed assets; or

4) a taxable person whose supply of goods would be taxable in accordance with the procedure established in this Section, or

5) a taxable person who supplies a second-hand means of transport was subject to VAT in the Member State of dispatching under special transitional provisions  applied to second-hand means of transport in that member State.

5. For the purposes of this Section, second-hand goods shall mean any used movable property (except for those referred to in paragraphs 6-8 of this Article, as well as precious metals, precious stones and articles of precious metals and/or precious stones), which are suitable for further use irrespective of whether or not those items require additional repairs and/or other servicing prior to their use.

6. For the purposes of this Section, works of art shall mean:

1) paintings, drawings and pastels classified under subheading 9701 of the Combined Nomenclature (hereinafter referred to as CN);

2) original engravings, prints and lithographs classified under CN subheading 9702;

3) original sculptures and statuary classified under CN subheading 9703 provided that they are produced in not more than 8 copies each;

4) tapestries classified under CN subheading 5805 and wall textiles classified under CN subheading 6304 made by hand from designs provided by artists, provided that they are produced in not more than 8 copies each.

7. For the purposes of this Section, collectors’ items shall mean:

1) postage or revenue stamps, postmarks, first-day covers, postal (stamped) paper and the like classified under CN subheading 9704;

2) collections and collectors’ pieces of zoological, botanical, mineralogical, anatomical, historical, archaeological, palaeontological, ethnographic or numismatic interest classified under CN subheading 9705.

8. For the purposes of this Section, antiques shall mean objects classified under CN subheading 9706 (except for those referred to in paragraphs 6 and 7 of this Article) of an age exceeding 100 years.

9. VAT payers who, in the cases specified in subparagraphs 1 to 3, paragraph 2 of this Article, have opted to apply the provisions of this Section, must  declare this option in accordance with the procedure determined by the central tax administrator.  Such an option will be valid for at least 24 months from the date of  declaration of the option in respect of all the appropriate transactions  effected by the VAT payer.

10. The provisions of this Section shall not apply in respect of the supplies to another Member State of new means of transport.

Article 107. Taxable Amount

1. When supplying the goods referred to in paragraph 2, Article 106 of this Law, the taxable amount shall be the seller’s margin calculated in accordance with the procedure established in paragraph 2 of this Article.

2. The seller’s margin shall be calculated as the difference between the consideration (exclusive of VAT itself) received or receivable by the seller for the good supplied and the amount (including VAT) paid or payable by him to his supplier when acquiring this good. Where the good imported by the VAT payer is supplied, the amount of import duties, import charges and import VAT charged on this good shall be additionally subtracted.

3. When supplying the goods referred to in paragraph 4, Article 106 of this Law by public auction, the taxable amount shall be the margin of the organiser of the sale by public auction calculated as the difference between the total consideration (exclusive of VAT itself) received or receivable from the purchaser of the good and the amount (including VAT) paid or payable by the auctioneer to the seller of the good. The total consideration received or receivable from the purchaser shall be constituted of not only the price of the good at the public auction but also the amounts specified in subparagraphs 1 and 2 of Article 15 (5) of this Law. The amount paid or payable to the seller of the good shall be the difference between the price of the good at the public auction and the commission received or receivable by the organiser of the sale by public auction under the contract with the seller of the good.

4. A VAT payer who is covered by the provisions of this Section shall have the right to calculate VAT on the total taxable amount of the good supplied, which is determined in accordance with the procedure established in Article 15 of this Law.

Article 108. Characteristics of VAT Deduction

1. Where a VAT payer calculates VAT in respect of the supply of the good referred to in this Section on the margin, he shall have no right to deduct input or import VAT on that good.

2. Where a VAT payer calculates VAT in respect of the supply of the good referred to in this Section on the total taxable amount of the good, the right to deduct input or import VAT on that good shall arise at the earliest upon the supply of that good by the VAT payer.

Article 108¹. Application of Provisions of this Chapter in the Cases Established in this Section

Where the goods listed in this Section are supplied under the conditions specified in Article 41 to 44 or Article 47 of this Law, the margin calculated for these goods shall be subject to a zero-rate VAT.

Article 109. Invoicing of the Supply of Goods

1. Where, in accordance with Article 107 (1), (2) and (3) of this Law, the VAT on the supply of the good has been calculated not on the total value of the good, the VAT payer shall have no right to specify the VAT calculated in this manner in documents invoicing this supply.

2. The organiser of the sale by public auction must, in the invoice he is issuing to document the supply of the good to the purchaser of that good, separately indicate the price of the good at the public auction, as well as the amounts payable by the purchaser, which are specified in subparagraphs 1 and 2, paragraph  5,   Article 15 of this Law. For the purpose of documenting the supply of the good, the organiser of the sale by public auction must issue to the seller of the good a document of the form prescribed by the central tax administrator, which must specify the price of the good at the public auction and the amount of the commission received or receivable by the organiser of the sale by public auction under the contract with the seller of the good. This document issued by the organiser of the sale by public auction shall be deemed a VAT invoice by which the seller of the good provided that he is a VAT payer documented the supply of goods.

Article 110. Accounting

1. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to determine cases when a VAT payer shall be entitled to calculate VAT on the margin in respect of all the goods or all the goods of a particular kind supplied during the tax period rather than every good supplied.

2. The central tax administrator shall set additional requirements for the accounting of VAT by the VAT payer who applies the provisions of this Section.

3. The  organiser of the sale by public auction  must specify separately in his invoice the amounts received or receivable from the purchasers as well as the amounts paid or payable to the seller .

Section four

VAT Scheme for investment gold

Article 111. Application of the Provisions of this Section

1. Under the provisions of this Section, investment gold shall mean:

1) gold bars, wafers and plates with a purity of at least 995/1000 recognised in the international markets of precious metals, provided the weight of such a bar, wafer or plate is at least 1 gram;

2) gold coins with a purity of at least 900/1000 and minted after 1800, which are or have been used as tender in their country of origin and are normally sold at a price which does not exceed the market value of the gold contained in a coin by more than 80%.

2. For the purposes of this Section, investment gold shall also mean securities certifying the right of ownership in respect of gold referred to in subparagraph 1 of paragraph 1 of this Article, as well as securities certifying the right or obligation to purchase or transfer the securities certifying the right of ownership in respect of gold referred to in subparagraph 1 of paragraph 1 of this Article.

3. For the purposes of this Law, gold coins referred to in subparagraph 2, paragraph 1 of this Article shall not be considered as coins of numismatic interest.

Article 112. Procedure for the Taxation of Investment Gold and Related Services

1. The supply, acquisition from another Member State and import of investment gold shall be exempt from VAT.

2. Services of agency (agent’s services) shall also be exempt from VAT, where the agent takes part in supplying or acquiring investment gold in the name and for the account of another person.

3. VAT payers producing investment gold or transforming any gold into investment gold shall have the right to choose to calculate VAT on the supply of investment gold in accordance with the standard procedure established by this Law, provided that the purchaser of investment gold is the VAT payer.

4. Where a VAT payer producing investment gold or transforming any gold into investment gold exercises the right referred to in paragraph 3 of this Article, the agent taking part in the transaction for the supply of this investment gold in the name and for the account of another person shall also have the right to calculate VAT on the services of agency (agent’s services) provided by him in accordance with the standard  procedure established by this Law.

5. Where a VAT payer chooses to calculate VAT in the cases provided for in paragraphs 3 and 4, he must  declare  his choice following the procedure prescribed by the central tax administrator.

Article 113. Right of the Supplier of Investment Gold to be Identified for VAT purposes

In derogation from the provisions of Article 72 of this Law, taxable persons who are not VAT payers and who are engaged in the supply of investment gold shall have the right to be identified for VAT purposes.

Article 114. Characteristics of VAT Deduction

1.  Irrespective of the fact that the supply of investment gold is exempt from VAT, the VAT payer shall have the right to deduct the following:

1) input VAT on purchases paid or payable in respect of investment gold to the supplier who has exercised the right referred to in paragraph 3, Article 112 of this Law;

2) input and/or import VAT on gold acquired and/or imported, which is intended for transforming it into investment gold;

3) input VAT on the services acquired, which consist of the change of form, weight and/or purity of gold.

2. A VAT payer producing investment gold or transforming any gold into investment gold shall have the right to deduct input and/or import VAT on the goods and/or services acquired and/or imported, which are related to the production or transformation of the above-mentioned gold, irrespective of whether or not he has exercised the right referred to in paragraph 3, Article 112 of this Law while continuing supply of this investment gold.

Article 115. Accounting

The Government of the Republic of Lithuania or an institution authorised by it shall set additional requirements for the accounting of taxable persons who are covered by the provisions of this Section.

SECTION FIVE

SPECIAL SCHEME FOR TAX Arrangements APPLICABLe FOR ELECTRONICALLY SUPPLIED SERVICES

Article 115¹.  Application of Provisions of this Section

1. The provisions of this Article shall apply only to those services which are electronically supplied by non-established taxable persons to non-taxable persons.  The non-established taxable person electronically supplying services within the  Community to non-taxable persons of different Member States shall have the right  choose to be identified for VAT purposes in a Member State and to discharge through that Member State his tax  related obligations on the whole territory of  the European Community. The provisions of this section shall apply where a non-established taxable person chooses the Republic of Lithuania as the Member State of identification.

2.      For the purposes of this Section:

1) a non-established taxable person  means a taxable person  who has neither established his business nor has a fixed establishment within the territory of the Community and who is otherwise required to be identified for VAT purposes pursuant to the relevant provisions of legal acts of member States, with the exception of his obligation  to be identified for VAT purposes under the provisions equivalent to the provisions of this section;

2) the Member State of identification means the member state in which the non-established taxable person chooses to be identified for VAT purposes;

3) the Member State of consumption  means the Member State in which the supply of electronic services is deemed to take place on the basis of criteria determining the place of supply of services;

4) VAT return means  the statement  of a form determined by the central tax administrator containing the information about the amount of services, VAT excluded, electronically supplied during a tax period in each Member State, the VAT due, applying the VAT rate established  for this category of services in an individual  Member State of consumption.

Article 115². Identification

1. Non-established  taxable persons supplying services electronically within the territory of the European Communities who have chosen the Republic of Lithuania as a state of identification,  shall be included in or excluded from the identification register and the identification number shall be allocated to them in accordance with the procedure determined by the central tax administrator.

2. The information  necessary for the tax administrator from a taxable person as well as the information from the tax administrator to the taxable person shall be communicated by electronic means.

Article 115³. Filing of a VAT  Return and Paying of VAT

1. A taxable person to whom the provisions of this Section apply, must submit for each calendar quarter, within 20 days following the end of the reporting period, a VAT return specified in this Section, following the procedure determined by the  central tax administrator. A VAT  return shall be submitted whether or not during that calendar quarter electronic services have been supplied by the taxable person within the territory of the European Communities.

2. A taxable person to whom the provisions of this section apply must pay, no later than by the end of the time period  indicated in paragraph 1 of this Article and following the procedure determined by the central tax administrator, the VAT  amount specified in the VAT return calculated for all electronic services supplied within the territory of the European Communities.

3.  The VAT paid by a taxable person to whom the provisions of this Section apply shall be allocated, following the procedure determined by the Minister of Finance, to the Member States within the territory of which this person supplied electronic services.

Article 115⁴.  Recording Requirements

The central tax administrator shall have the right to determine requirements for keeping records of persons to whom the provisions of this Section apply.

Article 115⁵. Cases when the Application of the Provisions of this Section is Cancelled

The provisions of this Section shall no longer apply if a non-established  taxable person:

1) ceases supply of electronic services within the territory of the European Communities, or

2)ceases to engage in economic activity, or

3) no longer meets the requirements for a person  who wants to qualify for the provisions of this Section, or

4)  is continuously in breach of the provisions of this Section.

Chapter XIII

VAT refund to foreign taxable persons

Article 116. Right to Recover the VAT paid in the Republic of Lithuania

1. A foreign taxable person shall, in accordance with the procedure established in this Chapter, have the right to be refunded the VAT paid in the Republic of Lithuania.

2. The right to be refunded the VAT paid in the Republic of Lithuania shall be granted to foreign taxable persons established in those third countries where the VAT paid (or any equivalent tax) is refundable to taxable persons of the Republic of Lithuania. The provisions of this paragraph shall not apply to:

1) non-established taxable persons to whom the provisions of Section Five, Chapter XII of this Law  or equivalent provisions of any other Member State apply and who  wish  a refund of the VAT on goods/services intended for supply of electronic services, paid in the Republic of Lithuania;

2) taxable persons established in another Member State.

Article 117. Requirements for Foreign Taxable Persons who Wish to be Refunded VAT

1. Any foreign taxable person shall have the right to submit an application to be refunded the VAT paid in the Republic of Lithuania only in the case where during that period in which the VAT paid is requested to be refunded he satisfies the following criteria:

1) he had no subdivision in the Republic of Lithuania, or, in the event of a natural person, his normal place of residence was not in the Republic of Lithuania either; and

2) supplied only such services and goods the tax on which, under the provisions of paragraphs 2 to 4, Article 95 of this Law, must be calculated and paid by the purchaser.

2. The right to submit an application shall also be enjoyed by such a foreign taxable person who satisfies the criterion set in subparagraph 1 of paragraph 1 of this Article and who during the period in which the VAT paid is requested to be refunded in the territory of the country:

1) carried out only the activity indicated in Article 45 of this Law  or acted as agent in the transactions indicated in the above-mentioned Article, as well as carried out the activity indicated in Article 53 of this Law which under the provisions of this Law would be subject to the zero-rate of VAT; and/or

2) provided services indicated in paragraph 6 and/or 7, Article 13 of this Law, but only to such purchasers/customers who under the provisions of this Law must calculate and pay VAT on such services acquired.

3.  A foreign taxable person shall have no right to apply for a refund of the VAT paid in the Republic of Lithuania if in the state where he is established provisions equivalent to the provisions of paragraph 2, Article 71 of this Law apply to him.

Article 118. Refundable VAT

1. The following shall be refundable to a foreign taxable person:

1) The import VAT paid in the Republic of Lithuania which became chargeable for him for the goods imported into the territory of the European Communities;

2) The VAT paid by this taxable person for the goods and/service including  those acquired from other Member States.

2. The VAT referred to in paragraph 1 of this Article may be refundable only in the case where the goods and/or services, in respect of which the refund of the paid VAT is requested, are intended for use in the following economic activities of a foreign taxable person:

1) the one referred to in subparagraphs 1 and 2 of Article 117 (2) of this Law, and/or

2) to supply goods and/or services outside of the territory of the country in the case where such supplies of goods and/or services would not be exempt from VAT if carried out in the territory of the country.

3. The VAT paid by a foreign taxable person in respect of the goods and/or services, the input and/or import VAT whereof shall, under the provisions of this Law, in no case be deductible by VAT payers, shall not be refundable to foreign taxable persons.

4. The Government of the Republic of Lithuania or an institution authorised by it shall have the right to establish that the VAT paid in respect of certain goods and/or services shall not be refundable to non-established foreign taxable persons, where the deduction of input and/or import VAT on these goods and services is limited under the provisions of this Law.

5. The input VAT shall not be refundable where  the provisions of Article 49 could be applied to the goods dispatched to another Member State  by the purchaser or also where the provisions of paragraph 2, Article 41 of this Law  could apply to the  goods  dispatched by another person  commissioned by him from the territory of the European Communities.

Article 119. Period the VAT Paid in which shall be Refundable, Minimum Refundable VAT Amount and Refund Procedure

The maximum and minimum duration of the period the VAT paid in which may be requested to be refunded, the minimum amount of refundable VAT the amounts under which specified in applications of foreign taxable persons shall not be refundable, as well as the procedure for submitting and examining applications to refund foreign taxable persons the VAT paid by them and the procedure for VAT refund shall be established by the Government of the Republic of Lithuania or an institution authorised by it.

Chapter XIV

TAX Control

Article 120. VAT Control

1. VAT, except for the case specified in paragraph 2 of this Article, shall be controlled by the State Tax Inspectorate. The State Tax Inspectorate shall also control the payment of VAT in respect of imported goods, where the import VAT on them is included into output VAT in accordance with the procedure established in Article 94 of this Law.

2. VAT on imported goods, including Community goods imported into the territory of the European Communities from third countries, not covered by paragraph 1 of this Article, shall be controlled by territorial customs office.

3. Importation of Community goods from third countries into the territory of the European Communities shall be subject to the same customs formalities as those applied to the non-Community goods imported into the customs territory of the European Communities. Where goods intended for transportation to a Member State other than the State into which they were brought from third territories are imported into the territory of the Community from third territories, these goods may be presented for the internal transit procedure as provided for by the Customs Code. Where goods from third territories which, if brought from third countries could be placed for temporary storage at the customs places of temporary storage, placed in a free zone or in a free warehouse, are brought into the Community territory, they could be placed under customs warehousing arrangements, inward processing arrangements, exempt from import duties, processing under customs supervision, temporary importation with total exemption from import duty, the same conditions  shall continue to apply to them as those which are used after the above customs procedures or after placing them under appropriate procedures.

4. Dispatching  of goods from the territory of the European Communities to third territories shall be subject to the same customs formalities as exportation of goods from the customs territory of the European Communities. In the event of a temporary  dispatching of goods  from the territory of the European Communities tot third territories, they shall be subject to the same provisions upon their return as those which are applied   to the goods which  had been  dispatched temporarily from the customs territory of the European Communities.

5. The procedure for the implementation of the provisions set out in paragraphs 3 and 4 of this Article shall be determined by the Customs Department.

6.  Discharge of tax obligations which may  arise  because of  non-Community goods brought into the territory of the European Communities which have not been released for free circulation as well as because of the goods brought from third territories shall be ensured in the same way as the liabilities relating to the import duty debt which may  emerge.

Article 121. Refund of the VAT Paid/Recovered Unjustifiably

1. The amount of VAT paid/recovered in excess shall be refundable/carried forward in accordance with the procedure established by the Law on Tax Administration, except for the case specified in paragraph 2 of this Article and paragraph 2 of  Article  91¹.

2. The VAT paid in respect of imported goods shall be refundable or its recovery shall be waived in the cases determined by the Government of the Republic of Lithuania or an institution authorised by it.  Applications to refund the paid VAT or to waive its recovery shall be examined in accordance with the procedure established by the Government of the Republic of Lithuania or an institution authorised by it.   The import VAT paid/recovered unjustifiably shall be refundable by the customs in accordance with the procedure established by the Customs Department.

3. Where a legal person who is not a taxable person paid import VAT in the Republic of Lithuania for goods imported from third countries or third territories  and which will be further imported to another Member State, the person shall be refunded the import  following the procedure determined by the Government of the Republic of Lithuania or an institution authorised by it.

Chapter XV

Liability for Violation of this Law

Article 122. Failure to Submit a VAT Return within the Established Interval

Where a VAT payer fails to submit a VAT return within the interval established in this Law, the amount of VAT payable into the budget for that period shall be increased (the amount of VAT refundable from the budget shall be reduced) by 1%.

Article 123. Failure to Comply with the Procedure for the Payment of VAT

1. With regard to persons who have violated the provisions of this Law, default interest shall be calculated in accordance with the procedure established by the Law on Tax Administration.

2. Where it is discovered that a VAT payer has unjustifiably reduced the calculated amount of VAT payable into the budget (increased the calculated amount of VAT refundable from the budget), an additional amount of VAT payable shall be calculated whereby the amount of VAT payable into the budget shall be increased (the amount of VAT refundable from the budget shall be reduced) accordingly, and a penalty of 10 to 50% of the calculated additional amount of VAT due shall be imposed.

3. Where it is discovered that a taxable person or any other person, who is not a VAT payer, but in accordance with the procedure established by this Law should have paid VAT into the budget, has failed to pay it, the amount of VAT payable into the budget shall be calculated and a penalty of 10 to 50% of the calculated amount of VAT shall be imposed.

4. The amount of an individual penalty imposed in the cases specified in paragraph 2 or 3 of this Article shall depend on the nature of violation, the form of the guilt of the tax payer and other circumstances which are recognised by the tax administrator as relevant when imposing  a larger or smaller penalty.

Article 124.  Repealed from 1 May 2004.

Chapter XVI

Final provisions

Article 125. Entry into the Budget

VAT shall be entered into the State budget.

Article 126. Entry into Force

1. This Law shall enter into force from 1 July 2002, except for subparagraphs 2, 3, 4, 5, 6 and 7 paragraph 3 of Article 19, Article 130 and Section Four of Chapter XII.

2. Subparagraph 2, paragraph  3, Article 19 of this Law shall enter into force from 1 January 2003. Until 31 December 2002, the printing, publication and circulation of books, newspapers and magazines, except for publications publicising eroticism and violence, which have been recognised as such by an institution authorised by legal acts, as well as paper for printing newspapers shall be exempt from VAT.

3. Subparagraph 3, paragraph 3, Article 19 of this Law shall enter into force from 1 January 2004. Until 31 December 2003, pharmaceuticals and medicinal products included on the list approved by the Government of the Republic of Lithuania shall be exempt from VAT; however, the Government of the Republic of Lithuania shall have the right to approve the list of pharmaceuticals and medicinal products on which VAT shall be chargeable at the reduced rate of 5% from the day of the entry into force of this Law.

4. Subparagraphs 4, 6 and 7, paragraph  3, Article 19 of this Law shall enter into force from 1 January 2003.

5. Subparagraph 5, paragraph 3, Article 19 of this Law, setting the reduced rate of VAT of 5% for organic food products (requirements for organic food products shall be laid down by the Government of the Republic of Lithuania) shall enter into force from 1 January 2006.

6. Section Four of Chapter XII of this Law shall enter into force from 1 January 2004.

7. VAT returns for the tax period of June 2002 shall be filed and VAT shall be paid into the budget in accordance with the procedure and time limits established by this Law.

8. VAT on agricultural products, the supply whereof was duly documented prior to the entry into force of this Law, shall be paid into the budget within 10 days from payment by purchasers for it. The VAT on the services or energy supplied prior to the entry into force of this Law, which are paid for with the resources of the state budget of the Republic of Lithuania or municipal budgets, the Privatisation Fund and the Road Fund (Road Maintenance and Development Programmes), as well as with the resources of soft credits allocated from the General and Municipal Funds for the Construction or Purchase of Housing and Apartments, the time period for the payment whereof has not expired upon the entry into force of this Law, shall be paid into the budget in accordance with the provisions laid down in  paragraph 6,  Article 90  of this Law.

Article 127. Application of the Provisions of this Law to Services Provided by Foreign Taxable Persons

1. The provisions of Chapter XI of this Law shall apply to those services of foreign taxable persons indicated in Article 13 (6) of this Law, which are supplied after the entry into force of this Law. The provisions of this Law shall not apply to the services indicated in Article 13 (6) of this Law, which were supplied by foreign taxable persons prior to the entry into force of this Law, even in the case where the purchaser/customer of these services received the accounting document invoicing the supply of these services and/or paid for these services after the entry into force of this Law.

2. The provisions of Chapter XI of this Law shall not apply to the services of foreign taxable persons indicated in paragraph 7, Article 13 of this Law, where the transaction for the supply of such services was concluded and the leased movable property was imported into the Republic of Lithuania prior to the entry into force of this Law.

Article 128. Application of the Provisions of this Law to Tangible Capital Assets Acquired and/or Imported prior to the Entry into Force of this Law

1. This Article shall establish the procedure under which VAT deduction shall be adjusted with respect to the tangible capital assets referred to in Article 67 of this Law, acquired or imported prior to the entry into force of this Law, as well as the change in the use of the building/structure materially improved prior to the entry into force of this Law.

2. VAT deduction shall be adjusted in accordance with the procedure established in this Article, provided:

1) less than 10 years have elapsed after the tax period when the input VAT on the property immovable by nature acquired prior to the entry into force of this Law was wholly or partially deducted; or where the property immovable by nature was manufactured by the VAT payer himself and the input and/or import VAT on the goods and/or services used for the manufacture of the said property was wholly or partially deducted – less than 10 years have elapsed after the tax period when this property was put to use;

2) less than 10 years have elapsed after the tax period when the material improvement of the building/structure carried out prior to the entry into force of this Law was completed where the input and/or import VAT on the goods and/or services used for the said improvement was wholly or partially deducted;

3) less than 5 years have elapsed after the tax period when input VAT on the capital tangible assets referred to in subparagraph 2 of Article 67 (1) of this Law, acquired or imported prior to the entry into force of this Law, was wholly or partially deducted; or where such assets were manufactured by the VAT payer himself and the input and/or import VAT on  the goods and/or services used for the manufacture thereof was wholly or partially deducted – less than 5 years have elapsed after the tax period when these assets were put to use.

3. Where prior to the entry into force of this Law tangible capital assets were manufactured by the VAT payer himself or the building/structure was materially improved, the input VAT of such tangible capital assets shall, under the provisions of this Law related to VAT deduction and the adjustment thereof, mean the amount of input and/or import VAT on the goods and/or services used for the manufacture of the said assets (where the material improvement of the building/structure is carried out – for improvement works).

4. VAT deduction in respect of the change in the use of the tangible capital assets referred to in this Article shall be adjusted in accordance with the procedure established in Article 67 of this Law until the end of the period for the adjustment of VAT deduction.

Article 129. Repealed from 1 May 2004.

Article 130. Proposals to the Government of the Republic of Lithuania

By 1 May 2002, the Government of the Republic of Lithuania shall approve legal acts necessary for the implementation of  this Law or shall authorise other institutions to do this by the said date.

Article 131. Repealed Laws

On the entry into force of this Law, the following shall be repealed:

1) Republic of Lithuania Law on Value Added Tax;

2) Republic of Lithuania Law Amending the Republic of Lithuania Law on Value Added Tax;

3) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;

4) Republic of Lithuania Law on Value Added Tax;

5) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;

6) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;

7) Republic of Lithuania Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;

Republic of Lithuania Law Amending Article 38 of the Republic of Lithuania Law on Value Added Tax;

9) Article 3 of the Republic of Lithuania Law Supplementing Tax Laws of the Republic of Lithuania;

10) Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;

11) Law Amending Article 26 of the Law Amending and Supplementing the Republic of Lithuania Law on Value Added Tax;

12) Law Supplementing Article 6 of the Republic of Lithuania Law on Value Added Tax;

13) Law Amending Articles 35 and 36 of the Republic of Lithuania Law on Value Added Tax;

14) Law Amending Article 38 of the Republic of Lithuania Law on Value Added Tax;

15) Law Amending Article 38¹ of the Republic of Lithuania Law on Value Added Tax;

16) Law Amending and Supplementing Article 23 of the Republic of Lithuania Law on Value Added Tax;

17) Law Supplementing Articles 25 and 38 of the Republic of Lithuania Law on Value Added Tax;

18) Law Amending and Supplementing Articles 17, 18, 26, 27, 28 and 41 of the Republic of Lithuania Law on Value Added Tax;

19) Law Amending Articles 4, 5, 6, 16, 17, 19, 20, 23, 25, 29, 35 and 36 of the Republic of Lithuania Law on Value Added Tax;

20) Law Amending and Supplementing Articles 2, 4, 9, 10, 11, 12, 13, 21, 22, 23, 24, 25, 35, 36, 38 of the Republic of Lithuania Law on Value Added Tax;

21) Law Amending Article 41 of the Republic of Lithuania Law on Value Added Tax;

22) Law Amending Article 38¹ of the Republic of Lithuania Law on Value Added Tax;

23) Law Amending and Supplementing Articles 5, 6, 8 of the Republic of Lithuania Law on Value Added Tax;

24) Law Amending Article 18 of the Republic of Lithuania Law on Value Added Tax;

25) Law Amending and Supplementing Article 17 of the Republic of Lithuania Law on Value Added Tax;

26) Law Supplementing Article 4 of the Republic of Lithuania Law on Value Added Tax;

27) Law Amending Article 17 of the Republic of Lithuania Law on Value Added Tax;

28) Law Amending and Supplementing Articles 4, 13, 14 of the Republic of Lithuania Law on Value Added Tax;

29) Law Amending Article 23 of the Republic of Lithuania Law on Value Added Tax;

30) Law Amending and Supplementing Articles 6, 7, 17, 25, 32, 35, 36, 41 of the Republic of Lithuania Law on Value Added Tax;

31) Law Amending Articles 4 and 23 of the Republic of Lithuania Law on Value Added Tax;

32) Law Repealing the Law Amending Article 4 of the Republic of Lithuania Law on Value Added Tax and Amending Article 4 of the Law on Value Added Tax;

33) Law Amending Articles 13 and 25 of the Republic of Lithuania Law on Value Added Tax;

34) Law Amending Articles 13 and 14 of the Republic of Lithuania Law on Value Added Tax;

35) Law Amending Article 25 of the Republic of Lithuania Law on Value Added Tax;

36) Law Amending Article 4 of the Republic of Lithuania Law on Value Added Tax;

37) Law Amending and Supplementing Article 25 of the Republic of Lithuania Law on Value Added Tax and Supplementing the Law with Article 38²;

38) Law Supplementing Article 13 of the Republic of Lithuania Law on Value Added Tax;

39) Law Amending Articles 17 and 32 of the Republic of Lithuania Law on Value Added Tax;

40) Law Amending Article 36 of the Republic of Lithuania Law on Value Added Tax;

41) Law Amending Article 5 of the Republic of Lithuania Law on Value Added Tax.

Invoking paragraph 2 of Article 71 of the Constitution of the Republic of Lithuania, I  promulgate this Law passed by the Seimas of the Republic of Lithuania.

Chairman of the Seimas

of the Republic of Lithuania                       Artūras Paulauskas

Annex 1

to the Law of the Republic

of Lithuania No IX-751

5 March 2002

List of Agricultural Services

1 Field work, reaping and mowing, threshing, baling, collecting, harvesting, sowing and planting.

2. Packaging and preparation for market,  for example drying, cleaning, grinding, disinfecting and ensilage of agricultural products.

3.      Storage of agricultural products.

4.      Stock minding, rearing and fattening.

5. Hiring out, for agricultural purposes, of equipment normally used in agricultural, forestry or fisheries undertakings.

6. Destruction of weeds and pests, dusting and spraying of crops and land.

7. Operation of irrigation and drainage equipment.

Annex 2

to the Law of the Republic

of Lithuania No IX-751

5 March 2002

Legal Acts of the European Union with which Provisions of the Law on Value Added Tax have been Harmonized

1. Council Directive of 28 May 1969 (69/169/EEC) on the harmonization of provisions laid down by law, regulation or administrative action relating to exemption from turnover tax and excise duty on imports in international trade (amended by Second Council Directive of  12 June 1972 (72/230/EEC), 78/1032/EEC: Third Council Directive of 19 December 1978, 78/1033/EEC: fourth Council Directive of 19 December 1978, 81/933/EEC: Council Directive of 17 November 1981, 82/443/EEC: Council Directive of 29 June 1982, Council Directive of 30 April 1984 (84/231/EEC), Council Directive of 8 July 1985 (85/348/EEC), Council Directive of 16 March 1987 (87/198/EEC), Council Directive of 21  December  1988 (88/664/EEC), Council Directive of 7 March 1989 (89/220/EEC), Council Directive of 13 March 1989 (89/194/EEC), Council Directive of 27 March 1991 (91/191/EEC), Council Directive of 19 December (91/673/EEC, Council Directive of 14 December 1992 (92/111/EEC), Council Directive of 14 February 1994(94/4/EC) and Council Directive  of 20 July 2000 (2000/47/EC).

2. Sixth Council Directive of 17 May 1977 (77/388/EEC) on the harmonization of the laws of the member states relating to turnover taxes – common system of value added tax: uniform basis of assessment  (amended on 26 March 1980 by  Eleventh Council Directive of 26 March 1980 (80/368/EEC),  Tenth Council Directive of 31 July 1984 (84/386/EEC), Eighteenth Council Directive of 18 July 1989 (89/465/EEC), Council Directive of 16 December 1991 (91/680/EEC), Council Directive of 19 October 1992 (92/77/EEC), Council Directive of 14 December 1992 (92/111/EEC), Council Directive of 14 February 1994 (94/4/EC), Council Directive of 14 February 1994 (94/5/EC), Council Directive of 22 December 1994 (94/76/EC), Council Directive of 10 April 1995 (95/7/EC), Council Directive of  25 June 1996 (96/42/EC), Council Directive of 20 December 1996 (96/95/EC), Council Directive of 12 October 1998 (98/80/EC), Council Directive of 25 March 1999 (1999/49/EC), Council Directive of 17 June 1999, (1999/59/EC), Council Directive of 22 October 1999 (1999/ 85/EC), Council Directive of  30 March 2000 (2000/17/EC), Council Directive of 17 October 2000 (2000/65/EC), Council Directive of 19 January 2001 (2001/4/EC), Council Directive of 20 December 2001 (2001/115/EC), Council Directive of 7 May 2002 (2002/38/EC), and Council Directive of 3 December 2002 (2002/93/EC).

3. Council Directive of 19 December 1978 on the exemption from taxes of imports of small consignments of goods of a non-commercial character from third countries  (78/1035/EEC) amended by Council Directive  of 17 November 1981 (81/933/EEC) and Council Directive of December 20 1985 (85/576/EEC).

4. Eighth Council Directive of December 6 1979 on the harmonization of the laws of member states relating to turnover taxes- – arrangements for the refund of value added tax to taxable persons not established in the territory of the country.

5. Council Directive of 28 March 1983 determining the scope of Article 14 (1) (d) of Directive 77/388/EEC as regards exemption from value added tax on the final importation of certain goods (amended by Council Directive of 8 July  1985 (85/346/EEC), Council Directive of  13 June 1988 (88/331/EEC) and Commission Directive of 7 March 1989 (89/219/EEC).

6. Thirteenth Council Directive of 17 November 1986 (86/560/EEC) on the harmonization of the laws of member states relating to turnover taxes – arrangements for the refund of value added tax to taxable persons not established in the community territory.

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