Tax & Legal Alert Contacts Issue No.178 ▪ 18 July 2014

Tax & Legal Alert
Issue No.178 ▪ 18 July 2014
Contacts
Kristina Kriščiūnaitė
Country Managing Partner,
Head of Tax & Legal Services
Email: [email protected]
Tel: +370 5 239 23 00
Nerijus Nedzinskas
Email: [email protected]
Tel.: +370 5 239 23 50
Aušra Miltenytė
Email: [email protected]
Tel.: +370 5 239 23 71
Lina Surplienė
Email: [email protected]
Tel. +370 5 239 2372
PricewaterhouseCoopers, UAB
J. Jasinskio 16B, Vilnius
Tel: +370 5 239 23 00
www.pwc.com/lt
The Tax & Legal Alert is produced by PwC Lithuania Tax & Legal Services
Tax & Legal Alert
July 2014
Tax News
Accounting
News
Tax & Legal Alert
provides the latest information on
changes in Lithuanian legislation most
urgent to our clients.
In this issue:

Value Added Tax news

Corporate Income Tax news

Personal Income Tax and Social
Insurance Tax

Accounting News

Legal News

Tax Case-Law
Legal News
Tax Case-Law
Tax News
Updated official Commentary on
calculation of VAT amount payable for
the tax period
Value Added Tax (VAT)
The official Commentary on Art. 89 of the VAT Law
was updated and supplemented.
Amended official Commentary on
application of 0% VAT rate on
transportation of goods outside the
territory of the EU
The official Commentary on Art. 41 of the VAT Law
was amended.
The main condition for application of 0% VAT rate
on transportation of goods outside the territory of
the EU is actual transportation of such goods
outside the territory of the EU and the
documentation held by the seller which proves the
application of 0% VAT rate.
Please note that application of 0% VAT rate is no
longer affected by the fact in which EU Member
State the export procedure was started, i.e.
regardless of the fact whether the export procedure
was started in Lithuania or in any other EU member
state (it does not matter who is indicated as the
exporter in the export declaration).
Letter No. (18.2-31-2)-RM-10083 issued by the Tax
Authorities on 16 June 2014.
In cases when import VAT is adjusted under the
decision of the Customs Department in tax period
different than the tax period when the initial VAT
return was submitted, the difference of the adjusted
import VAT amount must be reported in the VAT
return of the tax period when such an adjustment
was calculated.
Moreover, provisions regarding the filling of VAT
return FR0600 were updated.
Letter No. (18.2-31-2) - RM -10315 issued by the
Tax Authorities on 19 June 2014.
Supplemented official Commentary on
proof that must be held by the seller for
application of 0% VAT rate
The official Commentary on Art. 56 Part 1 of the
VAT Law was supplemented with new explanations.
Electronic documents which prove the
transportation of goods from Lithuania to another
country and are held in the information system of
the VAT payer can be accepted as proof for the
application of 0% VAT (in cases when such
documents are stored/archived and are easily
accessible to the Tax Authorities, e.g. the data of the
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information system of cargo transported via
Klaipėda Seaport - KIPIS).
Regarding non-taxable life insurance
income of insurance companies
is non-taxable, if the profit received does not exceed
LTL 10,000.
Please note that such electronic documents may still
be not sufficient to prove the application of 0% VAT
rate, i.e. the Tax Authorities may ask for additional
supporting documents.
Due to changes in Lithuanian Law on CIT (law No
XII-661, 20 December 2013) for non-life insurance
investment income of insurance companies, the
official Commentary of the Law on CIT has been
updated.
Please note that the tax relief is also applicable if the
securities are sold to the issuer established as an
open-end investment company.
Letter No. (18.2-31-2) - RM -10320 issued by the
Tax Authorities on 16 June 2014.
Corporate Income Tax (CIT)
Regarding notification on ongoing
investment project
As from 1 January 2015 a special form (PLN210 and
its appendices) will have to be submitted by the
companies which are planning to take advantage of
the investment project relief. It will replace the
current free-form notice.
The form will be online only and it will require less
data from the company which will reduce time costs
and mistake possibility.
Changes indicate that non-taxable income of
insurance companies, inter alia, includes dividends
received by life insurance companies (acting as
professional pension accumulation funds) from
investments of pension fund assets. Such dividends
are not subject to withholding tax.
Letter No. (18.10-31-1)-RM-10077 issued by the Tax
Authorities on 16 June 2014.
Personal Income Tax and Social
Insurance Tax
New Commentary regarding the
taxation of income received from the
sale of shares and derivatives
It is important to note that only the data provided
under the rules introduced by the Order No VA–34
dated 5 June 2014 can be adjusted by re-submitting
form PLN210. Information on investment projects
performed in previous periods may be adjusted by
submitting a free-form notice approved by the TA.
The new official Commentary on Art. 17, Part 1,
Clause 30 of the Law on PIT provides an
explanation regarding the taxation of income
received from the sale of securities and derivatives
in 2014 and the following periods.
Letter No. (32-42-31-1)-RM-9612 issued by the Tax
Authorities on 10 June 2014.
Please be reminded that starting from 2014 income
received from the sale of securities and derivatives
The official Commentary also provides detailed
explanations regarding the application of the tax
relief in case of collective investment.
Letter No. (32-42-31-1)-RM-10378 issued by the
Tax Authorities on 20 June 2014.
The official Commentary regarding the
taxation of income received from the
sale of asset and derivatives was
updated
The updated official Commentary on Art. 19 of the
Law on PIT explains that compulsory payments
related to the acquisition and the sale of asset or
derivatives can be deducted from the taxable
income.
Please note that if an individual chooses the
acquisition method (i. e. the securities are acquired
through a broker) or the currency and, therefore,
incurs additional expenses, such expenses are not
attributed to the acquisition costs and they cannot
be deducted from the taxable income.
Please also note that if derivatives can be acquired
only through financial brokerage companies or
commercial banks, such commission fees are
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attributed to the acquisition costs and they are
deducted from the taxable income.
Letter No. (32-42-31-1)-RM-10378 issued by the
Tax Authorities on 20 June 2014.
The official Commentary regarding the
attribution of income to classes was
updated
The updated official Commentary on Art. 22 of the
Law on PIT explains that interest income received
by Lithuanian tax residents is attributed to class B
except for interest income received from other
individuals.
Interest income received by Lithuanian tax nonresidents is attributed to class A.
Letter No. (32.42-31-1)-RM-9922 issued by the Tax
Authorities on 13 June 2014.
Accounting
news
Amendments to the Methodology of the
8th and 24th Business Accounting
Standards (BAS)
The methodologies of 8th BAS “Equity“ and 24th
BAS “Income Tax“ were changed regarding
amendments of the expansion of the 12th BAS
„Tangible assets“ on explanation of revaluation
Legal News
Tax Case-Law
reserve accounting and recognition of the deferred
tax liability. These methodologies were updated by
introducing new examples.
These amendments came into force on 1 July 2014.
Amended European Commission
regulations on international accounting
standards
Law Amending Law on Alcohol Control No. XII934.
The European Commission published the
Regulation (EU) No 634/2014 which amended the
Regulation (EC) No 1126/2008. The changes are
related to the Interpretation 21 (“Levies”) of the
International Financial Reporting Interpretations
Committee.
The amended interpretation addresses the
accounting for a liability to pay a levy if that liability
is within the scope of IAS 37 “Provisions,
Contingent Liabilities and Contingent Assets“.
13 June 2014 European Commission Regulations
(EU) No. 634/2014.
Legal News
Amendments to Law on Alcohol Control
came into effect
Law on Alcohol Control now determines that licence
for permanent or seasonal alcohol trade can be
issued not only for legal entities, established only in
Lithuania, but also for legal entities, established in
EU Member States, or their branches.
For more information about them please see our
newsletter of February 2014, No. 173.
Amendments to Law on Companies and
Law on Financial Institutions came into
effect
According to these amendments public limited
companies (PLCs) will have to establish at least one
collegial management body in the company –
management board or supervisory board as from 1
July 2015.
Also, in order to ensure one-stage management
structure, supervisory board does not have to be
formed and all supervisory functions may be
delegated to the management board.
According to the new regulation, companies will be
entitled to pay funds in advance, grant loans or
issue guarantees if by these actions it is intended to
create conditions to acquire shares of the company
group in cases, when:

company pays funds in advance, grants a loan
or issues a guarantee for employees of the
company group or other persons, if the true
intention of these actions is to create
conditions for the employees of the company
group to acquire shares of the company;
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financial institutions will be entitled to provide
financial aid for persons, when by such aid it is
intended to create conditions for the person to
acquire shares of the financial institution.
However, the above exception cannot be applied, if
by such actions, equity of the company would
become lower than the sum of paid share capital,
mandatory reserve and reserve for acquisition of
own shares.
The amendments also establish that when the
shares of the company are subscribed by a person,
acting on its behalf, but for the company’s interest,
it is considered that the share subscription
agreement is concluded by the same person.
These amendments came into force on 17 June
2014. Amendments related to the establishment of a
collegial management body will come into force on 1
July 2015.
Law Amending and Supplementing Law on
Companies No. XII-912.
Law Supplementing Law on Financial Institutions
No. XII-913.
Law on the Fundamentals of Free
Economic Zones amended
Legal uncertainty has been cleared by determining
that managing company of free economic zone
(FEZ) is entitled to lease the whole territory of the
FEZ as well as a part of it.
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Also, possibility for investors to rent plots in the
FEZ has been determined even in those cases where
the managing company is not established.
These amendments shall come into force on
1 January 2015.
For more information about the changes please see
our newsletter of April 2014, No. 175.
Law Amending Law on Fundamentals of the Free
Economic Zones No. XII-940.
Tax Case-Law
The sale of discount card – VAT taxable
On 12 June 2014 European Union Court of Justice
ruled in case C-461/12 (Granton Advertising BV),
where it was analysed whether the sale of a discount
card is VAT exempt (transactions in „other
securities“ or „other negotiable instruments“).
According to the EUCJ, since the card confers on its
holder only a right to obtain reductions in the prices
of goods and services offered by affiliated
businesses, it could neither be treated as acquiring a
right of ownership of Granton, nor as a claim/right
against that company, nor constitute a payment
instrument as a way of transferring money, like
payments, transfers and cheques, therefore, such a
transaction should be VAT taxable.
More criteria were mentioned in the case regarding
the definition of “other securities” and “other
negotiable instruments”.
Unlawful removal from customs
supervision leads to customs debt
On 12 June 2014 EUCJ ruled in case C-75/13 (SEK
Zollagentur), where the situation was analysed
when the non-Community goods were brought to
European Community (under temporary storage).
After several days the authorised consignor haulage company declared the goods under the
external Community transit procedure (to
Germany), however, the goods were not dispatched
as they were not found in the warehouse. Later,
after discovering the goods at the warehouse, a new
transit procedure was formed and the goods were
dispatched. The goods were taxed for import taxes
twice:
a)
b)
on the first transit, under the receipt of
notification from the recipient that the
goods were not received – the customs
debtor – the authorised consignor haulage company;
on the last transit when the goods were
released for free circulation in the country
of destination – customs debtor – the
recipient of goods.
EUCJ confirmed such taxation, stating that the
goods left for temporary storage must be deemed to
have been removed from customs supervision if
they are declared for an external Community transit
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procedure, but are not dispatched. The customs
debtor becomes the person, who placed the goods
for transit procedure - authorised consignor.
Tax & Legal Alert
Lithuania • 18 July 2014
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professional advice specific to their situation. No liability is accepted for acts or omissions taken in reliance upon the contents of this alert.
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