Tax & Legal Alert Contacts Issue No. 173 ▪ 21 February 2014

Tax & Legal Alert
Issue No. 173 ▪ 21 February 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
El.p. [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
February 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

Excise Duties News

VAT news from the EU

Corporate Income Tax news

Personal Income Tax and Social
Insurance Tax

General Information

Accounting News

Legal News

Tax Case-Law
Legal News
Tax Case-Law
Tax News
Value Added Tax (VAT)
Transactions with farmers, subject to
the flat-rate compensation scheme
The Tax Authorities additionally commented on
new form FR0617K on the purchase of agricultural
products and (or) services from farmers subject to
the flat-rate compensation scheme.
In box 11 of form DE0617K the code of the farmer
may be entered either in 12 or 13 digits (for farmers
whose codes have not been recoded yet).
The new form FR0617K should be used for
submitting (or adjusting) data from 1 January 2014
and for subsequent periods.
Letter No (18.2-31-2)-RM-304 issued by the Tax
Authorities on 15 January 2014.
Excise Duties News
Updated forms FR0630 and Fro630A
Excise declaration forms FR0630 and FR0630A are
issued in new versions, which together with their
annexes can be submitted from 1 February 2014.
The excise duty rate in box R4 of annex FR0630R,
box 20 of annex FR0630S, box V4 of annex
FR0630V of excise declaration form FR0630 and in
box 20 of annex FR0630K, box R4 of annex
FR0630R of excise declaration form FR0630A has
to be entered in ten-thousandth Lithuanian litas
precision.
Order No VA-4 of the Tax Authorities adopted on 23
January 2014.
VAT news from the EU
Publication on the VAT rates in the EU
The European Commission published an overview
of „VAT rates applied in various Member States“ on
13 January 2014.
Corporate Income Tax (CIT)
Regarding filing of a report on charity
The rules for completing monthly report on support
and (or) charity granted to one person as well as
support received from one person exceeding LTL
50.000 (form PLN203) were updated.
The rules were supplemented with a provision that
in cases when support is granted by a small
partnership, which has no senior accountant, the
completed return has to be sign by a member of the
small partnership who is responsible for
bookkeeping.
According to the updated rules, errors and
inaccuracies made in submitted returns have to be
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Tax & Legal Alert
February 2014
Tax News
Accounting
News
corrected by adjusting the return of that month
(previously inaccuracies could be adjusted by
making correct entries in a return of a subsequent
month or in an annual return). Monthly returns can
be adjusted until the last day when the last return of
that calendar year can be submitted, i.e. until
January 15 of the subsequent calendar year.
The rules were also supplemented with examples
explaining the cases when the return has to be
submitted.
Letter No (32.42-31-1)-R-766 issued by the Tax
Authorities on 28 January 2014.
Personal Income Tax and Social
Insurance Tax
Personal information related to social
insurance is provided via phone
From 14 January 2014 there is a possibility to get
the information related to pension, social benefits
and unemployment benefits via phone by calling
Social Security Authorities’ information centre at
1883.
Individual seeking for such information has to
provide the name, surname and unique
identification code to the consultant. The unique
identification code can be found by logging into
electronic individual service system EGAS or
obtained at any Social Security Authorities’ regional
department.
Legal News
Tax Case-Law
At the moment this information is available only for
individuals, however, companies should be able to
get the information via phone in the future as well.
For more information please see the press release
dated 14 January 2014.
Personal income taxation rules from 1
January 2014
Lithuanian Tax Authorities announced new
summary “Personal income taxation rules from 1
January 2014”. The information included in the
summary was agreed with Social Security
Authorities.
Letter No (9.7)I-72) issued by the Tax Authorities
on 9 January 2014.
Updated form FR0573
Declaration form FR0573 (4th version) and its
supplements FR0573A and FR0573U on PIT
withheld and paid were updated as well as the rules
on completion and submission.
Additional forms FR0573A and FR0573U were
supplemented with fields ‘code type’ where it
should be indicated what kind of identification code
– tax payer’s personal code, VAT payer’ code or
personal identification number from personal
document – was provided about individual for
whom the payments attributed to Class A income
were made.
Regarding the amended provisions of the Law on
PIT related to interest income taxation, rules on
completion of the form were supplemented with
new income type codes. New code (69) indicates
interest income from non-equity government
securities since starting from 1 January 2014 such
income is not subject to PIT. The rules state that all
types of interest paid to non-residents should be
declared by the company which pays the interest
even if it is non-taxable.
Please note that all types of payments made to the
members of the board and the members of
supervisory board who are Lithuanian nonresidents have to be declared.
Employers are obliged to declare all the additional
(voluntary) health insurance payments made on
employee’s behalf, life insurance and pension
contribution amounts even if such payments are
non-taxable (do not exceed 25% annual employee’s
employment related gross income).
The above mentioned changes are applicable when
declaring annual Class A payments made in 2014
and later.
Letter No (32.42-31)-1-RM-935 issued by the Tax
Authorities on 17 January 2014.
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Tax & Legal Alert
February 2014
Tax News
Accounting
News
General Information
Regarding Double Taxation Avoidance
Treaty between Lithuania and Kirghizia
Starting from 1 January 2014, treaty between
Lithuania and Kirghizia regarding the avoidance of
double taxation and the prevention of fiscal evasion
came into force.
Letter No (32.42-31-1)-RM-218 issued by the Tax
Authorities on 10 January 2014.
Regarding ratification of other treaties
on avoidance of double taxation
The Parliament of Lithuania accepted draft laws on
ratification of the treaties regarding the avoidance
of double taxation and the prevention of fiscal
evasion signed between Lithuania and Cyprus,
Kuwait, Morocco, Turkmenistan, and the United
Arab Emirates which will be discussed during
Session IV of the Parliament in spring.
Legal News
Tax Case-Law
Accounting
news

differences between assets and tax base occurred
due to deductible temporary differences and
amount of calculated deferred income tax;

influence of changes in taxable temporary
difference for determining deferred income tax.
Amendments to the Methodology of the
6th and 24th Business Accounting
Standards (BAS)
Legal News
The methodology of the 6th BAS “Explanatory
notes” was supplemented with the new practical
examples of:
Draft Law on Adoption of the euro in
the Republic of Lithuania

explanations of the significant business related
information given in the explanatory notes;

significant amounts in financial statements and
explanations of their changes.
The methodology of the 24th BAS "Corporate
income tax" was supplemented with the new
interpretations and examples of:

If the parties to the treaties finish all the necessary
ratification procedures until the end of 2014, the
treaties may come in force starting from 1 January
2015.
offsetting advance corporate income tax with the
obligation of corporate income tax;

calculating deductible temporary differences
when inventories are depreciated at the net
realisable value;
Report No SPP-111 of the evening sitting of the
Parliament of Lithuania.

training costs of not employment related natural
person paid by the company and recognized in
accounting, recorded and presented in the
financial statements;
The draft law determines the procedure for
introduction of the euro in Lithuania and removing
the litas from circulation.
This draft law determines that the litas will be
exchanged to the euro:

For indefinite period of time, free of charge,
without any limitations by the Bank of
Lithuania;

Free of charge, without any limitations for 6
months by commercial banks. After 6 months
the Bank of Lithuania will approve a list of bank
units, which will provide such exchange service
for another 6 months;

60 days after introduction of the euro, free of
charge, however limiting the exchange amounts,
by AB „Lietuvos paštas“.
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Tax & Legal Alert
February 2014
Tax News
Accounting
News
Funds in financial institutions will be recalculated
automatically free of charge on the day of
introduction of the euro in Lithuania.
Draft Law on Adopting the Euro in the Republic of
Lithuania No XIIP-1450.
Proposal to legalize currency exchange
services in non-credit institutions
It is proposed to abolish the requirement for legal
entities to have credit institution’s licence, in order
to engage in currency exchange operations.
According to the current procedure, the currency
exchange services can be provided only by credit
institutions with appropriate licences for such
services.
The draft law proposes that the entities seeking to
provide such services would be able to get a
separate licence for this particular activity.
Such licences would be issued and supervised by the
Bank of Lithuania.
Draft Law on Currency Exchange Operators No
XIIP-1471.
New version of the Law on Gambling
The draft law determines the new category of
gaming machines, which can be installed in other
places than casinos i. e. bars, restaurants, cafes,
hotels, etc.
Legal News
Tax Case-Law
The draft law would also determine the procedure of
remote gambling (e. g. internet gambling).
be issued for legal entities established in EU
member state or their branches.
Draft Law of new version of Law on Gambling No
XIP-4393(2).
It is also proposed to prohibit outdoor advertising of
alcohol. According to current regulations there are
some exceptions, for which this prohibition is not
applicable, therefore it is sought to remove these
exceptions and to prohibit any advertising of
alcohol.
Proposals to amend the Law on Tax
Administration
The aim of these amendments is to determine that
the tax administrator can transfer the recovery of
tax overdue to central manager of state-owned
property instead of AB „Turto bankas“ on the
grounds of representation or by transferring the
rights of claim.
The aim of these amendments is to manage state‘s
resources more efficiently by assigning the
management to a single institution.
Draft Law on amending articles 33, 39 and 93 of the
Law on Tax Administration No XIP-3949(3).
Consideration to extend issuance of
licence to engage in trade of alcohol and
to prohibit outdoor advertising of
alcohol
According to current regulations entities planning
to engage in permanent or seasonal alcohol trade
have to be incorporated in Lithuania. Such
requirement does not apply for the issuance of a
single (one-time) licence.
The draft law aims to change such restrictions and
to determine that licence for such activities can also
Draft Law on Amending Articles 17, 18, 18(2), 22,
29, 33, 34, 35, 37, 38, 39 and Amendment of Section
2 of Chapter III, Supplementation with Article 371
of the Law on Alcohol Control No 14-891.
Tax Case-Law
Elimination of violations does not affect
the obligation to pay penalty interest
On 29th January, 2014 the Supreme Administrative
Court of Lithuania (hereinafter – SACL) issued a
ruling in case No A-438-154-14. The dispute arose
from decisions, by which it was refused to grant the
applicant‘s request to relieve him from penalty
interest. According to the applicant, penalty interest
should have been reduced because the tax
administrator was not operative enough and that
the applicant cooperated with the tax administrator
and eliminated the irregularities immediately.
The SACL constituted that applicant‘s cooperation
with the tax administrator does not constitute
grounds to relieve the applicant from penalty
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Tax & Legal Alert
February 2014
Tax News
Accounting
News
interest. The SACL explained that penalties are not
a sanction for any tax law violations, but a security
for tax obligations. The penalty interest is calculated
as a compensation for that the state during
particular period of time wasn‘t able to use its own
funds. The fact that applicant adjusted the tax
refund and paid taxes accordingly, does not
constitute the ground to relieve applicant from
paying the penalty interest, however, it constitutes a
ground to relieve the applicant from paying fines.
Legal News
Tax Case-Law
The VAT treatment of goods for
provisioning of vessels, when they are
sold to undisclosed intermediary
On 7 November 2013 the European Union Court of
Justice (EUCJ) was asked for a preliminary ruling in
case C-526/12 (Fast Bunkering Klaipeda), where
the Lithuanian Commission on Tax Disputes asks,
whether the VAT exemption is applicable to
supplies made not to the operator of the vessels, but
to undisclosed intermediaries, where at the time of
the supply the ultimate use of the goods is known
and confirmed by evidence.
It is important to point out that the EUCJ analyzed
a similar question in case C-185/89 (Velker
International) the decision in which was
commented in the official Commentary on Art.44 of
the Lithuanian VAT Law.
Tax & Legal Alert
Lithuania • 21 February 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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