VAT in Baltic States

VAT in Lithuania

Standard VAT Rate: 21%
Reduced VAT Rates: 5%, 9%

Registration of VAT Taxable Persons:

In the companies, where the total amount of the consideration for goods and services supplied during the last twelve months exceeded LTL 155,000 (EUR 45,000) starting from the month when the above threshold was exceeded, must calculate, in accordance with the procedure,  VAT on supply of goods and services and pay it into the State Revenue budget.

The subdivision of a foreign taxable person located in the territory of Lithuania where that foreign taxable person supplies goods and/or services within the territory of Lithuania must calculate the VAT on the goods and services supplied by the foreign taxable person within  the territory of that country and pay the VAT into the State Revenue budget. The subdivision must, following the prescribed procedure, file an application to register the foreign taxable person as a VAT payer, without regard to the exceptions indicated above in respect of the LTL 155,000 (EUR 45,000) threshold.

Foreign person registration as VAT payer in Lithuania

When a non-resident taxable person supplies services or goods in Lithuania, the fixed establishment owned by this non-resident person in Lithuania have to register for VAT purposes and calculate and pay VAT. The requirement to appoint the fiscal representative is not applied for EU taxable persons. These persons can be VAT registered directly.

Non-resident taxable persons have to register for VAT purposes before the first supply subject to Lithuanian VAT.

A non-resident taxable person, is not required to register as a VAT payer, when it is engaged only in VAT-exempt activities or activities which are outside the scope of VAT or subject to zero-rated VAT in Lithuania, or if the taxable person supplies services where reverse-charge applies.

When begins to supply goods or services and the place of such a supply is Lithuania.

If acquires goods in Lithuania from another EU member state and the value of such goods was above the limit of LTL 35 000 (EUR 10159) the last twelve months or it is foreseen that the value of such goods will be above the limit of LTL 35 000 (EUR 10159) this calendar year.

If the Lithuania was chosen as the place for distance selling or the value of the goods supplied in Lithuania under the distance selling scheme is above the limit of LTL 125 000 (EUR 36283), or the goods supplied under the distance selling scheme are subject to excise duties.

Obligation to register as VAT payer arise for the foreign person though the goods and services supplied are subjected to the 0% VAT rate

  • supplies goods which are placed in temporary storage in the place of temporary storage under the customs control;
  • supplies goods which are placed in a free zone or placed in a free warehouse;
  • supplies 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;
  • supplies goods where the goods are transported to a VAT warehouse or goods which are placed under the arrangement of a VAT warehouse within the territory of the supply country where this circumstance is still in effect during the supply;
  • supplies agency/agent’s services in transactions specified above or other transactions of supply of goods;
  • supplies services directly relating to the goods which are placed under certain custom procedures or which are placed under the arrangement of VAT warehouse.

When does the obligation to account for VAT in relation to the goods or services supplied in Lithuania arise to the buyer

  • the foreign person is not established in Lithuania and supplies the services – transfer of copyright and related rights, consultants, lawyers, auditors, accountants, services, telecommunication services, electronically supplied services, etc., and the buyer of the services is a taxable person;
  • the buyer is a taxable person and acquires the services of hiring out of transport means which are supplied by the person established outside the European Community and the effective use of the supplied service takes place within the territory of the country;
  • if the buyer is registered as VAT payer in Lithuania and the goods acquired are installed or assembled in Lithuania;
  • if the buyer is registered as VAT payer in Lithuania and acquires the services of valuation of movable property, also work thereon -repair, maintenance, adjustment, etc., processing and alteration;
  • if the buyer is registered as VAT payer in Lithuania and acquires natural gas or electricity, and the place of supply of such goods is considered to be Lithuania;
  • if the buyer is registered as VAT payer in Lithuania and acquires the agent’s services;
  • if the buyer is registered as VAT payer in Lithuania and acquires the transportation 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;
  • if the buyer is registered as VAT payer in Lithuania and acquires the goods which are sold to him under the triangular trade scheme.

If the foreign person carries out other activities than mentioned above and does not register as VAT payer in Lithuania, the buyer of the supplied services or goods must account for the VAT if the buyer is a taxable person.

Persons from territories outside the area of the European Communities are registered through their branch in Lithuania, and where they do not have such branch – through the fiscal agent appointed to act in Lithuania.

The requirement to appoint a fiscal agent to act in Lithuania is not applicable to persons from EU member states. Such persons may be registered as VAT payers directly. 

VAT Compliance

Detailed rules regulate reporting requirements of Lithuanian transactions for Value Added Tax purposes. These include: invoice requirements, timeliness for an invoice to be issued, invoice and credit notes corrections rules, foreign currency reporting requirements and exchange rate sources, correction of previously submitted returns and accounting records that must be maintained for VAT purposes.

VAT Returns

A tax period is a calendar month.
The tax authorities may grant a right to a VAT payer to have a semi-annual tax period if all the income of the VAT payer from the economic activities during the preceding calendar year does not exceed LTL 200,000 (approximately EUR 58,000).

Quarterly VAT returns are filed by VAT payers that supply services by electronic means which are subject to the special taxation scheme.

Annual VAT returns are submitted if, after the end of the calendar year concerned, adjustments have to be made. Corrections of input VAT related to actual data on VAT-exempt and VAT-taxable turnover have to be made in annual VAT returns.

If the tax period is a calendar month, VAT returns must be filed by the 25th day of the next month.

If the tax period is a calendar half year, VAT returns must be filed by the 25th day of the first month following that period.

If the tax period is a calendar quarter, VAT returns must be filed by the 20th day of the first month following that period.

Annual VAT returns must be filed by 1 October of the following year.

Intrastat and EC Sales Lists

The Intrastat discloses details of movements of goods between Member States which take place for commercial reasons, recording the movement whenever goods enter the territory of Lithuania from other Member States or leave it to other Member States.
Declaration must be filed monthly once the annual threshold is exceeded.

The due date for submission is the 10th business day of the month following the reference period.

VAT in Estonia

Standard VAT Rate: 20%
Reduced VAT Rate: 9%

Registration of VAT Taxable Persons

VAT registration limit is generally EUR 16,000.

Foreign taxable persons engaged in business in Estonia through the permament establishment have to register for VAT purposes in Estonia, if the taxable supply of goods or services, except the transfer of fixed assets, exceeds EUR 35,000 as calculated from the beginning of a calendar year.

Foreign taxable persons need not register in case the taxable supply consists of zero-rated supply only, except for intra-Community supply of goods.

Foreign taxable persons without permanent establishment in Estonia need not register if the reverse charge mechanism applies.

A foreign trader have to register for VAT in the following cases:

  • When a trader, with no permanent establishment in Estonia and liable to taxation in another country, makes a taxable supply in Estonia that is not taxed by the Estonian taxable person.
  • When a trader, liable to VAT in another Member State, makes a distance sale to a person in Estonia who is not registered for VAT purposes, and the taxable supply of the distance sale exceeds EUR 35,000 as calculated from the beginning of the calendar year.
  • When a trader, liable to VAT in another Member State, makes a distance sale of goods subject to excise duties to a natural person in Estonia for personal purposes.

When a trader, liable to VAT in another Member State, makes distance sale to an Estonian, the trader can register for VAT voluntarily.

A person liable for VAT in another country without a permanent establishment in Estonia may appoint a tax agent. The Tax Board must approve the tax agent.

Using the 0% VAT rate

Business to business (B2B) transactions made in EU are called as Intra Community Supply and taxed with rate 0% VAT, if the following requirements are met:

  • Both businesses are VAT payers;
  • The accompanying documents of the goods/services (including invoices) indicate that the receiver of the goods is another Member State taxable person with a valid VAT registration number;
  • The goods are dispatched or transported from inland to a destination in another Member State and this is certified by the existing goods transportation documents;
  • The sales invoice includes the notification of 0% VAT and the note for Article in Directive 2006/112/EC.

Receiving the invoice with 0% means the recipient of goods/services shall apply VAT Reverse Charge Mechanism, what means that the declaration obligation lies on the recipient of goods/services.

The Seller in the Intra Community Supply shall submit together with the monthly VAT declaration also the special Intra Community Supply Declaration.

VAT Compliance

Detailed rules regulate reporting requirements of Estonian transactions for Value Added Tax purposes. These include: invoice requirements, timeliness for an invoice to be issued, invoice and credit notes corrections rules, foreign currency reporting requirements and exchange rate sources, correction of previously submitted returns and accounting records that must be maintained for VAT purposes.

The monthly VAT returns should be submitted to the Tax and Customs Board and VAT paid by the 20th of the next calendar month at the latest. If this is not done the tax officials have the right to impose a fine and delete your VAT ID from the register.

Claiming overpaid VAT back in Estonia

Overpaid VAT arises, when the VAT paid once with the goods/services purchased for business purposes is higher than VAT charged, selling the goods or services of your business. Overpaid VAT shall be covered by the State, where the business mainly locates and where a company is VAT registered.

There is two ways, claiming the VAT back, if the overpayment is recognized:

  • Through monthly VAT declarations the goods/services bought and sold are declared. The overpayment is calculated in the end of declaration form. The declaration, including the overpaid VAT is considered also as the claim of overpaid VAT refund, what means that the additional application for the amount is not required. Estonian Tax and Customs Board examines the declaration, if the refundable amount is high, the Board may ask additional questions about the business and particular invoices/contracts. If the amount is justified, the refundable VAT is transferred to the tax payers bank account within 2 weeks.
  • Through Cross-Border Refund System the VAT is overpaid in another EU state. If the goods/services, bought with foreign VAT are used for the business purposes in Estonia, Estonian VAT payer has a right to apply the overpaid VAT back from Estonian Tax and Customs Board, who itself contacts with the foreign tax authority, issues required evidences (scanned invoices are accepted) and applies the overpaid VAT back. The procedure takes longer than Estonian internal procedure.

Intrastat and EC Sales Lists

The Intrastat discloses details of movements of goods between Member States which take place for commercial reasons, recording the movement whenever goods enter the territory of Estonia from other Member States or leave it to other Member States.
Declaration must be filed monthly once the annual threshold is exceeded.

The due date for submission is 14th of the month following the calendar month to which the declaration relates.