Lithuania: Indirect tax updates

Reports highlighting recent value added tax (VAT) guidance

Reports highlighting recent value added tax (VAT) guidance

The KPMG member firm in Lithuania has prepared reports highlighting recent value added tax (VAT) guidance.

VAT deduction available on purchased electric cars from 2023

Input VAT deduction will be available for passenger (M1 category) electric cars the value of which does not exceed €50,000 (including VAT). This will also apply to electric car leases. Therefore, the lessor's confirmation of the value of the electric car is required.

Application of reduced VAT rates as of 2023

The main VAT changes as of 2023 include:

  • The reduced VAT rate of 9%:
    • Applies to electronic books and electronic non-periodical information publications
    • Is extended indefinitely for accommodation services and for attendance to all types of art and cultural institutions or events
    • Is extended until 31 December 2023 for catering services provided by restaurants, cafes and similar catering establishments and the sale of takeaway food (excluding alcoholic beverages)
    • Is extended until 30 June 2023 for performance services provided by performers as well as for sport events, sport clubs and other persons providing services similar to services of sport clubs
  • The reduced VAT rate of 5% applies to food for special medical purposes, provided that the cost of the purchase of such goods is fully or partially reimbursed

Deduction of input VAT when the seller is insolvent (CJEU judgment)

The European Union Court of Justice (CJEU) held that the relevant Council Directive concerning the common system of VAT must be interpreted as precluding the practice of the Lithuanian tax authority under which, in the context of the sale of an item of immovable property between taxable persons, the purchaser is denied the right to deduct input VAT merely because they knew or should have known that the vendor was in financial difficulty, or even insolvent, and that that circumstance could result in the vendor not paying or not being able to pay VAT into the public purse.

The case is: No.: C-227/21.

Obligation to adjust VAT deductions in the event of the taxable person being placed in liquidation procedure (CJEU judgment)

The CJEU held that a Lithuanian taxpayer must adjust the deduction of input VAT paid on the acquisition of goods or services for the production of a fixed asset if the fixed asset produced has not been and will not be used for a taxable economic activity, due to:

  • Decision of the owner or sole shareholder to liquidate the taxable person
  • Request of the taxable person to be deregistered from the VAT register
  • The fact that the taxable person has been deregistered

The case is: No.: C-293/21.

Read a February 2023 report prepared by the KPMG member firm in Lithuania


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