April, 2013 

Please enjoy the April edition of the Tax, Legal and Accounting Newsletter.

Kind regards,
KPMG in Lithuania


Personal income tax (PIT)

Personal income tax return and property declaration shall be due by 2 May.

As of 19 March preliminary formed PIT returns are available in the Electronic declaration system (EDS) of the state tax authorities.

The state tax authorities remind that income and property shall be declared by 2 May by state politicians, civil servants, members of the European Parliament, other persons specified in Art. 2 of the Law on Declaration of Personal Property of the Republic of Lithuania and their family members.

This year the list of the persons, that have to declare their property, has been expanded. The returns shall also be filed by heads of public and municipal institutions, their deputies, heads of subdivisions, as well as their deputies and their immediate family members; deputy heads of state enterprises and public limited liability companies of strategic importance to national security and enterprises important to ensuring national security, and their immediate family members; members of the European Commission nominated by the Government of the Republic of Lithuania, members of the Chamber of Audit, members of the European Union Court of Justice and members of the General Court of the European Union, members of the Regional Committees, members of the European Committees of Economic and Social Affairs, officials of judicial and other international institutions and their immediate family members etc.

Annual PIT returns shall be filed by residents of Lithuania who carry out individual activities, i.e. those who have registered individual activities with the state tax authorities or hold a business certificate – irrespective of the fact whether they have generated any income or not. Income shall also be declared by farmers and their partners. The individuals, who wish to apply a tax relief and get part of the expenses incurred refunded, should also declare their income.

It should be mentioned that by 2 May individuals shall notify the state tax authorities on the transactions concluded in cash when the amount exceeds Litas 50 thousand, they are not of a notary form and the income received from a transaction has not been declared with the state tax authorities.

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Social insurance

A new annex to the Form of SAV notification on self-employed persons.

The form of SAV notification on self-employed persons was supplemented with new annex SAV3DSD–M „Annual Income of Self-Employed Persons“.

This annex shall be filed when the insurer has not provided SAV notification or the data specified in the notification filed do not match with the data of the state tax authorities, therefore, a new notification for 2012 and subsequent tax years shall be filed.

Provisions of the rules for completion of the SAV notification related to filling out of the new annex were supplemented accordingly.

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Pension insurance

Individuals must decide on the method of pension funding.

On April 1, a new period has commenced for individuals to decide on their pension accumulation in the future.

The persons who prior to 2013 have signed contracts regarding participation in the private pension funding system must inform in writing their pension accumulation company by 1 September whether they choose to return to SODRA (the State Social Insurance Fund), or to continue accumulation by paying additional contributions for pension accumulation. If by 1 September a person does not notify the pension accumulation company on his decision, automatically the previously applied pension accumulation option will continue to be applied.

If contracts with private pension accumulation funds are signed in and after 2013, only the new pension accumulation method may be chosen, i.e. when additional pension accumulation contributions shall be paid. The new members of the pension system shall not be allowed to stop accumulation in private pension funds, i.e. to return to SODRA.

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Corporate income tax (CIT)

A new wording of the publication The Peculiarities of the Carry Forward of Tax Losses (the Cases of Reorganisation, Transfer, Restructuring and Liquidation).

The state tax authorities have prepared a new wording of the publication The Peculiarities of the Carry Forward of Tax Losses (the Cases of Reorganisation, Transfer, Restructuring and Liquidation).

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Value added tax (VAT)

Amendments to the Regulations of the VAT Invoice Register.

Amendments were made to the Regulations of the Issuance and Recognition of Accounting Documents Used for Tax Calculation and the Regulations of Handling of VAT Invoice Registers, Form FR0671 of the Data of Received VAT Invoices and Form FR0672 of the Data of Issued VAT invoices.

Editorial and technical amendments (in the rules and forms) related to the amendments to the Law on VAT, which came into effect as of 1 January 2013, set forth a possibility for a single VAT invoice for supply of goods and services where an obligation to calculate VAT occurs in the same calendar month. As the previous wording of the rules and forms specified that the term a joint VAT invoice shall be applied to goods or services jointly supplied by several VAT payers or several persons, therefore, editorial amendments were needed by which a joint VAT invoice is replaced by a single VAT invoice.

The terms for the purpose of the Law on VAT:

• A joint VAT invoice is used for supply of goods or services where an obligation to calculate VAT occurs in the same calendar month;

• A single VAT invoice is used when goods or services are jointly supplied by several VAT payers or several persons.

Please note/ be reminded that a single VAT invoice shall be used by advocates acting under the partnership framework as well as notaries working in a notary office under a joint activity contract.

The commentary of Part 1, Art. 101 of the Law on VAT with regards to taxation of tourism services was amended and supplemented.

The commentary of Part 1, Art. 101 of Section 2 of the Law on VAT regarding the taxation schemes of tourism services was amended and supplemented. The commentary discloses in detail the provisions applicable to tourism schemes acquired by a VAT payer from third persons and subsequently provided by the VAT payer in its name to end-users.

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Excise duties

Annex 1 to the Rules for Completion and Filing of Forms FR0630 and FR6030A of Excise Duty Declarations was amended.

This Annex was amended taking into account the amendments to the Law on Excise Duties related to excise duty rates to be applied on goods which are subject to excise duties.

The mentioned Annex shall be applied when Excise Duty Declaration Form FR0630 and Personal Excise Duty Declaration Form FR0630A and their Annexes are filed for tax periods commencing as of 1 January 2013 and for subsequent tax periods.

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Labour Law

The employer shall duly determine the grounds of termination of an employment contract.

In the ruling of 28 March 2013, the Supreme Court of Lithuania stated that when an employment contract is terminated on the initiative of an employee on the grounds of Part 2, Art. 127, the employer may not adopt a decision to terminate the employment contract on its own initiative according to Part 1, Art. 127 of the Labour Code unless the employee clearly and unambiguously expresses his will regarding the change of the grounds for termination of the employment contract or agrees with the proposal of the employer to terminate the employment on other grounds specified in the law.

In the case when an employee has not clearly stated in his application based on which Part (1 or 2), Art. 127 of the Labour Code he should be dismissed, the employer shall have an obligation to clear this issue out and evaluate the situation. For example, the employer, being aware that the person, who has filed an application regarding termination of the employment and has not indicated the specific grounds for termination, is of a retirement age, has no right to choose the employment termination grounds at its own discretion which are favourable to the employer.

When an employee is dismissed in accordance with Part 1, Art. 127 of the Labour Code, no severance pay is paid to him while termination of employment according to Part 2 results in appropriate compensation. Consequently, when the will of the employee regarding the grounds of employment termination is not clearly stated, the employer has an obligation to find it out.

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Accounting news

Amendment to 14 BAS Business Combinations.

The main amendments to the Standard are the following:

• In relation to the International Financial Reporting Standard 3, the concept Negative Goodwill was removed. Now, a portion of the value of net assets of the acquired entity or business exceeding the price paid by the acquirer of the entity or business may be recognised as a gain from a business combination. Final Provisions of the Standard define how to apply the new standard to the accounting of negative goodwill which is not fully amortised.

• The Standard determines the date of acquisition, outlines how to register reorganisation of a subsidiary and a parent after the date of acquisition when the financial data of the subsidiary company has not been consolidated before. The Standard contains clarification of the provision regarding the measurement of the acquired entity’s assets and liabilities at their fair value at the date of acquisition in reorganising the subsidiary and the parent only if this business combination is registered in accounting by applying the purchase method.

• In the Standard a new provision was introduced for measurement of assets and (or) liabilities related to business taken over by the acquirer at their fair value during the initial recognition. Also, the Standard contains clarification regarding the acquisition of the entity’s shares in stages, i.e. the total acquisition cost of investment is calculated in the stage when control over another entity is obtained.

• In the chapter Application of the Purchase Method, a new element has been added that allows more precise identification of the acquirer when control over another entity is obtained or when entities are reorganised by way of merger, i.e. if the values of net assets of merging entities are different, the entity with the higher value of net assets is likely to be the acquirer.

• Chapter V of the Standard contains clarified provisions regarding the period for adjustment of the acquisition cost of the entity and the amount of arisen goodwill. The Standard was added with a provision setting out what has to be recorded in accounting if additional amount payable cannot be reliably estimated as at the date of acquisition and if it is not included in the acquisition cost. In this case, it is recognised as contingent liability or contingent asset. The new standard defines that the adjustment period, when the amount payable can be reliably estimated, is the period until the last day of the next financial year. We note that, contrary to IFRS 3, the adjustment period as of the acquisition date provided for in the Standard is longer than 12 months. The requirement for valuation of acquired assets and liabilities was clarified – they are measured at their fair value. Also, the evaluation procedure was established for cases when the fair value cannot be reliably estimate d.

• The Standard contains clarified provisions regarding accounting of business combinations of entities under common control and provides for the possibility of the purchase method to be applied when preparing consolidated financial statements when entities under common control are reorganised by way of merger. The new standard imposes compliance with the same procedure as in cases when one of the entities under common control obtains control over another entity under common control or when one of the entities under common control acquires the entire or part of business of another entity under common control, i.e. allows entities the possibility of the purchase method application or of adding the carrying amounts of assets and liabilities of the acquired entity to the carrying amounts of the acquirer’s assets and liabilities.

The new 14 BAS is effective for financial statements of annual periods beginning on and after 1 January 2014. The earlier application of the Standard is also permitted.

The BAS was revised following the Order No. VAS-3 of 8 March 2013 of the Director of the Authority of Audit and Accounting.

European Commission Regulation amending international financial reporting standards (IFRS).

Commission Regulation No. 183/2013 of 4 March 2013 endorses the amendments to IFRS 1 ‘First-time Adoption of International Financial Reporting Standards’ relating to accounting for government loans.

The amendments to IFRS 1 deal with accounting for loans received from governments at a below market rate of interest. Their objective is to give first-time adopters of IFRSs relief from full retrospective application on transition to IFRSs. Thus, the amendments to IFRS 1 add an exception to the retrospective application of IFRSs to require that first-time adopters apply the requirements set out in International Accounting Standard (IAS) 39 Financial Instruments: Recognition and Measurement and IAS 20 Accounting for Government Grants and Disclosure of Government Assistance prospectively to government loans existing at the date of transition to IFRSs.

Any reference to IFRS 9 as laid down in the Annex to this Regulation should be read as a reference to IAS 39 as IFRS 9 has not been adopted by the European Union yet.

Each entity shall apply the amendments referred to IFRS 1, at the latest, as from the commencement date of its first financial year starting on or after 1 January 2013.

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The newsletter has been prepared in accordance with legislation effective as at 5 April 2013 which is subject to change retroactively or prospectively and any such change might affect the contents of the newsletter. We accept no obligation to update you should law or understanding change the contents of the newsletter in the future.

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.


Contact us:

Birutė Petrauskaitė

Birutė Petrauskaitė

Head of Tax and Legal

+370 5 2102600

Vita Šumskaitė

Vita Šumskaitė

Senior Manager, Tax

+370 5 2102600

Inga Šutaitė

Inga Šutaitė


+370 46 480 012