August, 2013 

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

Kind regards,
KPMG in Lithuania

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Personal Income Tax (PIT)

The commentary of the Law on PIT regarding services under a service receipt was adopted and the commentary regarding attribution of income to A and B class income was updated.

The commentary of Subpar. 55, Par. 2, Art. 17 of the Law on PIT was adopted. It sets forth what income is treated as received from agricultural and forestry services under a service receipt. Furthermore, the taxation procedure is explained and practical examples are provided.

The commentary of Article 22 of the Law on PIT, regulating attribution of income to classes, was updated. In the commentary it is specified what income is attributed to A and B classes and practical examples are provided.

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Value Added Tax (VAT)

The commentary of Art. 15 of the Law on VAT regarding the taxable value was supplemented.

The commentary of Par. 5, Art. 15 of the Law on VAT regarding the taxable value was supplemented with the criteria and the practical examples when the services related to leasing and maintenance of leased assets shall be deemed to be one transaction of real estate leasing. The commentary also specifies when the elements of leasing and insurance of a vehicle shall be deemed to be one or two transactions.

The commentary of Art. 32 of the Law on VAT regarding the sale or other transfer of property immovable by its nature was supplemented.

The commentary of Art. 32 of the Law on VAT regarding sale or other transfer of property immovable by its nature was supplemented. This commentary of par. 1 of this article was supplemented with the provisions and practical examples regarding treatment of sales transactions of old buildings along with land according to the practice of the European Court of Justice.

Furthermore, Par. 2, Art. 32 was supplemented with an extensive commentary when a land plot is deemed to be a land plot for construction.

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Real Estate Tax (RET)

As of 2014, the RET relief applied to agricultural entities will get limited.

On 27 June 2013, Subpar. 9, Par. 2, Art. 7 of the Law on RET, specifying that legal entities, the income from agricultural activities of which amount to over 50 percent of their total income, shall be released from RET, was amended.

As of 1 January 2014, the mentioned entities shall be exempt from RET on the real estate which is used wholly or part thereof for generation of:

• Income from agricultural activities and (or)

• Income of cooperative companies (cooperatives) from sale of agricultural products acquired from their members

According to the currently effective wording of the law, RET shall not be paid on the real estate of legal entities, the income from agricultural activities of which amount to over 50 percent, i.e. irrespective whether it is used for generation of income from agricultural activities or not.

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Miscellaneous

The EU Directive related to the disclosure of payments to governments was adopted.

At the end of July 2013, the EU Directive 2013/34/EU related to the disclosure of various payments to governments came into force. The directive shall apply to the entities operating in the fields of land depth exploration, development and extraction, oil and gas and virgin forestry industries.

According to the provisions of the directive, the entities operating in the mentioned fields shall file reports on the payments to governments exceeding 100 thousand euro related to the mentioned activities, including local authorities, organisations and companies run by governmental institutions.

The purposes of the reporting is to support the governments in implementation of the principles and criteria of the Mining Industry Transparency Initiative according to which governments, having received payments from the entities operating in the mentioned sectors and within jurisdiction of the governments (in cash or in kind), such as royalties, dividends, infrastructure improvements, license fees etc., shall report to their citizens.

The mentioned EU directive shall be implemented in the internal legal acts of member states by 2016.

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The newsletter has been prepared in accordance with legislation effective as at 16 August 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

Lawyer

+370 46 480 012