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Refund of Value Added Tax

EcovisOn 12 February 2008 European Council adopted a directive laying down detailed rules for the refund of value added tax, provided for in Directive 2006/112/EC, to taxable persons not established in the Member State of refund but established in another Member State (hereinafter - Directive) which had to be implemented till 1 January 2010. Hereby since that date a new procedure of the refund of Value Added Tax (hereinafter - VAT) to taxable persons not established in the Member state of refund but established in another Member State was applied in European Union.

The main goals of the Directive were to simplify and modernise the procedure by allowing the use of modern technologies. Directive creates an electronic system by which the taxable person submits his application for a refund via a web portal developed by the Member State in which he is established. Member States were obliged to make this web portal available on 1st January 2010.

Directive was implemented into Lithuanian law by the amendments of the Law on Value Added Tax (hereinafter - Law).

Taxable persons (natural or legal persons, also organisations and other units performing an economic activity) established in one of European Union member countries have a right for the refund of VAT paid in Lithuania for the goods or services if they satisfy following conditions:

  • during the refund period, he has not had in Lithuania the seat of his economic activity, or a fixed establishment from which business transactions were effected, or, if it’s a natural person his domicile or normal place of residence was not in Lithuania;
  • during the refund period, he has not supplied in Lithuania any goods or services which are subject of VAT, with the exception of the following transactions: the supply of transport services and services ancillary thereto which according to the Law are charged by zero-rate of VAT or the supply of goods and services to a person who is liable for payment of VAT.

Taxable persons established other European Union country has a right to refund VAT [aid in Lithuania for:

  • fuel
  • accommodation
  • admissions to exhibitions
  • other goods or services which this taxable person acquired for his economic activity taxable by VAT.

The refund period shall not be more than one calendar year or less than three calendar months. Refund applications may, however, relate to a period of less than three months where the period represents the remainder of a calendar year.

The amount indicated in the refund application cannot be less than 400 EUR (1380 LTL) if this application relates to a refund period of less than one calendar year but not less than three months of the same year. And it cannot be less than 50 EUR (170 LTL) if the refund application relates to a refund period of a calendar year or the remainder of a calendar year.

To obtain a refund of VAT in Lithuania, the taxable person shall address an electronic refund application to Lithuania and submit it to the Member State in which he is established via the electronic portal set up by that Member State. In this application taxable person has to provide following information:

  • Applicant's name and full address.
  • Address for contact by electronic means.
  • Description of the applicant's economic activity for which the goods and services are acquired.
  • Refund period covered by the application.
  • Declaration by the applicant that he has supplied no goods and services deemed to have been supplied in Lithuania during the refund period.
  • Applicant's VAT identification number or tax reference number.
  • Bank account details including IBAN and BIC codes.
  • All information related to acquired goods and services (details of every invoice or importation document). Goods or services have to be described by the codes established in art. 9 of the Directive or some Commission Regulation No 1174/2009 of 30 November 2009 laying down rules for the implementation of Articles 34a and 37 of Council Regulation (EC) No 1798/2003 as regards refunds of value added tax under Council Directive 2008/9/EC

If taxable amount on an invoice or importation document is 1000 EUR (3500 LTL) or more and where the invoice concerns fuel, the threshold is 250 EUR (900 LTL), then the applicant has to submit by electronic means a copy of the invoice or importation document. If Lithuanian tax administrator has reasonable doubts concerning submitted application it has a right to require sending via electronic means or post a copy or original of the invoice or importation document and in that case limitary amount is not applicable. Information transmitted by electronic means cannot exceed 5 MB. If copies of all documents exceed this amount of information then a taxable person attach to his application only a part of documents and the rest sends by email which will be indicated to him by the Lithuanian tax administrator when it receives his application.

The refund application has to be be submitted to the Member State of establishment at the latest on 30 September of the calendar year following the refund period. The application has to be submitted in Lithuanian or English. If attached documents are in English its confirmed translation also has to be supplied.

If Lithuanian tax administrator doesn’t require any supplementary information the decision on the refund of VAT has to be taken within 4 months since the day the application was received.  If Lithuanian tax administrator require supplementary information it has to be presented within 1 month and the decision on the refund of VAT has to be taken within 2 months since the day the supplementary information was received. When the refund application is approved, refunds of the approved amount shall be paid by Lithuania at the latest within 10 working days of the expiry of the established deadline for the decision taking.

This new procedure is favorable for the taxable person since the Member States shall be liable to pay interest if the refund is made late. Interest shall be calculated from the day following the last day for payment of the refund until the day the refund is actually paid. The amount of interest is defined every quarter of the year by the order of Minister of Finance. For the second quarter of 2011 the interest was defined 0,03 percent for every delayed day.

As the conclusion it can be noted that the new VAT refund procedure is simpler as the paper procedure set out in legislation in 1979 was replaced by the electronic one. Taxable persons do not need any more to send original invoices to all Member States in which they incurred VAT in order to receive a refund; they present only one VAT refund application in his Member State of establishment or residence.

Giedre Uleviciute
ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora
E-mail: giedre.uleviciute@ecovis.lt - Internet: www.ecovis.lt