Lithuania: Change to VAT refund process effective 1 January 2021

Lithuania: Change to VAT refund process

An amendment to the value added tax (VAT) law regarding the process for refunds of VAT overpayments will be effective 1 January 2021.


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Under current rules, full refunds of VAT may not be refundable because of certain thresholds limiting the refundable amount. With the amendment, the restrictive thresholds will no longer apply. However, new restrictions will apply with regard to VAT-payers that are not compliant with the requirements set forth for “reliable taxpayers” under the Lithuanian law on tax administration.

Additional VAT developments

  • The Lithuanian VAT law was revised to clarify that the margin tax scheme applies to precious metals and stones only when such items can continue to be used for their intended purpose.
  • The tax authorities announced that until the end of the national state of emergency related to the coronavirus (COVID-19) pandemic, a reduced VAT rate of 5% will be applied to protective medical goods (such as face masks, respirators, etc.). The reduced VAT rate applies provided that the goods are used by healthcare institutions in providing healthcare services that are compensated pursuant to the Lithuanian law on health insurance.

Read an October 2020 report [PDF 183 KB] prepared by the KPMG member firm in Lithuania

Other recent tax developments in Lithuania include the following items:

  • The Lithuanian government and tax authorities will apply certain relief measures in response to the COVID-19 pandemic in an effort to assist taxpayers with ongoing obligations.
  • Deadlines for the mandatory disclosure of reportable cross-border tax arrangements were amended.

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