On 31 December 2018, the Lithuanian Official Gazette published an order for the transfer pricing (TP) rules. The new requirements generally reflect measures implementing recommendations under the OECD’s base erosion and profit shifting (BEPS) project. According to the order the new TP documentation requirements were introduced and apply to related-party transactions conducted in 2019 and subsequent years. The order includes following measures:
- The definition of a “group of entities” has been expanded.
- The Master file must be prepared by Lithuanian residents and nonresidents with a permanent establishment (PE) in Lithuania that belong to an MNE group and whose revenue (attributed to a PE) in the previous tax period exceeded EUR 15 Million.
- The Local file documentation must be prepared by Lithuanian residents and nonresidents with a permanent establishment (PE) in Lithuania if revenue (attributed to the PE) in the previous tax period exceeded EUR 3 million.
- The Master and Local file documentation is to be prepared by the 15th day of the 6th month after the financial year-end.
- Updates of transfer pricing documentation can be made every three years if the conditions and circumstances of the underlying transactions remain unchanged. The data of controlled transactions must be updated annually.
- Exemptions for low-value transactions also have been introduced. Therefore from now, transfer pricing documentation will not be required if a controlled transaction or the sum of controlled transactions during the financial year does not exceed €90,000 per related party.
- Sanctions for non-compliance with new requirements have been tightened. Non-compliance with the transfer pricing documentation requirements will result in a penalty ranging from €1,820 to €5,590, and the penalty for repeated violations will range from €3,770 to €6,000.
