STI has clarified that VAT registration for cross-border transactions does not automatically require businesses to pay VAT on domestic sales if their turnover remains below the EUR 45,000 threshold. The guidance also confirmed that businesses could correct VAT returns if they had incorrectly paid VAT on domestic sales.
Lithuania’s State Tax Inspectorate (STI) has clarified that businesses required to register for VAT because of cross-border transactions with other EU Member States do not automatically have to charge and pay VAT on domestic sales, provided their annual domestic turnover remains below the EUR 45,000 threshold.
The guidance addresses the application of Article 71¹(9) of the Lithuanian Law on VAT in the context of Directive (EU) 2020/285, which introduced a special VAT scheme for small businesses to reduce their VAT obligations on cross-border supplies within the EU.
VAT registration and domestic sales
A business may be required to obtain a Lithuanian VAT identification number because it acquires goods or services from other EU Member States or supplies services to customers in those countries. However, such registration does not, by itself, create an obligation to calculate and pay VAT on domestic supplies in Lithuania.
The domestic VAT exemption remains available as long as the value of supplies made in Lithuania does not exceed the EUR 45,000 VAT registration threshold. Businesses must therefore distinguish between VAT registration requirements arising from cross-border transactions and their obligations concerning domestic sales.
Correction of VAT returns
Businesses that have incorrectly calculated and paid VAT on domestic sales while remaining below the EUR 45,000 threshold may adjust their VAT return data to correct the errors.
The guidance clarifies how the domestic VAT exemption applies to businesses that are registered for VAT because of cross-border activities, helping them determine their VAT obligations on Lithuanian sales.
