Lithuania has amended its definition of a “reverse hybrid entity” to comply with the EU Anti-Tax Avoidance Directive (ATAD2). Previously, a Lithuanian entity was considered a reverse hybrid if it was owned by a tax resident of a foreign country, and that foreign country treated the entity as a separate taxable person, while Lithuanian law treated the entity as transparent for tax purposes. The new definition expands the percentage ownership condition to 50% or more, and it also applies to entities that are not collective investment vehicles. Law No. 2023-12400, which amended the definition of a reverse hybrid entity, entered into force on 23 June 2023.
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