VMI has revised its guidance on input VAT deductions, clarifying who is eligible, what is excluded, and the rules for both domestic and foreign taxpayers.
Lithuania’s State Tax Inspectorate (VMI) has issued an updated commentary on the right to deduct input value added tax (VAT) under Article 57 of the Law on VAT, published on 28 November 2025.
The revised guidance clarifies which taxpayers are eligible for VAT deduction, outlines exclusions, and provides practical examples for domestic, EU, and international transactions.
The update confirms that registered VAT payers can generally deduct input VAT, but excludes certain groups, such as entities registered only for intra-EU acquisitions, special e-services schemes, or under the small business scheme (SVS). Non-registered persons exceeding the VAT threshold may still recover VAT on taxable activities by filing the non-registered taxpayer VAT return (FR0608). Foreign entities operating in Lithuania may also claim deductions on taxable transactions carried out locally.
The commentary provides detailed guidance on self-assessed VAT, reverse charge VAT, capital contributions, asset transfers, and intra-EU acquisitions. It also highlights that taxpayers can voluntarily waive their right to deduction to manage future VAT liabilities related to personal consumption or asset use. The guidance aligns Lithuanian practice with binding European Court of Justice rulings, reinforcing that the right to deduction is fundamental and immediate.
