From 1st of May 2025, important changes to the Value Added Tax (VAT) Law came into force in Lithuania.
VAT Registration
One of the fundamental changes is the calculation of the VAT registration threshold. Until now, the VAT registration threshold of 45,000 euros was assessed based on the income received in the last 12 months. However, from 1st of May 2025, this procedure has changed. The new system provides that this threshold will need to be calculated based on the calendar year: both for the current and the previous year. This means that when assessing whether it is mandatory to register as a VAT payer, it will be necessary to review all income received for goods and services in Lithuania for 2024. If this income exceeds 45,000 euros, from 1st of May 2025, there will be an obligation to register as a VAT payer.
In the event that the amount of income in 2024 did not exceed 45,000 euros, the income for 2025 is monitored. If in the period from January 1st to December 31st, 2025, the total amount of income exceeds the established limit, VAT will be applied from the transaction by which this limit was exceeded. In such a case, it is also necessary to immediately submit an application for registration in the VAT register.
It is also important to note that deregistration from the VAT register will be possible only if the limit of 45,000 euros is not exceeded for two consecutive calendar years. This means that both in the previous and current years, income should not have exceeded the established limit, and there is no reason to believe that it will be exceeded in the future.
VAT obligation when purchasing services from abroad
Another important change is related to the purchase of services from abroad. From 1st of May 2025 persons whose income from activities in Lithuania does not exceed 45,000 euros and who are currently not required to register as VAT payers will have to do so if they purchase certain services from foreign taxable persons. This applies both to purchasing services from the European Union and from third-country entities, when, according to the provisions of the VAT Law, the place of supply of services is considered to be Lithuania.
Such persons will be able to apply the Small Business Scheme (SBS), which allows only the so-called “reverse charge” VAT to be calculated for services purchased from abroad. However, as long as their income in Lithuania does not exceed 45,000 euros, they will not be required to calculate VAT for goods or services provided here. However, it is important to note that persons applying the SBS will not be entitled to a VAT deduction.