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The Agreement on International Carriage of Passengers (SMPS), May 30, 1999, in force since May 1, 2002, Official Gazette “Valstybes zinios” No. 6-117, 2004.
This agreement establishes the order for direct international carriage of passengers and/or luggage by rails and combined rail and water transport among the following countries: Azerbaijan, Albania, Byelorussia, Bulgaria, Vietnam, Georgia, Kazakhstan, China, Peoples’ Democratic Republic of Korea, Kirghizia, Latvia, Lithuania, Moldova, Mongolia, Poland, Russia, Slovakia, Tadzhikistan, Turkmenistan, Uzbekistan, Ukraine, Czech Republic and Estonia.
This agreement is binding to the rail companies, passengers, senders and receivers of unaccompanied luggage.
The agreement is not applicable to the carriage of accompanied and unaccompanied luggage in case: 1) the stations of departure and destination are in the same country; 2) the stations of departure and destination are in the same country and luggage is carried by transit through the territory of the other state in the carriages of the sending country; 3) the luggage is carried from the station of one country to the station of other country by transit through the territory of the third country, which is not a party of the agreement, and is carried in the carriages of the sending or receiving country.
The agreement does regulate the following legal relations: carriage of passengers, carriage of accompanied and unaccompanied luggage, carriage fees, the liability of the rail companies, the submitting of claims, rules on jurisdiction, prescription, the settlements between the rail companies.
The Law on the Funds of Charity and Support of the Republic of Lithuania, No. IX-1940, December 22, 2003, in force since January 13, 2004, Official Gazette “Valstybes zinios” No. 7-128, 2004.
The amendment law on Funds of Charity and Support was also adopted in order to coordinate its provisions with the Civil Code of the Republic of Lithuania.
The law specifies the definition of the charity and support fund by indicating that the fund shall be a non-profit public legal person, which purpose is to provide charity and / or support.
The law requires determining the objectives of the fund in detail by stipulating the spheres and the kinds of the activities in the bylaws of the fund. The law was supplemented with the provisions that enable the funds to provide charity and support themselves.
The law does not specify the rights and obligations of the fund. It only states that the funds shall have the rights (including the right to carry out the allowed commercial activities), which are not limited by Civil Code or other laws of Lithuania and which are indispensably related with the activities and objectives of the fund. However there are some new restrictions in the law as well. For instance, the funds are not allowed to transfer the property of the fund free of charge to the founder of the fund under the agreement on use or trust; to pledge the property of the fund; grant the credits; to purchase the goods or services for obviously unreasonable price; to grant warranties or sureties for the obligations of other persons, etc.
The new law waives the provision that used to oblige the funds to have paid administration.
The Law on the Amendment of the Law on State and Municipality Enterprises, No. IX-1895, December 16, 2003, in force since January 7, 2004, Official Gazette “Valstybes zinios” No. 4-24, 2004.
In order to resolve the difficulties that appear in practice the amendment law coordinated the provisions of the Law on State and Municipality Enterprises (State enterprises) with the provisions of Civil Code.
The law provides a definition of the owner of enterprise. The owner of the state enterprise is the state and the owner of the municipality enterprise is the respective municipality. The institution of the state or municipality exercises the rights of the enterprise owner. The powers of the institutions when exercising the aforementioned rights are particularly determined in the law.
The law clearly states that the state and municipality enterprises are public legal persons. Therefore they may acquire only those rights and obligations that do not contradict to the bylaws and the objectives of the enterprise.
Taking into account the requirements that are established by the Civil Code the contents of the bylaws of state enterprise were accordingly specified.
The law on state enterprises waives the administration as the body of management and states that Head of the enterprise shall be a mandatory body of management. There was established in the law that the bylaws of the enterprise may stipulate the collegial body of management – the board. The powers of the board, the formation and the recall thereof shall be determined in the bylaws of the enterprise.
The state or municipality institution is entitled to appoint the auditors.
The provisions regarding the allocation of the profits were also modified. Besides all, it is stated that at most 1/5 of the profits may be spent on the premiums of the employees.
The law states that state enterprise may be restructured into budget institution, public institution, public limited liability company, and municipality enterprise. The law determined the terms and conditions following which the state enterprise should be restructured.
The Law on the Amendment and Supplement of the Law on Value Added Tax (VAT), No. IX-1960, January 15, 2004, enters into force on May 1, 2004, Official Gazette “Valstybes zinios” No. 17-505, 2004.
The Law on VAT was amended and supplemented with the provisions, by which it was harmonized with the legislation of EU. The amendment law will enter into force on the day of Lithuania’s accession to the EU, i.e. May 1st of 2004.
The new definitions for goods, VAT payer, VAT commercial invoice were provided in the law. There is clearly established in the law that the goods shall be any object (including the money of numismatic purpose), as well as electric power, gas, heating and other sources of energy. The computer medium shall not be deemed as an item in case it contains software, which is not standardized. The latter shall be defined as the software that was not created for mass using and which may be used on their own only after the consumers were limitedly instructed in operating of standardized functions thereof.
VAT payer is a person who was registered as VAT payer by the tax administrator, including other identification for VAT purposes, in case there is a identification number, except the identification of the persons for the purpose of compensational VAT rate schemes.
VAT commercial invoice is a document, which formalizes the delivery of goods or provision of services, as well as the payment of advance and which shall conform to all the mandatory requirements that were established in the law. In case such document is written in another member state, when there is an obligation to do that, it shall be deemed as the VAT commercial invoice provided the document meets the requirements of that member state.
The law was supplemented with the provisions, which determine the object of VAT. There was additionally established that the object of VAT shall be the acquisition of goods in the territory of the state from other member state, in case:
1.Natural or legal person, who is not VAT payer, acquires the goods from VAT payer, unless such delivery of goods is deemed as carried out in the territory of the state.
2.Any person acquires brand new vehicles;
3.Any person acquires the goods that are liable for excise tax and the obligation to calculate tax rises in Lithuania, except those natural or legal persons, who are not VAT payers.
The law establishes that besides delivery of goods (provision of services), acquisition of goods and import of goods, the VAT object also shall be the occurrence of the circumstances that are determined in the article 53 of the law. This article states special rules, which applies to certain cases of international commerce. The circumstances and transactions that are regulated by the aforementioned article either are not imposed by import VAT or taxed with zero VAT rate. The following transactions on delivery of goods shall be imposed by zero VAT rate in case:
a)The goods are delivered to the storing places that are supervised by the customs for temporary storing;
b)The goods to be delivered are brought to the free zone or placed into the free warehouse;
c)Any of the following customs procedures were formalized to the goods to be delivered: customs storing, customs supervised processing or temporal bringing in for processing without imposing import levies;
d)The goods were carried into the warehouses that are exempted from VAT;
e)Other cases that are provided in the law.
The detailed and finite list of the aforementioned transactions is established in the law.
The law states that the following acquisition of goods shall not be deemed as VAT object:
1)The acquisition of goods from other member state in case zero VAT rate would be applicable if the delivery would take place in the territory of the state;
2)The acquisition of second hand goods, art works, antique from other member state in case they are acquired from the VAT payer, who is engaged in trading of such goods, or from the auction organizer and their delivery was imposed VAT in the state of departure.
3)The acquisition of vehicles from other member state in case they are acquired from the VAT payer who is engaged in trading of such goods, and in case their delivery was imposed VAT in the member state of departure in conformity with special provisions that shall be applicable to the second hand vehicles.
Lithuanian companies that carry the goods from the EU states will not have an obligation to formalize import declarations and other documents related to import. After May 1 2004 Lithuanian natural and legal persons also will not be obliged to formalize the export declarations and customs procedures. However in most cases it will be allowed to apply zero VAT rate further on provided buyer of the goods is registered as VAT payer and the sold goods are brought out of Lithuania.
Lithuanian VAT payers when selling the goods to VAT payers of other member states in order to apply zero VAT rate must:
Indicate the code of VAT payer of other member state in the VAT commercial invoice;
Submit the evidences that the goods were brought out of Lithuania;
Quarterly declare to the tax inspectorate the fact that goods were delivered to the member state of EU.
It should be pointed out that the law establishes a simpler procedure for VAT invoicing. There will be a possibility to write the VAT commercial invoice by electronic means of communication provided the contents of the invoice is legible.
The law states that the carriage of goods for business purposes from one member state to another member state in case the owner of the goods does not change will be also considered as the VAT taxable delivery. After the goods are brought to the other member state zero VAT rate may be applicable.
The law also states that in case Lithuanian VAT payers sell the goods to the persons of other member states that are not VAT payers, Lithuanian VAT payer shall deduct 18 percent of VAT in respect of such goods and pay to the budget of Lithuania the difference between VAT. In case the value of the sold goods exceeds the amount, which is fixed in another member state, Lithuanian VAT payer shall additionally register as VAT payer in that state. The respective provision is established in the law regarding the foreign persons who trade in Lithuania.
The other novelty of the law is the provision that obliges to declare VAT an pay the tax those natural and legal persons of Lithuania, who within a calendar year acquire the goods from the member states of EU for the value, which exceeds 35000 LTL.
The new regulations on taxation of vehicles, which are applicable in EU, will come into force after this law becomes effective. The main rule is that the new vehicles are always imposed with VAT in the buyer’s state and the VAT rate of that state shall be applicable.
The law provides expanded list of services for which service provider shall calculate VAT. Some services will be imposed with VAT in that member state where the buyer is registered as VAT payer, disregarding the place where the services actually were rendered.
The law newly regulates the VAT taxation order for carriage of goods that is done within the territory of EU. The main principle is that the services of carriage of goods are deemed to be rendered in the place where the route began, and the additional services – there where they were actually rendered.
After the law comes into force, the VAT payers will be granted the codes of VAT payer that will be valid throughout the EU.
The law determines that in case the supplier brings the goods out of EU area, the delivered goods shall be taxed with zero VAT tax rate.
The Law of the Republic of Lithuania on Ratification of Convention between the Kingdom of Spain and the Republic of Lithuania for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital, No. IX-1861, December 2, 2003, in force since January 29, 2004, Official Gazette “Valstybes zinios” No. 15-459, 2004.
Convention between the Kingdom of Spain and the Republic of Lithuania for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income and on Capital (Convention) was signed on July 22nd 2003 in Madrid, Spain.
The convention shall be applicable to the persons who are residents of one or both of the contracting states. For the purposes of the Convention, the term "resident of a Contracting State" means any person who, under the laws of that State, is liable to tax therein by reason of his domicile, residence, place of management, place of incorporation or any other criterion of a similar nature. In case an individual is a resident of both Contracting States the Convention determines the rules that enable to eliminate such problem. The term "permanent establishment" means a fixed place of business through which the business of an enterprise is wholly or partly carried on, including a place of management; branch; office; factory; workshop, and a mine, an oil or gas well, a quarry or any other place of extraction of natural resources.
The existing taxes to which the Convention shall apply are in particular: a) in Spain: (i) the income tax on individuals; (ii) the corporation tax; (iii) the income tax on non residents; (iv) the capital tax; (v) local taxes on income and on capital; b) in Lithuania: (i) the tax on profits of legal persons; (ii) the tax on income of natural persons; (iii) the tax on enterprises using state-owned capital; (iv) the immovable property tax.
The part III of the Convention regulates the taxation of various sources of income in the state, resident of which is a person who receives the incomes or in the state where such incomes occur.
The double taxation is avoided by using the method of credit. Where a resident of contracting state derives income or owns elements of capital which, in accordance with the provisions of this Convention, may be taxed in another contracting state, then it is allowed to deduct from the taxes of that resident, which were paid in the first state, an amount equal to the taxes paid in another contracting state.
The Treaty of Lithuania’s Accession to EU, April 16, 2003, enters into force on May 1, 2004, Official Gazette “Valstybes zinios” No. 1-1, 2004.
On the 16th of September 2003 the Seimas of the Republic of Lithuania ratified the Treaty of Lithuania’s accession to the European Union.
The full text of the Treaty was promulgated in the first 2004 issue of Official Gazette “Valstybes zinios”. According to the Treaty the Czech Republic, the Republic of Estonia, the Republic of Cyprus, the Republic of Latvia, the Republic of Lithuania, the Republic of Hungary, the Republic of Malta, the Republic of Poland, the Republic of Slovenia and the Republic of Slovakia become member states of the European Union as well as the parties of the Treaties, on which the European Union is found, as amended from time to time.
The terms and conditions of the accession as well as necessary amendments to the treaties were established in the Act, which was appended to the Accession Treaty. The provisions of the Act are constitutive part of the Accession Treaty.