The 2012 worldwide VAT, GST and sales tax guide

408 L ITHUANIA
differs by more than 5% from the provisional percentage used, an
adjustment calculation must be made.
Capital goods. Capital goods are items of capital expenditure that
are used in a business more than one year. Input tax is deducted
in the VAT year in which the goods are acquired. The amount of
input tax recovered depends on the taxable person’s partial deduction
recovery position in the VAT year of acquisition. However,
the amount of input tax recovered for capital goods must be
adjusted over time if the taxable person’s partial exemption
recovery percentage changes during the adjustment period or if
the capital goods are either used for nontaxable supplies or written
off. The adjustment may result in either an increase or a
decrease of deductible input VAT, depending on whether the taxable
person’s recovery percentage increased or decreased in the
year, compared with the year in which the capital goods were
acquired.
In Lithuania, the capital goods adjustment applies to the following
assets for the number of years indicated:
• Property immovable by its nature, including improvement of
buildings or structures: adjusted for a period of 10 years
• Other types of tangible capital assets legally required to be
depreciated over a period of at least four years for purposes of
the taxes on profit or income: adjusted for a period of five years
The adjustment is applied each year following the year of acquisition,
to a fraction of the total input tax (1/10 for immovable
property and 1/5 for other tangible capital goods).
Refunds. If the amount of input tax that is deductible for a VAT
period exceeds the amount of output tax that is chargeable in the
same period, the taxable person has a VAT credit. The credit must
first be used to offset other taxes payable. If the amount of VAT
credit exceeds all taxes payable, the excess is refunded.
G. Recovery of VAT by nonestablished businesses
Lithuania refunds VAT incurred by businesses that are neither
established nor registered for VAT in Lithuania. Nonestablished
businesses may claim Lithuanian VAT to the same extent as VATregistered
businesses.
For businesses established in the EU, refund is made under the
terms of the EU Directive 2008/9/EC. For businesses established
outside the EU, refund is made under the terms of the EU 13th
Directive. The refund scheme for non-EU countries applies in
accordance with the reciprocity principle.
To claim a refund, a nonestablished business must satisfy both of
the following conditions:
• It must not have a business establishment in Lithuania through
which activities are performed (or if the claimant is an individual,
he or she must not be a permanent resident in Lithuania).
• It must not make taxable supplies of goods or services in
Lithuania.
However, if the claimant supplies international transport services
or sells goods that are taxed through the application of the reversecharge
mechanism, it may still apply for a VAT refund.