About us

A recent trend has been that, in order to optimise taxes, the aim is not to create a group structure that crosses the borders of Lithuania, but to “bring back” to Lithuania the companies (holdings, SPVs) and other investments that have been “transferred” abroad. This trend has become more pronounced in recent years, as tax administrations have started to use more and more instruments to combat tax avoidance and aggressive tax planning (Organisation for Economic Co-operation and Development’s (OECD’s) project on Combating Base Erosion and Profit Shifting (BEPS), etc.).

In response, one of the projects had to review the structure of the client, a group managing a well-known shopping complex, where the group companies were established not only in Lithuania but also in jurisdictions such as Liechtenstein, Malta, etc. Our task was to simplify the group structure by eliminating non-Lithuanian companies and to propose alternatives to do so with the lowest possible tax burden and minimal risk.

Tax litigation practice shows that the most frequent issues raised (disputed) by the Inland Revenue are the right to deduct VAT, the validity of allowable deductions, and the satisfaction of the private needs of owners/managers. TaxLink has successfully represented the company’s interests in tax disputes with the Inland Revenue, justifying material write-offs on a site-by-site basis, defending the costs of rectifying construction defects, etc.

In some cases, the best outcome of a tax dispute is to invite the tax authorities to negotiate, agree on a certain amount of tax and thus bring the tax dispute to an end (such an outcome of a tax dispute was achieved in favour of a basketball club in a tax dispute concerning meal and prize allowances paid to basketball players and coaches – the negotiation led to a reduction of the initial tax and penalty amounts assessed by the tax authorities by up to 60%).

Both Lithuanian and foreign investors often seek to find out what financial, tax and legal risks may exist due to the company’s “history” before acquiring a particular company or part of its business. TaxLink has extensive experience in conducting reviews of companies engaged in a wide range of activities (services, manufacturing, trading).

In particular, in an exceptional situation, a client approached us at one of the last stages of a transaction, when the essential terms of the transaction had already been discussed and the transaction price had been agreed – the client intended to acquire two real estate properties for rent, one in Vilnius and the other in Kaunas. The seller developed each of the properties in separate special purpose vehicles (SPVs). After conducting tax audits of both companies’ 3-5 year tax liabilities (VAT, corporate income tax (CIT), personal income tax (PIT), real estate tax (RET) and social security contributions), we assessed the situations and clearly defined the size and level of tax risks and the most likely outcome of a tax dispute with the Inland Revenue Department. Based on our insights and recommendations, the investor renegotiated the price paid for the shares of one SPV and refused to buy the shares of the other SPV altogether, negotiating an asset deal vs. share deal.

We are faced with a wide range of situations where individuals receive various types of income, not only from Lithuania but also from other countries around the world. In such cases, individuals are faced with a number of questions as to how their global income should be taxed correctly, so that not only are their tax obligations correctly met, but also so that they do not unnecessarily pay too much tax in Lithuania or in the country of source of income.

Examples include situations where considerable effort is required to calculate the result of an investment in securities, where both the individual actively invests directly in shares of companies, government bonds and international funds of various countries, and also enters into options for risk management, as well as using international brokers for investment purposes.

We are proud of the fact that the fact that we have been entrusted with the GST filing obligations of the very wealthy has allowed us to accumulate many years of experience in filing not only ordinary income, but also, for example, The volume of transactions and the result (profit) are often so large that even the software itself generates an automatic message when filing the annual personal income tax return: please check whether you have entered the correct amount of income/expenses.

In a major construction project of a greenfield factory in the Kaunas Free Economic Zone (FEZ), we represented EU companies hired as contractors for certain works. In a complex construction process, we advised the contractors (EU companies) on VAT and permanent establishment (corporate income tax) obligations in Lithuania and helped them to comply with them properly.

After a Lithuanian living and working in the US started working at a Lithuanian university, the person contacted TaxLink to find out how to correctly tax the wages (salary) received from a Lithuanian employer in order to avoid double taxation. The complexity of the situation was added by the COVID-19 emergency (part of the time the person worked physically in Lithuania and part of the time remotely in the US).

The analysis of the situation showed that the Lithuanian employer was overtaxing the salary (Wages and Salaries) by deducting too much Sodos contributions and in some cases too much personal income tax (PIT). As a result of the incorrect taxation, a Lithuanian living in the US would receive significantly less after-tax wages, and in some months, the amount of income lost due to the incorrect taxation could be in the thousands. We are pleased to have helped the employer understand its tax obligations, correct the tax errors and pay the missing wages to our client.

A natural person has been involved in rural tourism for almost 10 years, using certain immovable and movable property purchased with EU support. The individual was a VAT taxable person and charged VAT on the rural tourism services and paid personal income tax (GPT), national social insurance (SSD) and compulsory health insurance (Sodra) on the profits. After deciding to sell the business and to cease self-employment, the individual had a number of questions – whether to sell the business/assets with or without VAT, whether to recover (refund) part of the input VAT on the assets, when it is better to cease self-employment (before or after the transaction), whether to tax the gain on the sale of the assets as a profit from the self-employment, or as a profit from the sale of the personal assets, etc.

By looking into the individual’s situation and analysing the data of his/her rural tourism activities over the whole period, we have answered all the questions raised, advised on the optimal time from a tax point of view to stop the individual activity and calculated the VAT, GPT and social security obligations related to the sale of the business and the stopping of the activity.

We are experienced and often analyse situations as to whether a foreign company providing services and goods/equipment to a Lithuanian client, e.g. services related to the design, installation and commissioning of an equipment/manufacturing line, is required to register for VAT in Lithuania and/or pay corporate income tax for activities carried out through a permanent establishment (PE) in Lithuania.

In one such case, we are pleased to have assisted a Polish company to optimally fulfil its tax obligations in Lithuania, where the project in Lithuania, both due to the specific nature of the project (the Polish company’s equipment was only an integral part of the Lithuanian client’s project, and therefore the work was carried out in stages with some interruptions, e.g. The project in Lithuania took much longer than planned (instead of the planned 5 months, the project in Lithuania took longer than the planned 5 months) due to both the COVID-19 emergency (the Polish company was not able to send its staff to Lithuania for a certain period of time), It took almost 1 year), and consequently, permanent establishment (corporate tax) obligations have arisen which were not planned at the beginning of the project.

A natural person develops real estate projects and operates each project through a separate company (SPV). There are more than 10 such projects and corresponding SPVs.

The client asked for assistance in the course of a control action by the IRS, where the IRS raised questions as to: why the same employees work only a few hours in the companies; why their hourly salary is high but the total monthly salary in a particular company is relatively low; why some companies do not have telephones, computers, cars etc.; and why they do not have loans with each other etc.

Not only did we help the client to defend itself against the IRS, but we are proud that, after analysing the existing group of companies, the functions of the employees, etc., we have proposed and implemented a group structure which will not raise the above-mentioned questions in the future, and which will also make it possible for the companies to consolidate their tax losses on a yearly basis (the tax losses of one company may be passed on to the other company, and the company which takes over the losses will pay less or no corporation tax accordingly).

The proposed group structure will therefore allow tax losses to be “utilised” in the year in which they arise, without having to wait for the taxable profits to be made by the company that incurred the tax loss.

We developed an action strategy for one of the shareholders of a well-known group of companies in Lithuania to avoid an additional tax burden after the abolition of the personal income tax (PIT) exemption for individuals on the sale of shares in the company.

The tax dispute arose because the Inland Revenue took the position that the taxpayer’s earlier actions were carried out with a view to obtaining a tax benefit and the Inland Revenue, applying the substance-versus-form principle laid down in Article 69 of the Law on Tax Administration of the Republic of Lithuania, assessed the spouses with more than EUR 3 million of payable GPT and almost EUR 2 million of late payment interest and penalties.

Representing our client’s interests, we had to go through all stages of the tax dispute – the Tax Disputes Commission (MGK), the Vilnius Regional Administrative Court (VAAT) and the tax dispute, which lasted for over a year, was won at the last stage – the Supreme Administrative Court of Lithuania (LVAT).