VAT of foreign companies and CIT (permanent establishment) implications in Lithuania

We often face situations when we are asked to advise our clients whether a foreign company providing certain services or goods to the Lithuanian customer, for example, providing services and goods linked to the installation of manufacturing line/equipment, is required to be registered for VAT in Lithuania and/or are obliged to pay corporate income tax on the activities performed by the permanent establishment.

In one of these cases, we are happy to have helped the Polish company to optimally meet tax obligations in Lithuania, when the project in Lithuania was overdue (instead of the planned 5 months, it took almost 1 year). The delay was caused by the specificity of the project (Polish company equipment was only an integral part of the whole project, therefore, works were performed in stages, i.e. waiting when works are accomplished by other Lithuanian contractors) and due to the emergency situation caused by COVID-19 (for some time the Polish company could not send workers to Lithuania). Consequently, the situation resulted in the permanent establishment (corporate income tax) obligations that were not planned at the beginning of the project.

Other experience