We have developed an action strategy for one of the shareholders of a well-known group of companies in Lithuania in order to avoid an additional tax burden after the abolition of the personal income tax (PIT) incentive on the sale of the company’s shares to a natural person.
The tax dispute arose because the STI took the position that the actions previously implemented by the taxpayer were performed solely for a purpose of a tax benefit and, therefore, the principle of connecting over form principle established in the Article 69 of the Law on Tax Administration of the Republic of Lithuania should have been applied. The STI estimated that the spouses should pay 3 million EUR of PIT and almost 2 million EUR interests and fines.
Representing the client’s interests, we had to go through all stages of the tax dispute – the Tax Disputes Commission, the Vilnius Regional Administrative Court, and the tax dispute that had been taking place for over a year was won in the last stage – the Supreme Administrative Court of Lithuania.