Changes in Lithuania‘s VAT Regulations

In recent months, the Lithuanian Parliament has discussed a number of VAT-related changes. Among them are: change in the taxation of sports and cultural activities, VAT adjustments for repairs, and changes related to the hospitality sector.

The government has agreed to extend the VAT reduction on hospitality, sporting, and cultural services. According to the decision, a reduced VAT rate of 9% will be in place at least until the end of December 2023. The VAT reduction went into power as a means to support these economic activities during the COVID-19 pandemic.

It is possible that these areas will experience more VAT reductions. Currently, the Lithuanian Parliament is discussing the classification of sports and culture activities in relation to VAT. The economic activities included are sports events, sports club subscriptions, entrance fees to museums and exhibitions, theatre and cinema tickets, and performance, art, and cultural events admissions. As of now, those events are subject to the standard rate of 21%. It is proposed to reduce the rate to 9%, starting from January 1, 2023.

Among other discussed VAT reductions is the taxation of household items repair services. The proposal to reduce VAT from already reduced 9% to 5% will go into power from the beginning of 2023. Among activities with the reduced VAT rate are repairs of household appliances, electronic devices, watches, clothing and shoes, furniture, bicycles, e-scooters, toys, and equipment used by people with disabilities.

Naturally, this decision aims at promoting the circularity of the economy, lengthening the lifespan of household items, and reducing waste. Moreover, it should help small businesses that typically take care of such repairs.

Corporate Tax