Lithuania - Simplification of the Refund Procedure

As previously indicated, the Ministry of Finance and the State Tax Inspectorate are working diligently on enhancing the use of electronic procedures for collecting, reporting, and settling taxes. The goal is to reduce the administrative burden that legal and natural persons have when fulfilling their tax obligations.

On September 25, 2024, the Lithuanian Government adopted a Resolution amending the previous Resolution, which determined the refund procedure for foreign passengers whose place of residence is outside the European Union.

Adopting this Resolution, prepared by the Ministry of Finance, will unquestionably ease the administrative burden that merchants, refund intermediaries, and foreign buyers experience regarding the refund procedure.

Background
Before adopting the amendment to the Resolution, the administrative burden for all parties involved in the tax refund procedure for foreign passengers was complex, costly, and long. At present, the refund procedure is conducted mainly using an electronic system.

Following the present rules, before the amendment becomes effective, a printout of the VAT refund declaration with accompanying documents is mandatory for completing the procedure in cases where the confirmation of the exit of the goods from the territory of the EU cannot be processed in the electronic system.

Foreign purchaser, when this is the case, is obliged to submit the refund declaration to the merchant or refund agent together with the supporting(accounting) documents, and the merchant or tax agent(depending) who is responsible for handling the refund is obliged to keep all paper-based documents for ten years.

Simplification of the Refund Procedure
The adopted Resolution will eliminate the necessity of providing and storing settlement(accounting) documents in cases with a paper-based certified refund declaration. In these cases, the refund declaration as such is enough to make the VAT refund for foreign travelers.

Vendors and tax refund intermediaries will have an obligation to keep an e-version of the certified refund declaration for ten years instead of having the mandatory requirement to store and archive the paper-based one.

Takeaway
The adoption of this Resolution will undoubtedly have a positive impact on the entire VAT refund procedure for foreign buyers of goods that will be exported outside the borders of the European Union.

This Government act shows the Lithuanian Government's willingness to move further from the paper-based economy into digitalization, which will result in less costly and demanding procedures for tax settlements.

Accounting, VAT