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Invoicing a natural person: what should you know?

02.10.2023
Invoicing a natural person: what should you know?

Invoicing is part of everyday business activities. However, when it comes to selling services or goods to an individual, questions arise: is everything the same as with businesses? The legislation in force in Lithuania lays down certain specificities when it comes to invoices to natural persons. In this article, we will try to answer the main questions related to this topic in order to ensure a smooth and legal process.

Requirements for a VAT invoice for a natural person in Lithuania

In Lithuania, it is important to comply with the legal requirements when issuing a VAT invoice to a natural person who is not engaged in economic activity. These invoices must be clear and informative, as well as complying with the set standards. Each VAT invoice must therefore contain the following mandatory elements:

  • the title of the accounting document;
  • the date of the accounting document;
  • the name and code of the seller, i.e. the person who has issued the VAT invoice;
  • the name of the goods or services;
  • units of measurement, price and amount.

In addition, it is essential that the invoice contains the name and address of the customer. This guarantees correct and smooth processing and identification of invoices.

Invoice details for VAT-free in Lithuania

Even if VAT is not applied to a specific economic activity, the format of the invoice remains unchanged. In such a situation, the invoice must contain: the name of the accounting document, its date, the name and code of the seller – i.e. the person who issued the invoice. In addition, the name of the good or service, the units of measurement, the price and the total amount. It is particularly important that the name and address of the buyer are indicated.

Invoicing nuances for business licence holders”

Since 2012, the rules on invoicing for those with a business licence have changed: they are no longer obliged to invoice natural persons. However, it is important to note that even if the customer refuses to receive an invoice, the seller still has to issue one. Another nuance relates to the situation where a natural person wants his purchase costs to be treated as a cost of his business. In this case, the VAT invoice must include the individual’s personal identification number.

Penalties for false invoicing

Invoicing is a responsible activity, especially in the context of the tax legal framework. Lithuanian legislation provides for a range of penalties for businessmen for errors in invoicing, from financial penalties to more severe consequences in the event of repeated offences. The most common sources of errors are incomplete or incorrect data on the invoice, incorrect VAT rates or incorrect dates. To avoid such errors, it is advisable to use quality accounting software and to regularly educate yourself on tax issues.

Electronic invoices

In the modern era of technology, it is also possible in Lithuania to issue invoices in electronic format to a natural person. Electronic invoicing offers many advantages to entrepreneurs, such as speed, reduced administrative costs and increased security. It is important to comply with the legal requirements, but e-invoicing does open up new opportunities for the business world.

Storage of accounts

When it comes to archiving invoices, Lithuania provides that invoices issued to a natural person must be kept for at least 10 years. They may be kept in either paper or electronic form, but it is important to ensure that the relevant document can be quickly and easily submitted to the relevant authorities. In addition, other specific archiving requirements should be taken into account, which may relate to specific types of accounts or specific activities.

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