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When must the VAT invoice be issued?

02.10.2023
When must the VAT invoice be issued?

In the business world, the importance of documentation cannot be overstated. They are the foundation of legal and financial processes. The VAT invoice is particularly important and has its own specific rules in Lithuania. Why do I need to know the subtleties of this invoice? Every businessman must be well informed in order to run a smooth and lawful business. In this article, we will detail what you need to know about the VAT invoice in Lithuania.

The nature and importance of the VAT invoice in Lithuania

A VAT invoice is a document that confirms the purchase of goods or the receipt of services and shows the amount of value added tax (VAT). In Lithuania, this type of tax is one of the most important sources of the State budget, and therefore the rules for its collection are strictly regulated. The VAT invoice is an integral part of this process.

In Lithuania, a VAT invoice is issued by a supplier or service provider when goods or services are sold to another business or consumer. It reflects the details of the transaction, including the date of supply, the description of the good or service, the price, the VAT rate applied and the amount.

When and in which cases is it necessary to issue a VAT invoice?

Under Lithuanian law, a VAT invoice must be issued no later than 15 calendar days after the date of sale of the goods or services. This is to ensure the efficiency and fairness of tax collection. There are a number of main cases in which a VAT invoice must be issued:

  • The sale of goods or supply of services to another trader. This principle is necessary to ensure the collection of VAT on business transactions and to eliminate opportunities for tax evasion.
  • Goods or services are sold to the consumer when the amount of the transaction exceeds a certain threshold. This helps the State to monitor larger transactions and ensure that VAT is paid on all relevant transactions.
  • The goods or services are sold to another EU country. This is important because EU cross-border trade transactions are subject to certain VAT rules designed to ensure fair tax collection and avoid double taxation.

What information should be included in a properly issued VAT invoice?

To be properly issued, a VAT invoice should be complete, clear and reflect the full substance of the transaction. It should include:

  • The name of the supplier, the legal address, the VAT number. This information is necessary in order to identify the person or body issuing the invoice.
  • The name, legal address and, if applicable, VAT number of the buyer. This helps to ensure correct and accurate information about the party to the transaction.
  • A detailed description of the goods or services. This is important to make it clear what goods or services were the subject of the sale/purchase.
  • Date of transaction or date of payment. This allows you to determine when the transaction took place and when the VAT should be paid.
  • The VAT rate and amount. This provides clarity for both the seller and the buyer as to the applicable VAT rate and amount.
  • The total amount excluding and including VAT. This helps both parties to see the financial value of the transaction and the amount of VAT payable.

What are the VAT rates in Lithuania and how are they applied?

There are several VAT rates in Lithuania, depending on the type of goods or services. The main rate is 21%, but there are lower rates for certain goods or services. For example, foodstuffs, medicines and some services may be subject to a lower VAT rate of 5% or 9%. It is essential to know which rate applies to a particular good or service as this directly affects the VAT invoicing. The variety of VAT rates allows the government to regulate the market by encouraging or restricting the sale of certain goods or services. It also allows social considerations to be taken into account by imposing lower taxes on essential goods.

Summary

The VAT invoice is a vital document in Lithuania and must be issued correctly and on time. It is essential for entrepreneurs to know all the nuances of this document in order to run their business successfully and without problems. Only then can the smooth and lawful process of selling goods and services be ensured, as well as the proper disclosure of one’s obligations to the State.

If you need even more information about the VAT invoice or other related issues in Lithuania, you can always contact specialists or take advantage of various training courses. Before starting a business or changing your business model, it is always necessary to carefully examine all governing documents and laws. VAT is one of the most important taxes in Lithuania, so the rules for collecting and declaring it must be absolutely clear to every entrepreneur.

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