Summary
-
The Lithuanian Ministry of Finance has reportedly proposed amending the VAT Law to clarify that incidental supplies of immovable property, financial services, and insurance or reinsurance services are excluded when calculating turnover against the mandatory VAT registration threshold, provided that such transactions are outside the taxable person’s normal business activities.
-
The principal proposed clarification is the express inclusion of insurance and reinsurance services. If enacted, the amendment would reduce the risk that an isolated exempt transaction creates an unexpected VAT registration obligation for a business whose recurring taxable turnover otherwise remains below the applicable domestic threshold.
-
The proposal is dated 10 August 2026 and is expected to apply from 1 January 2027 if adopted. Businesses should note that it remains draft legislation and should continue applying the existing rules until the amendment has completed the Lithuanian legislative process and been formally enacted.
Article
The Lithuanian Ministry of Finance has reportedly prepared draft amendments to the Law on Value Added Tax concerning the calculation of turnover for mandatory VAT registration purposes. The proposal would clarify the treatment of incidental transactions that do not form part of a taxable person’s normal economic activity.
Under the draft, turnover from supplies of immovable property, qualifying financial services, and insurance or reinsurance services would be excluded from the registration-threshold calculation when the transactions are incidental and the taxable person does not ordinarily carry out such activities. The treatment would therefore depend not only on the legal classification of the transaction but also on its relationship with the person’s normal business operations.
The most notable element is the proposed express inclusion of insurance and reinsurance services. This is intended to make the Lithuanian rules more closely reflect article 288(1)(e) of the EU VAT Directive, which addresses the turnover components taken into account under the special scheme for small enterprises. The proposal reportedly follows an inquiry from the European Commission concerning Lithuania’s transposition of that provision.
The amendment could be relevant where, for example, a business makes a one-off disposal of immovable property or carries out an isolated financial or insurance transaction alongside its ordinary commercial activities. Without an exclusion, the value of a significant but exceptional transaction could cause the business to exceed the VAT registration threshold even though its recurring taxable turnover remains comparatively limited.
The proposal should not be understood as excluding all immovable-property, financial or insurance transactions. The transaction must be incidental, and the business must not normally conduct the activity concerned. Businesses active in property development, financing, insurance intermediation or similar sectors are therefore unlikely to qualify merely because a particular transaction is infrequent.
If adopted in the reported form, the amendment would apply from 1 January 2027. Finance and tax teams should monitor the legislative process and document the business purpose, frequency and operational context of relevant transactions. Evidence that an activity is genuinely exceptional may become important when supporting its exclusion from the threshold calculation.
A direct official link to the draft dated 10 August 2026 could not be independently located. The measure should therefore be treated as a proposal based on the supplied report, rather than as enacted legislation.
Source Links
Latest Posts in "Lithuania"
- Lithuania Updates VAT Guidance on Business Gifts, Samples and Other Free Transfers of Goods
- Lithuania Clarifies Small-Business VAT Exemption Where Cross-Border Transactions Trigger Registration
- Lithuania Launches New IDAIS Platform for Intrastat Reporting
- Lithuania Clarifies VAT Registration Rules Under Small Business Regime
- Lithuania Updates VAT Rules on Incidental Supplies and ViDA Implementation
