Changes in the Lithuanian legislation in 2016

Regarding language requirements

Please note that all advertisement in the Republic of Lithuania, including advertisement in radio or television, shall be prepared in Lithuanian language. Description of goods or services shall also be provided in Lithuanian language. If a name or brand name is mentioned in foreign language, translation or explanation in Lithuanian language shall be provided. In case these regulations are not followed, the company shall receive an administrative fine of 86-145 EUR. 

Regarding changes in labour and employment law

Please note that new version of Labour Code is planned to be adopted in 2016. The new labour code will introduce more flexible employment forms such as temporary employment agreement, labour agreement for project implementation, employment agreement with several employers, and etc. Employment agreements with fixed terms will be easier to conclude. 

There will be more possibilities to fire employees much easier, without giving extensive reasoning as it is currently required. It shall be noted that maximum period of notice will be reduced until 1 month (2 months for parents with small children). All the severance payments will be also reduced, and maximum amount of such payment will be 2 months for the employees which have worked more than 12 months in the company.

Said amendments shall liberalize employment relations in Lithuania and stimulate the employers to hire more employees. The new Labour Code is currently being discussed in the Parliament of the Republic of Lithuania. 

Increase of minimum salary

Starting from 1st of January, 2016 the minimum hourly rate for full time workers is 2,13 EUR. Minimum monthly salary will be 350 EUR (gross) per month.

Increase of tax-free minimum

Starting from 1st of January, 2016 tax-free minimum will be equal to 200 EUR (prior to the amendments it was 166 EUR). Tax-free minimum will be applied if a person receives minimum salary. If a person has children (up to 18 years old), additional sum of 120 EUR for each child will be applied to the tax free minimum.

As the salary of an employee increases, tax-free minimum decreases as it is calculated following the formula: 200 – 0.34 x (monthly salary – 350 EUR). Once monthly salary of 938.24 EUR is reached, tax free minimum is no longer applicable.

Regarding share capital of companies

Please be informed that following January 1, 2015 all the companies registered in Lithuania are imposed with obligation to change their share capital as the country has joined the Euro zone. Several amendments have been implemented in Lithuanian legislation and it was established that the share capital as well as nominal value of the shares shall be indicated in Euros and Euro cents (if any). For this reason, the Articles of Association of each company registered in Lithuania shall be amended and submitted to the Commercial Register until December 31, 2016.

The official exchange rate EUR 1 = LTL 3.4528.

The decision to change the Articles of Association of a company shall be taken by the General meeting of the shareholders following the provisions of the Law on Companies of the Republic of Lithuania. The decision shall be approved by the majority of the shareholders. A difference in the value of shares or share capital which has been caused by rounding of numbers shall not be regarded as the change of share value or share capital. Any differences of the value of share capital shall be included in the accounting as profits (losses) of the company. 

Amendments of the share capital shall be registered in the Commercial Register within period January 1, 2015 – December 31, 2016.  

Please do not hesitate to keep in touch, if you have any additional questions regarding the share capital conversion procedure.

Information about invoices shall be submitted to Tax Inspection

As of 1st of October, 2016 all information about incoming and outgoing VAT invoices as well as bills of lading shall be submitted to Tax Inspection using SAF-T classifier. Registries of VAT invoices shall be prepared by the companies, and all incoming and outgoing VAT invoices, including simplified VAT invoices shall be included in the registries.

No advance VAT

Starting from the 1st of January, 2016 there is no obligation to pay advance VAT. When declaring VAT for the month of January and all succeeding months, there is no obligation to pay advance VAT.

Advance payments 

Generally any advance invoices which require to calculate VAT, shall have the sum of VAT indicated in the invoice. When the invoice for supply of goods or services is issued, the remainder balance shall be indicated as well as the whole sum of the transaction. As of 1st of October, 2016 there will be no obligation to indicated the sum of the whole transaction and only the remainder sum shall be indicated in the subsequent invoice. 

PIT and Social security taxes

As of 1st of December, 2015 the companies can provide revised data about PIT and Social security taxes for the whole financial year. Prior to the amendments, only data regarding the aforementioned taxes of one month or one calendar quarter could have been submitted. 

Payment of taxes

Starting from the 1st of January, 2016, most of the taxes shall be paid until the 15th of each month. The amendment shall simplify the payment of taxes as the majority of payments will be due on one date. VAT declaration and payment date remains unchanged, as previously it will be 25th of each month. Any advance payments or tax payments where the dates are indicated in the EU legislation, shall be paid on their respective dates. 

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