The current situation in relation to tax jurisdictions in Lithuania:

  • Legislation regulates the transactions between related parties – penalties could be imposed as a result of non-compliance with the legal requirements. The penalties will increase significantly from the 1st of April 2016.
  • In Lithuania, there will be a separate transfer pricing division within the Tax Authority. This unit is responsible for transfer pricing control - tax audits, writing guidelines, etc.
  • Tax inspectors are gaining more experience on transfer pricing issues during tax audits. Questions regarding transfer pricing are becoming increasingly common.
  • OECD guidelines regarding transfer pricing are not mandatory, but still actively used in practice by companies and the Lithuanian Tax Authority. 

The threshold for following procedures established by the legislation for transfer pricing documentation: 

Transfer pricing regulations are applicable to Lithuanian entities and foreign companies performing their activities through permanent establishment in Lithuania. 

The threshold for transfer pricing documentation for Tax Authorities:

  • Turnover EUR 2 896 200 (taxpayers)
  • In case the aforementioned threshold is not reached, simplified documentation may be prepared. 

Read more about tax litigation practices and the related fines and penalties on our Lithuanian site. More also on our Estonian, Latvian and Ukrainian sites