Accounting and taxing rates of income, received from individual activity
What elements must be included in accounting records?
The following are the main elements of an accounting record which must be included:
• the name of an accounting record (it is not applied to the receipt of a cash register);
• the name and code of the economic entity which has drawn up the accounting record, the name of buyer (full name), code (personal identification number), Resolution No 407 of the Government of the Republic of Lithuania as of 9April, 2004;
• Date of an accounting record;
• content of economic operation or economic event;
• the result of economic operation or economic event expressed in money terms or quantities. If the result of economic operation or economic event is expressed in quantities, it must be indicated the units of measurement;
• person (s) entitled to draw up and sign or just sign the records, the name (s) or first letter (s) of name (s), surname (s), signature (s) and position (it is not applied to the receipt of cash register);
• Expenses can be justified by receipts of cash register only if the value of the goods or services (including VAT), which acquirement is confirmed by the receipt of cash register, does not exceed 1000 LTL / 289,62 €.
Forbidden deductions include:
• costs of acquisition of residential buildings and premises;
• costs of acquisition of cars, except those that are used only for transportation or driver training and (or) are leased;
• costs of set-up computer programs;
• costs of acquisition of computer software if it is purchased from associated persons or is acquired from the units which are registered or otherwise organized in the target areas, or from the residents of the target area;
• VAT and income tax;
• (import) VAT for goods purchased from a resident who is payer of a VAT and is included in the VAT report;
• forfeits, fines, penalties for delays and other sanctions for breaching of legislation;
• costs of support and donations;
• representation expenses (50 percent of resident entertainment expenses related to income can be attributed to allowable deductions from 1 January, 2010. This amount can not exceed 2 percent of self-employment income);
• allowable deductions which are included in non-taxable incomes (counting and returning taxes of incomes for 2010 year and subsequent income tax years);
• benefits for foreign citizens which permanent residence is in the target areas;
• recovery of damages done by resident;
• benefits from which a resident is required to deduct income tax or profit tax, but he/she has not deducted them yet;
• benefits for foreign entities that are registered or otherwise organized in the target areas
A person who registered individual activities during the fiscal year must submit an annual income tax return no later than May 1 st of next year.
Income Tax Return Form GPM308 is used to return taxes for calendar year 2010.
It is important. An annual income tax return is submitted even though the resident did not receive any self-employment income.
Registering for VAT:
• voluntary;
• compulsory;
- when salary exceeds the threshold of 100,000 EUR in the last 12 months (as well as persons who control and persons controlled by them, if the total amount of salaries exceeded EUR 100,000)
- the value of goods purchased from the European Union (hereafter called “EU“) during the calendar year is bigger than 35,000 EUR (the VAT paid in EU is not included);
- purchasing services from foreign non-taxable persons;
- for services to be taxed in another EU Member State.
Real Estate Tax Return Form KIT711 is submitted and the tax is paid by 1st February of the next fiscal year.
Real estate tax rate is from 0.3 to 1 percent of real estate tax value.
The specific rate of real estate tax is determined by municipal councils.
Incomes of self-employment (except for agricultural incomes) for calendar year 2010 are taxed at a rate of 5 percent, after subtracting allowable deductions,
Incomes of individuals who are engaged in economic activities meeting free profession activities in 2010 are subject to 15 percent income tax rate.
Profession, in which qualified people are engaged personally, responsible and professionally independently, providing intelligent services to clients and the public, including:
• lawyer, lawyer assistant;
• notary, notary assistant;
• bailiff, bailiff assistant;
• consultant on legal issues and other legal activities;
• tallyman, auditor, accountant;
• lobbyist, financial consultant, tax consultant;
• architect, engineer, designer;
• physician, psychologist;
• journalist, realtor, broker, and similar activities;
9 percent
50 percent from the amount calculated from self-employment income, as allowable deductions are subtracted, but CHI and State Social Insurance (hereafter called “SII“) payments are not subtracted.
Maximum contribution of 5054 LTL / 1.463,74 € for the calendar year is paid before 1 May, 2011, but some people have to pay a monthly payment of 72 LTL / 20,85 € in advance.
50 percent from the amount calculated from self-employment income, as allowable deductions are subtracted, but CHI and SII payments are not subtracted.
Maximum contribution of 16 006LTL / 4.635,66 € for the calendar year is paid before 1 May, 2011, but if there are the advances paid voluntarily, they are not refunded in a case of overpayment.
On 24 May 2010, the Minister of Finance of the Republic of Lithuania adopted Order No. 1K-166 (accounting rules in 2010 and later).
(Official Gazette, 2010, No 61-3022).
Note. These rules are not applied to farmers.
