Taxes

Registration of individual activities, data changes or additions through the My VMI system.

https://www.youtube.com/watch?v=cn_7c407gMg

I will use fixed assets in my individual business activities.

https://www.youtube.com/watch?v=Vw0ZktZlOW0

Functionalities of the Electronic Declaration System (EDS)

https://www.youtube.com/watch?v=zDljeYvSBfI

As part of your individual activity, you are required to:

Issue Accounting Documents:

After providing a service or selling a product, issue an appropriate accounting document. The types of documents you might need include:

• Invoice (if you are not a VAT payer)
• VAT Invoice (if you are a VAT payer)
• Cash Register Receipts (if income is recorded with a cash register)
• Other Accounting Documents (such as payment orders, cash receipts, etc.)

Fill in the Accounting Log:

• Maintain an accounting log of income and expenses. If you use a cash register, also fill in the log of cash register operations. Note that this is not necessary if your accounting is handled through i.APS.

Submit Annual Income Tax Return:

• By May 1 of the following year, submit your annual income tax return to VMI, even if you did not receive income from individual activities. Ensure you pay any income tax due as calculated in the return.

Deduct and Pay Income Tax on Rent Payments:

• From January 1, 2018, if you paid rent to another resident for real estate used in your activity, you must deduct 15% income tax from these payments and declare them to VMI.

Permitted deductions are expenses incurred by the resident in connection with income from individual activities received during the tax period.

Allowable deductions for ongoing activities can be categorized as follows:

Actual Incurred Operating Expenses:

• These must be substantiated by legally binding documents, such as invoices, VAT invoices, cash register receipts, etc.

Standard Deduction:

• Alternatively, you can deduct an amount equal to 30% of the income received from individual activities.

Important Notes:

• Actual Expenses: If you choose to deduct the actual incurred expenses, you must retain legally valid documents to substantiate these expenses.
• Standard Deduction: If you opt to allocate 30% of your self-employment income as a deduction, you are not required to provide documentation for this amount.

. Paid Reverse VAT for Bolt Services:

The VAT paid on services from Bolt (such as commission fees) can be considered a deductible expense if:

You are not a VAT payer.

You do not include VAT on the service in your VAT report.

2. Costs of Purchase, Repair, and Operation of Fixed Assets:

Fixed Assets: Assets used to earn income from individual activities for more than one year and with a purchase price above the minimum set by the resident must be declared using Form FR0457 provided by VMI.

Short-Term Assets: Assets used for less than one year are included as deductions in the tax period in which they are used.

Declaration of Fixed Assets:

Fixed assets must be declared on Form FR0457 before use. Include both new and previously used assets. If a fixed asset is no longer in use, indicate this on the form. Short-term assets do not need to be declared on this form.

Acquisition and Depreciation:

Costs for acquiring fixed assets, including depreciation, can be deducted if:

The asset is owned or obtained through a purchase-sale or finance lease agreement.

Depreciation is calculated according to the relevant rates (e.g., 4 years for cars up to 5 years old, 10 years for older cars) and reported on Form FR0457.

Conditional depreciation applies if the asset is classified as a business asset in a different tax period.

Installation of Gas Equipment:

Costs for installing gas equipment in a car used for individual activities can be deducted based on the percentage of use specified in Form FR0457.

Car Insurance, Repairs, and Other Expenses:

Costs for insurance, repairs, technical inspections, and other car-related expenses can be deducted based on the percentage of use specified in Form FR0457. These expenses must be supported by legally binding documents.

Fuel Costs:

Fuel expenses can be deducted if:

You have purchase documents (a receipt is sufficient for purchases up to €150).

The car is listed on Form FR0457.

Fuel use is recorded and related to income-generating activities.

3. Communication Services (Mobile Internet, Phone Calls):

Telephone and internet costs can be claimed as deductions, even if the phone or tablet is not listed on Form FR0457.

Keep a free-form accounting document for phone and internet expenses, indicating their use for business purposes.

4. PSD and VSD Contributions:

Contributions determined by Lithuanian law for individuals engaged in self-employment can be claimed as deductions.

5. Pollution Tax:

If applicable, pollution tax may be classified as an allowable deduction, as it is not explicitly listed as a disallowed expense.

What information must be included on these documents? If you choose to allocate actual incurred expenses as allowed deductions, ensure that the supporting documents, such as invoices, VAT invoices, and cash register receipts, are collected and maintained. These documents must be kept for at least 10 years.

According to Clause 2.7 of the Rules for Issuing and Recognition of Accounting Documents Used to Calculate Taxes (hereinafter referred to as "the Rules"), expenses can be recognized based on invoices or VAT invoices only if they include:

Supplier Information:

Code of the supplier (if the supplier is an individual, include the VAT payer's code; if not available, include the personal code or the number of the individual activity certificate).

Buyer Information:

Name and code of the buyer (if the buyer is an individual, include the name, surname, and VAT payer code; if not available, include the personal code or the number of the individual activity certificate).

A cash register receipt is sufficient for justifying expenses in the following cases:

Goods or Services:

The value of the goods or services, including VAT, does not exceed €100.

Fuel Purchases:

The value of the fuel, including VAT, does not exceed €150.

The receipt must include identifying information for the buyer, such as a personal identification number or individual activity certificate number.

There is no limit on the number of receipts you can submit as long as each receipt falls within the specified maximum values.

For detailed requirements for cash register receipts, click here. If a cash register receipt does not meet the established requirements, you must also provide an invoice or VAT invoice.