The State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania has issued an explanation (No. (32.42-31)-1-RM-655) on approval of residence place for the residents of Lithuania for the purporses of tax payment. The mentioned explanation was issued in accordance to the practice of implementation of Double Taxation Avoidance Agreements with different states.
The State Tax Inspectorate notes that the approval of residence place is necessary for the residents of Lithuania in case they receive income from foreign states, to whom Lithuania has entered into Double Taxation Avoidance Agreement, and wish to use tax relief on income received from that foreign state.
The residence place of permanent residents of Lithuania is approved by tax administrator of the Republic of Lithuania which indicates in a document that the person shall be considered a resident of Lithuania according to Double Taxation Avoidance Agreement between Lithuania and a certain foreign state. The person (irrespective of whether he is a national of Lithuania or a foreign state, or a person without nationality) shall be considered a resident of Lithuania during the calendar year, if he meets at least one criterion specified in paragraph 1 of Article 4 of the Law on Personal Income Tax of the Republic of Lithuania (further – LPIT). Under the mentioned Law a resident of Lithuania for the purposes of tax payment is considered to be:
i) any natural person whose permanent place of residence is in Lithuania during the calendar year or
ii) any natural person who has more personal, social and economic interests in the calendar year in Lithuania than abroad or
iii) any natural person who is present in Lithuania for a period or periods in the aggregate of 183 days or more during the calendar year, or
iv) any natural person who is present in Lithuania for a period or periods in the aggregate of 280 days or more during two successive calendar years and who stayed in Lithuania for a period or periods in the aggregate of 90 days or more in any of such year (in this case the person shall be considered a resident of Lithuania during both years of his presence in Lithuania).
v) any natural person who is a citizen of the Republic of Lithuania and who receives remuneration or whose costs of living are covered from the state budget of the Republic of Lithuania, even if he does not meet the requirements in clause iii) and clause iv).
The person shall be considered a resident during the calendar year, if he has a permanent place of residence in Lithuania during that year. The concept of permanent place of residence is defined in paragraph 30 of Article 2 of the LPIT. Permanent place of residence shall mean any place suitable for residence (a house, flat, room, any premises in a structure, which shall not be legally registered as a residential place), which is established, maintained and where such a person resides permanently or most often, and not only for a short stay during holidays, a business trip or studying, etc. A permanent place of residence shall mean not only the residential place owned by the resident by right of ownership where he lives most of all, but also the place which the resident rents and lives permanently or most often. If the resident has a place of residence both in Lithuania and abroad, the permanent place of residence shall be considered to be the place where he actually lives most often during that year.
Concerning the interests of residents it has to be mentioned that the entirety of interests should be taken into account assessing in which state the person has more interests. If the person departs from Lithuania, however, the real estate and/or movable property he owns by rights of ownership, his bank accounts, and his family stay in Lithuania, he is a national of the Republic of Lithuania, lives from the earnings received in Lithuania, pays his social insurance contributions and/or life assurance premiums in Lithuania, has a loan taken from a Lithuanian bank and pays interest, etc., such a person is considered a resident of Lithuania for the period of his presence abroad.
A foreign resident who comes to Lithuania becomes a resident of Lithuania, if he is present in Lithuania for a period or periods in the aggregate of 183 days or more during the calendar year, or for a period or periods in the aggregate of 280 days or more during two successive calendar years and who stayed in Lithuania for a period or periods in the aggregate of 90 days or more in any of such year. The following days shall be considered the days a foreigner was present in Lithuania: the day of arrival in Lithuania; the days of presence in Lithuania, including not only working days, but also days off (Saturdays and Sundays), holidays, days of vacation spent in Lithuania, and the day of departure from Lithuania.
A resident of Lithuania is considered also any natural person who is a citizen of the Republic of Lithuania and who receives remuneration or whose costs of living are covered from the state budget of the Republic of Lithuania, even if he does not meet the requirements in clause iii) and clause iv).
Permanent resident of Lithuania who receives income from a foreign state, to whom Lithuania has entered into Double Taxation Avoidance Agreement, and wants to use tax relief on income sourced abroad, has to submit to the tax administrator of the Republic of Lithuania a certain form prepared by the tax administrator of that foreign state and indicated for approval of status of a resident. The tax administrator of the Republic of Lithuania fills in that form and approves a person to be a resident of Lithuania for the purposes of tax payment. In case a person fails to submit the mentioned form, the tax administrator of the Republic of Lithuania fills in a form FR0254 (DAS-4), which is indicated to approve the residence place of Lithuanian resident.
The rules for filling in the mentioned form are approved by the order No. 159 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania dated 27th June 27, 2001.
Dovilė Aukštuolytė
Assistant to the Attorney at Law
ECOVIS Miškinis, Kvainauskas ir partneriai advokatų kontora
E-Mail: dovile.aukstuolyte@ecovis.lt