Lithuania: Revised transfer pricing documentation rules

published on February 21, 2019

The new Lithuanian transfer pricing documentation requirements were introduced since December 31, 2018. These requirements generally reflect measures implementing recommendations under the OECD's base erosion and profit shifting (BEPS) project. The main changes are listed below:

Thresholds for preparation of transfer pricing documentation

• Master file – if the annual turnover of a taxpayer for the previous financial year has exceeded 15 million euro and the taxpayer is a part of an international group;
• Local file – if the annual turnover of a taxpayer for the previous financial year has exceeded 3 million euro.

”De minimis” rule

The exemptions for low-value transactions have been introduced, i.e. transfer pricing documentation has to be prepared by the taxpayer only if  transaction (including multiple similar transactions) for the financial year exceeds 90,000 euro per associated entity.

Changes in deadlines

Strict deadlines for preparing transfer pricing documentation have been set, i.e. documentation for a financial year must be prepared by the 15th day of the sixth month after this financial year-end.

Updates of transfer pricing documentation

When the economic circumstances of the transactions remain the same and the market situation does not change significantly, the transfer pricing documentation (including benchmarking studies) has to be renewal at least every 3 years. However, the financial data provided in this documentation (transactions recorded actually, calculations made, prices, mark-ups and margins actually applied etc.) has to be updated on the annual basis.

Sanctions

• Non-compliance with the transfer pricing documentation requirements will result in a penalty ranging from 1,820 to 5,590 euro and the penalty for repeated violations from 3,770 to 6,000 euro;
• Besides, since 2019 the tax authorities can grant to the taxpayer the status of a non-reliable taxpayer and one of the conditions for granting such status is not having the transfer pricing documentation. This status is announced on the website of the Lithuanian tax authorities and can cause negative consequences (e.g. such companies cannot participate in public tenders, they are subject to a longer tax limitation period during which the taxes can be audited etc.).

All above mentioned changes will be applied to associated enterprises transactions conducted in 2019 and subsequent years.