Lithuania Proposes Excluding Incidental Property and Financial Deals from the EUR 45,000 VAT Threshold

On 7 October 2026, the Government of the Republic of Lithuania approved draft amendments to Article 71 of the Law on Value Added Tax (VAT) via Resolution No. 749. The bill, registered with Parliament under No. XVP-1944, adjusts how the statutory EUR 45,000 turnover threshold for mandatory VAT registration is calculated.

The proposed amendment targets point 4 of paragraph 22 of Article 71 of the VAT Law. Under the revision, consideration received from incidental supplies of immovable property by nature, incidental property leases, and financial or insurance/reinsurance services specified under Article 28 of the Law will not be counted toward the EUR 45,000 threshold, provided that the taxable entity does not routinely engage in such activities.

The initiative addresses an inquiry from the European Commission regarding the correct transposition of Article 288 of EU VAT Directive 2006/112/EC and aligns national statutory language with Court of Justice of the European Union case law. The current framework could trigger unintended registration obligations when an otherwise small enterprise executes a one-off asset sale or financial arrangement.

For non-VAT-registered businesses—such as consultants, service providers, or small traders—the reform means that incidental revenue from disposing of real property or earning interest from a non-routine loan will not force a mandatory VAT registration. Entities will need to segregate incidental real estate and financial income from regular operating revenue in their internal accounting systems to monitor the VAT threshold correctly.

The bill is currently under parliamentary consideration. Subject to approval by the Seimas, the provisions are slated to take effect on 1 January 2027. Following enactment, the State Tax Inspectorate is expected to update its official commentary to clarify the legal assessment criteria for classifying transactions as incidental.