Lithuania: Updated transfer pricing documentation requirements

Lithuania: The local tax authority has updated transfer pricing documentation requirements – the updates largely come into effect from 1 January 2021.

Low value-add intra-group services

The tax authority has adopted a number of simplification measures, one of which relates to the provision of low-value intra-group services. Where a cost plus 5% pricing policy is applied, no benchmarking study will be needed.

For these purposes, low value-add intra-group services are services provided to an associate person for:

  • the management of personnel;
  • the application and maintenance of information technology, accounting, auditing, legal, technical assistance; and
  • other similar services of an administrative, supportive, ancillary nature.

The services provided must also adhere to the following:

  • these services must not be part of the business activities carried out by the group;
  • these services must be low added value in natures;
  • the provision of these services does not use or create unique and/or valuable intangible assets;
  • in the provision of these services, the service provider shall not assume or create any significant risk.

But wait, there’s more…

There are some additional transfer pricing legislative updates as part of these amendments, including:

  • Hard-to-value intangibles – introduction of certain simplified processes with respect to controlled transactions connected to HTVI. In addition, new provisions are introduced allowing the tax administrator to retroactively adjust the price of the controlled transaction based on information received after the transaction.
  • In-country transactions –  The elimination of a requirement to prepare transfer pricing documentation for transactions between Lithuanian taxpayers.
  • Profit-split method – Clarification of the procedure for applying the transactional profit-split method. Such procedures follow broad OECD principles.

See the official text from the Minister for Finance for more details or reach out to us with any questions.

By |2020-11-07T13:40:59+00:00November 7th, 2020|Europe, Intangibles, Safe harbors, TP Methods|0 Comments