Set up Lithuanian taxes in your Shopify store

This article covers:

• Tax settings
• Tax rates in Lithuania and the EU
• Selling goods to customers in Lithuania
  • My business is not VAT-registered
  • My business is VAT-registered
• Selling goods to customers in other EU member states
  • Selling as a micro-business
  • Surpassing the micro-business threshold
  • Country-specific registration
  • Selling digital goods
• Selling goods outside the EU

If you want to charge VAT to some customers and not to others, you may choose from two settings, depending on how you would like to display product prices in your Shopify store.

If you primarily sell to consumers (B2C), you may want to display product prices with VAT included.

To display product prices including VAT while allowing business customers to have VAT deducted at checkout:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Global settings section, check the Include sales tax in product price and shipping rate.
3. Click Save to apply the changes.

Optionally, you can enable dynamic tax inclusion. This Shopify feature automatically includes or excludes the tax based on the customer's region and adjusts the tax rate accordingly.

To activate dynamic tax inclusion:

1. In your Shopify admin, go to Settings → Markets and click the market you want to set up tax collection for.
2. Click Duties and taxes, and in the Storefront and checkout pricing field, click Edit.
3. In the Domestic taxes field, select Dynamic taxes. Click Done.
4. Click Save to apply the changes.

If you sell mainly to businesses (B2B), you'll probably want to display your product prices without VAT.

To display your product prices excluding VAT:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Global settings section, uncheck the Include sales tax in product price and shipping rate checkbox.
3. Click Save to apply the changes.

Optionally, you can disable dynamic tax inclusion:

1. In your Shopify admin, go to Settings → Markets and click the market you want to set up tax collection for.
2. Click Duties and taxes, and in the Storefront and checkout pricing field, click Edit.
3. In the Domestic taxes field, select Don't add taxes. Click Done.
4. Click Save to apply the changes.

The standard VAT rate in Lithuania is 21% and applies to most goods and services.

Certain goods and services qualify for reduced VAT rates of 12%, 10%, or 5%, while others are subject to a 0% VAT rate under the Lithuanian VAT Act.

A 0% VAT rate applies to specific zero-rated supplies, including exports and intra-Community supplies.

If you sell goods to customers in Lithuania, whether businesses (B2B) or consumers (B2C), you must charge Lithuanian VAT if your business is VAT-registered.

If your business is not VAT-registered, you do not charge VAT and cannot include VAT on your invoices.

You must register for VAT once your taxable turnover exceeds €45,000. You can also register voluntarily before reaching this threshold.

You must also register for VAT if the total value of goods purchased from other EU member states exceeds, or is expected to exceed, €14,000 in the current or previous calendar year.

This requirement applies even if your taxable turnover is below €45,000.

If your business is VAT-registered in Lithuania, you must charge VAT on some sales but not others, depending on where your customers are located.

If you sell goods to VAT-registered businesses (B2B) in other EU member states, these sales are zero-rated for VAT. This means you apply a 0% VAT rate on your invoices, while the customer accounts for the VAT under the reverse charge mechanism.

If you sell goods to consumers (B2C) in other EU member states, you must charge VAT. The VAT rate depends on whether you exceed the micro-business threshold.

If your annual cross-border taxable turnover within the EU does not exceed €10,000 (excluding VAT), you may qualify for the micro-business scheme.

Once approved by your local tax authority, you charge the VAT rate of the country where your business is established.

To use the micro-business scheme, apply for the exemption through your local tax authority.

Once approved, you can use a single VAT registration for your sales across the EU.

Next, configure your tax settings in Shopify. You only need to complete this setup once.

To charge your home country's VAT rates under the micro-business scheme:

1. In your Shopify admin, go to Settings → Taxes and duties.
2. In the Regional settings section, click European Union.
3. In the Collect VAT cross-border section, click Collect VAT.
4. In the Collect across the EU window, select Collect using your home country registration.
5. Select your Country of registration and enter your VAT number. If you have applied for a VAT number but have not received it yet, leave this field blank and update it later.
6. Click Collect VAT to save your changes.

If your annual cross-border sales within the EU exceed €10,000 (excluding VAT), you must charge the VAT rate of the destination country.

As a result, the VAT rate you charge will vary depending on where your customers are located.

If you exceed the threshold by selling to multiple EU countries, registering for VAT in each member state can become administratively complex.

Instead, you can use the One-Stop Shop (OSS) Union scheme. With OSS, you charge the VAT rate of the destination country while reporting and paying VAT through a single OSS return.

Shopify supports the OSS scheme by allowing you to configure your VAT registration and automatically apply the correct VAT rates to your EU sales.

To configure the OSS scheme in Shopify:

1. In your Shopify admin, go to Settings → Taxes and duties.
2. In the Regional settings section, click European Union.
3. In the Collect VAT cross-border section, click Collect VAT.
4. In the Collect across the EU window, select Collect using a One Stop Shop (OSS) registration.
5. Select your Country of OSS registration and enter your VAT number. If you have applied for a VAT number but have not received it yet, leave this field blank and update it later.
6. Click Collect VAT to save your changes.

Now, your customers' shipping country VAT rates automatically apply to all EU sales.

Some businesses may choose to maintain VAT registrations in each EU country where they ship goods.

If this applies to you, Shopify allows you to add a local VAT registration number for another country, enabling you to apply the correct VAT rates.

Shopify will then automatically apply VAT rates based on your VAT registrations.

To add the local VAT registration number:

1. In your Shopify admin, go to the Settings → Taxes and duties page.
2. In the Regional settings section, click European Union.
3. In the Collect VAT in an EU country section, click Collect in another location.
4. Select the Registration country and enter your VAT number. If you have applied for a VAT registration number but have not received it yet, leave this field blank. You can update it once you receive your VAT number.
5. Save your changes by clicking the Collect VAT button.
6. To add a local VAT registration number for each country where you are registered, click Collect VAT in an EU country, then confirm your selection by clicking the Collect VAT button.

If you cannot select an additional country where you are VAT-registered, you may need to create a shipping zone first.

To create a shipping zone:

1. In your Shopify admin, go to the Settings → Shipping and delivery page.
2. In the Shipping section, click the shipping profile where you want to add shipping zones.
3. In the Shipping zones section, click Add shipping zone.
4. Enter a name for the shipping zone, add the country or countries where you are VAT-registered using the search bar, then click Done.
5. Add shipping rates to make the zone available.
6. Click Save to apply your changes.

Special VAT rules apply when selling digital goods from Lithuania to customers in other EU countries.

Before applying these rules, it is important to understand what qualifies as a digital service.

Digital goods or services include radio and television broadcasting services, telecommunications services, and electronically supplied services, such as online magazines, music, films, and games.

Using the internet to facilitate a sale does not necessarily mean that a business provides digital services.

For example, selling goods where the order and processing are completed electronically (such as through a Shopify store) is not considered a supply of digital services. These transactions are treated as sales of goods and follow the standard VAT rules described above.

If you supply digital services from Lithuania to customers in other EU countries or to consumers in the UK, there is no registration threshold (such as the €10,000 exemption available to micro-businesses).

Therefore, if you sell to non-VAT-registered customers (B2C), you must register for VAT in the relevant country and charge the applicable VAT rate.

This means that customers in different EU countries may be charged different VAT rates, ranging from 16% to 27%.

If you sell digital goods to VAT-registered businesses (B2B), the business customer is responsible for accounting for any VAT due to the tax authorities in their country.

Registering for VAT in multiple countries can be time-consuming. Shopify store owners in Lithuania who sell to other EU countries (excluding Northern Ireland) can register for the VAT One Stop Shop (OSS) scheme.

The OSS scheme allows businesses to declare and pay VAT due on these services in their own member state through a single online portal.

If you sell goods from Lithuania to customers outside the EU, whether B2B or B2C, these sales are generally exempt from VAT.

This means that you do not charge VAT on the invoices issued for these transactions.

Once you have configured your tax rates correctly in your store, Sufio will automatically create compliant invoices with an accurate breakdown of the VAT charged.

Invoices can be created in multiple languages and include all required details to comply with EU invoicing requirements.

Providing invoices with the correct tax breakdown helps ensure accurate bookkeeping and supports your tax reporting obligations.

If you sell to businesses (B2B), Sufio invoices include the required information, including the VAT registration number for your Shopify store and your business.

For guidance tailored to your specific business situation, consider consulting a tax professional or accountant who specializes in VAT and ecommerce.

You can find a local tax advisor by searching for VAT and ecommerce specialists in your area.