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Factsheet for measure LT-2021-26/1956 Updated – measures in Lithuania

Preferential VAT rates for catering industries and the cultural sector

Lengvatinis PVM tarifas maitinimo ir kultūros sektoriams

Country Lithuania , applies nationwide
Time period Temporary, 22 June 2021 – 31 December 2023
Context COVID-19
Type Legislations or other statutory regulations
Category Supporting businesses to stay afloat
– Direct subsidies (full or partial) or damage compensation
Author Inga Blaziene (Lithuanian Centre for Social Sciences) and Eurofound
Measure added 12 July 2021 (updated 12 March 2023)

Background information

On 22 June 2021, the Seimas of the Republic of Lithuania adopted Law No XIV-429 Amending Article 19 of Law No IX-751 on Value Added Tax of the Republic of Lithuania, introducing a provisional reduced VAT rate of 9% for the catering and cultural sectors to be effective until 31 December 2022. According to the initiators of the amendments to the VAT law, the main purpose of this measure is to help the catering and cultural sectors that have been hit hard by COVID-19 and have been unable to provide services for a long time due to lockdown-related restrictions.

Content of measure

The amendments to the law stipulate that the reduced VAT rate of 9% will be applied to:

  • catering services provided by restaurants, cafes and similar catering establishments and take-away food, with the exception of alcoholic beverages and services or part thereof related to alcoholic beverages;
  • attendance at all types of art and cultural institutions, arts and cultural events, sports events, sports clubs and at services similar to those of sports clubs provided by other persons;
  • performance services provided by performers (actors, singers, musicians, conductors, dancers or other persons who play, sing, read, recite or otherwise perform literary, artistic, folklore or circus acts).

These amendments to the law came into force on 1 July 2021 to be effective until 31 December 2022. The standard VAT rate in Lithuania is 21%.

Updates

The following updates to this measure have been made after it came into effect.

01 January 2023

The Law amending Article 19 of the Law on Value Added Tax of the Republic of Lithuania No IX-751 entered into force in Lithuania on 1 January 2023. The new law foresees that the preferential 9% VAT rate will be applied indefinitely to the accommodation services and attendance at all types of art and cultural institutions. The preferential 9% VAT rate for catering services has been extended until 31 December 2023; for performance services provided by performers and sports events until 30 June 2023

Use of measure

According to the Lithuanian Association of Hotels and Restaurants (LAHR), about 2,600 companies in the catering sector, employing about 30,000 people, will be able to benefit from the VAT relief in Lithuania. No information is available for the cultural sector.

Target groups

Workers Businesses Citizens
Does not apply to workers Sector specific set of companies
Does not apply to citizens

Actors and funding

Actors Funding
National government
Company / Companies
Public support service providers
No special funding required

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Informed Informed
Form Not applicable Not applicable

Social partners' role in the implementation, monitoring and assessment phase:

  • No involvement
  • Main level of involvement: Sectoral or branch level

Involvement

No information available.

Views and reactions

The LAHR President welcomed the measure. According to her, restaurants will be able to use the additional funds to cover debts and raise salaries for staff. Representatives of trade unions and employers in the cultural sector have not expressed their views in that regard.

Sectors and occupations

    • Economic area Sector (NACE level 2)
      I - Accommodation And Food Service Activities I56 Food and beverage service activities
      R - Arts, Entertainment And Recreation R90 Creative, arts and entertainment activities
      R91 Libraries, archives, museums and other cultural activities
      R93 Sports activities and amusement and recreation activities

This case is not occupation-specific.

Sources

  • 22 June 2021: Law No XIV-429 Amending Article 19 of Law No IX-751 on Value Added Tax of the Republic of Lithuania (e-seimas.lrs.lt)
  • 22 June 2021: The 9% reduced VAT rate for catering services and culture (www.vz.lt)
  • 22 June 2021: After many years’ wait, Seimas temporarily reduces VAT rate to 9% for restaurants, events, cinemas and sports clubs (www.lrt.lt)
  • 22 November 2022: Law amending Article 19 of the Law on Value Added Tax of the Republic of Lithuania No IX-75 (e-seimas.lrs.lt)

Citation

Eurofound (2021), Preferential VAT rates for catering industries and the cultural sector, measure LT-2021-26/1956 (measures in Lithuania), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LT-2021-26_1956.html

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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.