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Database of national-level policy measures

Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for measure LT-2022-1/2900 – measures in Lithuania

Zero VAT rate for district heating

Nulinis VAT tarifas gyventojų centralizuotam šildymu

Country Lithuania , applies nationwide
Time period Temporary, 01 January 2022 – 30 April 2022
Context War in Ukraine
Type Legislations or other statutory regulations
Category Responses to inflation
– Support for energy bills
Author Inga Blaziene (Lithuanian Social Research Centre) and Eurofound
Measure added 15 September 2022 (updated 20 September 2022)

Background information

On 17 March 2022, the Seimas of the Republic of Lithuania approved Law No. XIV-942 on Adding Article 125-2 to Law No. IX-751 on Value Added Tax and Repealing Article 125-2, whereby the reduced VAT rate of 9% for district heating is set at 0% for households in Lithuania. This is the State’s way of reducing the skyrocketing costs of home heating and hot water for households in 2022.

Content of measure

The amendments to the law provide that the reduced VAT rate of 9% for district heating applied to households in Lithuania is temporarily set at 0%, with the difference (from 9% to 0%) being compensated to heat suppliers from the State budget.

The new VAT rate will apply retroactively from 1 January 2022 and will only cover the winter-spring heating season until 30 April 2022.

The zero rate will only apply to heat energy supplied to households for home heating (including heat energy supplied through the hot water supply system), as well as to hot water or cold water supplied to households for home heating.

The Ministry of Finance (MF) of the Republic of Lithuania estimates that the VAT compensation for heat energy will reduce households’ bills by almost a tenth and will cost the State budget around €23 million.

The Government's proposal to apply a zero VAT rate for the heating seasons of 2022-2023 and 2023-2024 is currently being considered.

Use of measure

According to the Ministry of Energy (ME), about 57% of all heat consumed in Lithuania is supplied by district heating, and almost 694,000 households receive their heat in this way.

Target groups

Workers Businesses Citizens
Does not apply to workers Does not apply to businesses Applies to all citizens

Actors and funding

Actors Funding
National government
Public support service providers
National funds

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: Peak or cross-sectoral level

Involvement

No information available.

Views and reactions

No information available.

Sources

  • 17 March 2022: Law No XIV-942 on Adding Article 125-2 to Law No IX-751 on Value Added Tax and Repealing Article 125-2 (e-seimas.lrs.lt)
  • 27 March 2022: VAT for centralized heating is abolished - how will the compensation reach the residents? (www.lrt.lt)

Citation

Eurofound (2022), Zero VAT rate for district heating, measure LT-2022-1/2900 (measures in Lithuania), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LT-2022-1_2900.html

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