Construction + SBS = YOUR VAT liability
As of 1 May 2025, changes to the VAT law will no longer apply to construction works if your client (buyer) is a VAT payer applying the Small Business Scheme (SBS) in Lithuania.
What does this mean in practice?
✅ If your customer has a VAT code but applies GST,
❌ No reverse charge under Article 96 of the VAT Act.
In this case, you, as the supplier of the services, must calculate and pay VAT on the construction work you provide to the national budget.
What should construction companies do?
Make sure that your buyer/customer, even though he has a VAT code, is not a person applying for VAT.
– IF THE CLIENT DOES NOT APPLY SVS, the normal reverse charge applies – the customer pays the tax himself.
– IF THE CLIENT USES SVS, you must invoice, declare and pay the VAT yourself.
How to check?
✔️ The application of the SVS can be checked at the VMI registry or by asking the client directly.
✔️ The safest way to do this is to include a confirmation of the exemption from SVS in the contract or order.
Failure to check could mean that the tax burden falls on you, and VAT that has been incorrectly applied could be considered unpaid.
