A GUIDE FOR AN INDIVIDUAL WHO OBTAINS A BUSINESS CERTIFICATE

(abridged version)
Table of Contents
Business certificate ..........................................................................................................................2
Location of activities. Issuing business certificates ....................................................................2
Period of activities ............................................................................................................................3
Establishment of a fixed income tax amount ...............................................................................3
Possibility of obtaining a refund of the paid fixed income tax amount.....................................4
Payment of state social insurance contributions.........................................................................4
Payment of compulsory health insurance contributions ............................................................4
Rights, duties and liabilities of an individual who obtains a business certificate ...................5
Rights that a business certificate does not provide ....................................................................5
Duties of an individual who obtains a business certificate ........................................................6
Liability of an individual who obtains a business certificate ......................................................7
The right of an individual who obtains a business certificate to appeal against actions of
officers ...............................................................................................................................................7
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Business certificate

A business certificate is documentary proof of payment of a fixed income tax in

respect of individual activities and/or leasing of residential premises included in the list of
types of activities undertaken under a business certificate (hereinafter referred to as the
List), as approved by Resolution No 1797 On the Rules of Issuing Business Certificates
to Individuals of 19 November 2002 of the Government of the Republic of Lithuania
(hereinafter referred to as the Resolution).
The List documents activities that can be pursued under a business certificate. The
List states the name of the activity and provides (in brackets) the code specified in the
Classification of Economic Activities (hereinafter referred to as NACE). The State Tax
Inspectorate under the Ministry of Finance of the Republic of Lithuania (hereinafter
referred to as the STI under the MoF) approved the classification of activities that can be
pursued under a business certificate (hereinafter referred to as the classification) in which
it indicated the link between individual activities and NACE, grouped activities and used it
as the basis for providing individual codes, and established activities which entailed the
indication of the stationary location of the activities (such activities are marked as (ST) in
the classification). Each municipal council shall establish fixed income tax amounts for
activities under such codes, and such tax shall be applied to income received from
respective activities over a respective period.
An individual who pursues activity under a business certificate shall be
responsible for independently dealing with activity-related issues, covering his or her
operating expenses and ensuring that his actually performed activities do not
exceed the limits of individual activities subject to the fixed income tax and
defined in the business certificate.
It is worth noting that individuals may obtain an unlimited number of business
certificates for different activities. However, individuals willing to engage in activities not
included in the List, have to choose another form of economic activity (e.g. to establish a
company or register individual business).
Pursuant to the Republic of Lithuania Law on Personal Income Tax of 2 July 2002
(hereinafter referred to as the Law on Personal Income Tax), as of 1 January 2012,
individuals employed under a business certificate may pursue activities only if
they need not be and are not identified for VAT purposes, or – in the event of lease
– if their income from a lease over the tax period does not exceed the amount
specified in Article 71 of the Republic of Lithuania Law on Value Added Tax of
5 March 2002.
Where the individual pursues activities other than specified in his or her business
certificate, he or she must pay income tax on income received from such other activities,
pursuant to the provisions of the Law on Personal Income Tax.

Location of activities. Issuing business certificates

The Resolution provides that business certificates may be issued to individuals to

pursue activities:
1) without restricting the area of activities,
2) in the entire territory of the Republic of Lithuania, except for the areas of Alytus,
Kaunas, Klaipėda, Palanga, Panevėžys, Šiauliai and Vilnius city municipalities, the area
of Neringa municipality and the area of Marijampolė city of Marijampolė Municipality
(known as the area of Marijampolė municipality before 31 December 2013),
3) within the area of the specific municipality.
The State Tax Inspectorate (hereinafter referred to as the STI) uses the one-stop
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shop principle; therefore, individuals may contact any county state tax inspectorate
(hereinafter referred to as CSTI) and request a business certificate, which shall be
issued subject to fixed income tax amounts established as follows:
− if the location of activities is selected without restricting the area of activities, of
the entire territory of the Republic of Lithuania, except for the areas of Alytus, Kaunas,
Klaipėda, Palanga, Panevėžys, Šiauliai and Vilnius city municipalities, the area of Neringa
municipality and the area of Marijampolė city of Marijampolė Municipality, is selected as
the location of activities, the fixed income tax amounts and reliefs established by the
municipal council in the permanent/declared domicile of the individual requesting a
business certificate shall apply,
− if the area of the specific municipality is selected as the location of activities,
the fixed income tax amounts and reliefs established by the municipal council in the
selected specific location of activities shall apply.
Individuals can also obtain, renew/replace or terminate business certificates
electronically. These individuals must submit an e-application regarding the obtaining or
renewal/replacement of a business certificate or regarding the termination of activities
specified in the business certificate by logging in to the personal taxpayers’ page, viz. My
STI, using his or her e-banking data or other external facilities, e-signature or log-in cards
issued by the STI. After he or she logs in to My STI, the individual will have to fill in a
respective application and pay the calculated fixed income tax amount as well as the
state social insurance contribution (if the business certificate is issued for a period of at
least three months). Information about the credited payment of taxes and the number of
the business certificate shall be provided to the individual in his or her personal account in
My STI.
As of 1 January 2012, one of the following natural persons can be listed in the
business certificate issued at an individual’s request: a spouse, father, mother, a child of
14 or older, a dependant, a guardian/sponsor; however, it is the individual who obtained
the business certificate who has to declare income from the activity specified in the
business certificate. Persons stated in the business certificate will have the right to
participate in the activity pursued by the individual and specified in the business
certificate.

Period of activities

Business certificates can be issued and renewed for a desired period within a
calendar year, and this cannot extend beyond the last day of the same calendar
year.
Trade business certificates shall be issued and renewed for a desired period
within a calendar year, which shall be counted as a number of days. The shortest period
shall be one day.
Service and manufacturing business certificates shall be issued and renewed
for a desired period within a calendar year, however not exceeding a calendar year and
for at least five calendar days that need not be consecutive.

Establishment of a fixed income tax amount

Each municipal council shall establish a fixed income tax amount for each
individual type of activity in compliance with Article 6 of the Law on Personal Income
Tax; therefore, fixed income tax amounts can differ by municipality and can change on
an annual basis.
Municipal councils shall have the right to establish a lower fixed income tax
following the procedure prescribed by legal acts (Article 6(4) of the Law on Personal
Income Tax).
Individuals can pay the fixed income tax into one of the collective accounts of
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budget revenue of the STI under the MoF listed on the website of the STI under the MoF
www.vmi.lt/cms/biudzeto-pajamu-surenkamoji-saskaita (payment code 1461).
Income tax must be paid by and before the date of the business certificate.
Information about fixed income tax amounts established/approved by municipal councils
is also provided on the website of the STI under the MoF
www.vmi.lt/cms/web/kmdb/1.4.10.1#Scroll_126.

Possibility of obtaining a refund of the paid fixed income tax amount

If a business certificate is issued for a period exceeding one month and if

information used for the calculation of income tax changes, the individual must notify any
territorial state tax inspectorate within 10 calendar days following the change of
information.
If the change of information used for the calculation of income tax results in the
overpayment of income tax, such overpayment shall be either refunded or credited
following the procedure set forth in the Republic of Lithuania Law on Tax Administration
of 13 April 2004 (hereinafter referred to as the Law on Tax Administration). The income
tax amount refundable or additionally payable shall be calculated as of the first day of
the month following the month of the change.
Income tax shall be also refunded or credited in the event the activity defined in the
business certificate is terminated and no longer performed until the expiration of the
issued business certificate. In the event of sickness, the income tax amount shall be
refunded or credited for the period starting with the onset of the sickness (provided no
other natural person is stated in the business certificate) and ending with the expiration of
the issued business certificate. In other cases, the income tax amount shall be refunded
or credited for the period starting with date of the receipt by the CSTI of a written
application to terminate individual activity under a business certificate and ending with the
expiration of the issued business certificate, after the application to refund or credit
income tax is submitted.

Payment of state social insurance contributions

Individuals performing activities under a business certificate must be covered by a

compulsory state social insurance (hereinafter referred to as the SSI) in order to receive a
basic pension, as provided by the Republic of Lithuania Law on State Social Insurance of
21 May 1991. SSI contributions shall be calculated pro rata on the term of validity (the
number of calendar days of performed activities) of the business certificate that is being
issued or renewed. Persons who obtain a business certificate for a period shorter than
three months must pay SSI contributions for the entire term of validity of the business
certificate in advance. Persons who obtain a business certificate for the period of at least
three months shall pay SSI contributions once a quarter, however not later than by the
15th day of the first month of the following quarter.
Individuals who obtain a business certificate for the leasing of residential premises
are not obliged to pay SSI contributions.

Payment of compulsory health insurance contributions

Individuals who obtain a business certificate of individual activities must pay

compulsory health insurance (hereinafter referred to as the CHI) contributions, i.e. 9% of
the minimum monthly wage (hereinafter referred to as the MMW) applicable on the last
day of the month in respect of which the payment is made, and such contributions must
be paid on a monthly basis.
Compulsory health insurance contributions are paid into one of the collective
accounts of budget revenue of the STI under the MoF listed on the website of the STI
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under the MoF www.vmi.lt/cms/biudzeto-pajamu-surenkamoji-saskaita (payment

code 1891).
If individuals who perform individual activities under a business certificate are on the
list of those insured by the State and/or receive income relating to employment
relations or relations that fundamentally equate to an employment relationship, CHI
contributions will be calculated pro rata to the term of validity of the issued business
certificate, i.e. CHI contributions will be paid only in relation to the days of a calendar
month specified in the business certificate (i.e. to which the business certificate
pertains). The daily contribution shall be calculated pro rata.
Individuals who obtain a business certificate for the leasing of residential premises
are not obliged to pay CHI contributions.

Rights, duties and liabilities of an individual who obtains a business certificate

Business certificate issued for any type of activities authorises the holder to perform
that type of activity in the location that the certificate specifies.
The issued business certificate authorises the sale of goods only to individuals
(including individuals engaged in individual activities – under a business certificate or
those who registered individual business – other than trade).
The issued service and manufacturing business certificate authorises the sale of
goods manufactured by the holder of the business certificate and the provision of services
not only to individuals (including individuals engaged in individual activity – under a
business certificate or those who registered individual business – under an individual
activity certificate), but also to legal entities (except for the leasing of residential
premises), provided income received from the sale of goods manufactured by the holder
of the business certificate and the provision of services to legal entities does not exceed
EUR 4,500 per tax period (the EUR 4,500 amount includes income received from legal
entities from activities defined in all business certificates).
If the amount of EUR 4,500 is exceeded, the entire income (received from
activities defined in all business certificates) received from legal entities (starting with
the very first EUR earned) shall be subject to tax as if it was income received from
a registered individual business (under the individual activity certificate).
A business certificate of any type authorises the sale of goods manufactured by
the holder of the business certificate and the provision of services to legal entities only if
the type of activity authorised by the business certificate is not one of the activities
that the legal entity actually performs. It means that neither goods manufactured by
the holder of the business certificate can be sold nor services can be provided to a
company or another legal entity engaged in the same activity.
It is worth noting that individuals who obtained a trade business certificate are
not prohibited from acquiring goods from an individual who obtained a manufacturing
business certificate.
Spouses who hold individual business certificates may sell goods in the same
marketplace if they have a documentary proof of the acquisition of goods issued to the
benefit of either of the spouses.

Rights that a business certificate does not provide

A business certificate does not authorise individuals to engage in licensed activities.

The issued trade business certificate shall not provide the right to:
− sell vehicles, motorcycles, mopeds, sugar;
− sell goods using provisional trading facilities arranged on premises (except for the
sale of flowers, books and publications and sales on premises located within the market
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territory), also on premises built using kiosks.

A trade business certificate does not provide the right to sell agricultural or food
products or any other goods to individuals for the purpose of their individual trade
activities, including activities performed under a trade business certificate.

Duties of an individual who obtains a business certificate

An individual who obtains a business certificate must:

Submit their annual income tax return by May 1 of the year following the tax period (a
calendar year) during which the individual either received or did not receive income from
activities performed under a business certificate.
An individual who obtains a trade or manufacturing business certificate must keep the
following documents on site wherever he or she carries out his or her activities: his or her
Lithuanian passport or identity card, passport or other identity documents and
documentary proof of the acquisition of goods, materials or raw materials.
An individual must keep documentary proof of the acquisition of goods/services,
materials and raw materials as well as other documents, including Form FR0508
Receipts of Sale/Purchase of Goods/Services (hereinafter referred to as a receipt) and
the register for five calendar years following the year of their receipt or issue, while
invoices and VAT invoices must be kept for 10 years following their date of issue.
Documents must be kept in the form (whether written or electronic) in which they were
issued or received. Individuals must ensure that the authenticity of VAT invoices and the
consistency of the contents as well as the legibility of documents are preserved. These
documents must be kept in the custody of the individual or they can be handed over to
the custody of the CSTI following the procedure prescribed by the STI under the MoF.
An individual who obtains a business certificate must use Receipt forms for the
sale/purchase of goods and the provision of services; such Receipt forms are provided on
the website of the STI under the MoF (they can be printed at www.vmi.lt/cms/formos), or
they can be printed separately (they can be bought at shops run by publishers who print
blank document forms).
An individual who obtains a business certificate must issue receipts when the issue of
receipts is prescribed by the Description of the Installation and Operation of Cash
Registers approved by Resolution No 1283 of 13 August 2002 of the Government of the
Republic of Lithuania. An individual who obtains a business certificate and purchases
goods from another individual who obtains a business certificate and who manufactured
these goods, or who purchases agricultural products from an individual who produced
these products, or who purchases articles from an individual who owns these articles,
must issue receipts. In any other case, Receipts of Sale/Purchase of Goods/Services
shall be issued at the request of a buyer or a recipient of services.
A Receipt shall be issued at the moment money is received. If the parties agree (enter
into a separate agreement) and establish the moment of the payment for goods or
services which does not coincide with the actual moment of the provision of services or
the transfer of goods, an invoice shall be issued at the moment of the provision of
services or the transfer of goods and, once the payment is later made, the Receipt shall
be issued at the moment money is received.
Individuals who perform trading activities on the premises (inside) and who use
cash registers to account for operating income shall state operating income and operating
expenses in the register of cash transactions performed by a cash register (hereinafter
referred to as the cash transaction register); the form and the filling in procedure of the
cash transaction register is established by Order No V-255 On the Approval of the Rules
for the Operation of Cash Registers of 18 September 2003 of the Head of the State Tax
Inspectorate under the Ministry of Finance of the Republic of Lithuania.
Individuals who obtained a business certificate and who do not use cash registers
to account for operating income must complete the register of accounting of income and
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expenses. Individuals may select the option of completing the said register – to simply
enter the total amount of expenses on a monthly basis or to account for expenses by type
and state the amount of each expense. Entries on received (i.e. paid) income shall be
made each day on which income is actually received; there is no need to make an
entry on the day on which no income is received.
If a business certificate is issued for a period exceeding one month and if
information used for the calculation of income tax changes, the individual must notify the
CSTI within 10 calendar days following the change of information.
If the location of the type of activities performed in the stationary location changes,
the individual must notify the CSTI within 10 calendar days following the change and the
CSTI will issue a revised business certificate (reflecting the corrected information) within
one working day following the date of the receipt of the application. The simplest way to
submit the application to replace a business certificate is to submit it electronically by
logging in to the personal taxpayers’ page – My STI.
An individual who obtains a business certificate must follow the rules of the
activities that they carry out as stated in legislation.

Liability of an individual who obtains a business certificate

An individual who obtains a business certificate but who fails to meet the
requirements established by the Rules of Issuing Business Certificates (such as the
failure to have a documentary proof of the acquisition of goods, materials or raw materials
in the location of trade or manufacturing activities or in the location of the provision of
services; the failure to issue receipts or invoices, as specified by the Rules of Issuing
Business Certificates; the failure to correctly keep registers of income and expenses)
shall be subject to liability as laid down by Articles 172, 1721,1729, 1731 of the Code of
Administrative Offences:
− for violation of commercial or economic activities – pursuant to Article 1729 or
Article 172(1) of the Code of Administrative Offences (a fine of EUR 144 to
EUR 579),
− for violation of the procedure of the submission of the return − pursuant to
Article 1721 of the Code of Administrative Offences (a warning or a fine of EUR 57 to
EUR 1,158),
− for violation of accounting rules – pursuant to Article 1731 of the Code of
Administrative Offences (a fine of EUR 28 to EUR 11,584).
If holders of a business certificate who have to pay SSI contributions fail to pay them
on time, they will have to pay the default interest as laid out in Article 16 of the Republic
of Lithuania Law on State Social Insurance of 21 May 1991. If an inspection establishes
that SSI contributions were unlawfully reduced, the deficient amount shall be determined
and a fine of 50% of that amount will be imposed.
If holders of a business certificate fail to calculate and pay CHI contributions or fail
to pay them on time, they will have to pay the default interest in compliance with the Law
on Tax Administration.

The right of an individual who obtains a business certificate to appeal against

actions of officers

Activities performed by an individual who obtained a business certificate may be

subject to inspection by officers of state control authorities.
Article 144 of the Law on Tax Administration establishes the right of an individual
to appeal against any act or omission of the tax authority (officer). Disputes between an
individual and the tax authority will be settled according to the procedure laid out by the
Republic of Lithuania Law on Administrative Proceedings of 14 January 1999.
A complaint made by an individual about any act or omission of an officer of the
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tax authority must be lodged with the Administrative Disputes Settlement Commission or
the Administrative Court within one month of the date the tax authority notifies the
taxpayer of its decision or within two months of the expiration of the deadline for meeting
legal and regulatory requirements. If the tax authority fails to perform or delays the
adoption of the decision, a complaint concerning such performance/delay can be lodged
within two months of the expiry of the deadline set for the settlement of the issue.
More information about the procedure of obtaining a business certificate is
available on the website of the STI under the MoF at www.vmi.lt or by contacting the Tax
Information Department of the STI under MoF by dialling 1882 (if calling from TEO,
OMNITEL, BITĖ or TELE2) or 8 700 55 882 (if calling from any other network), or +370 5
2553190 (if calling from abroad). Standard call rates apply.
Please be aware that this abridged version of the Guide for an individual Who
Obtains a Business Certificate and the full version of the Guide for an individual Who
Obtains a Business Certificate are available at the website of the STI of the MoF at
www.vmi.lt/cms/web/kmdb/1.16.2.4#Scroll_453.