Lithuania, as a member of both the European Union (EU) and the Organisation for Economic Co-operation and Development (OECD), has adopted the Country-by-Country Reporting (CbCR) requirements in accordance with the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13. These regulations aim to enhance tax transparency and ensure that multinational enterprises (MNEs) pay taxes in the jurisdictions where they generate profits. This guide is intended to provide Chief Financial Officers (CFOs) and financial executives in Lithuania with an overview of the CbCR obligations, detailing applicability, reporting requirements, penalties for non-compliance, and key resources.

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Applicability of CbCR in Lithuania

Criteria for Reporting:

• CbCR obligations in Lithuania apply to multinational enterprise (MNE) groups with consolidated annual revenues of €750 million or more in the preceding fiscal year.
• The ultimate parent entity of an MNE group must file the CbC report if it is tax resident in Lithuania.
• In cases where the ultimate parent entity is located in a jurisdiction that does not require CbCR or does not exchange CbC reports, a surrogate parent entity in Lithuania may be required to file the report.

Relevant Legislation:

• Lithuania implemented the CbCR requirements through the Law on Tax Administration and follows the EU’s Council Directive (EU) 2016/881, which amended Directive 2011/16/EU regarding the automatic exchange of information.
• The legal framework aligns Lithuania’s CbCR rules with international standards set by the OECD, ensuring consistency across EU member states.

Reporting Requirements

Information to be Reported:

• The CbC report must include key financial data for each tax jurisdiction in which the MNE operates, such as:
  • Total revenues (broken down into related-party and unrelated-party revenues)
  • Profit (or loss) before tax
  • Income tax paid and accrued
  • Stated capital
  • Accumulated earnings
  • Number of employees
  • Tangible assets other than cash or cash equivalents
• The report must also list all constituent entities of the MNE group, detailing their tax jurisdictions and primary business activities.

Form and Submission:

• The CbC report must be submitted in XML format, consistent with the OECD’s standard template for such filings.
• Submission is made through Lithuania’s State Tax Inspectorate (STI) online portal.
  • Detailed submission guidelines and XML format instructions can be found on the State Tax Inspectorate website.

Filing Deadlines

• The CbC report must be filed within 12 months following the end of the fiscal year of the MNE group. For instance, if the fiscal year ends on 31 December 2023, the CbC report must be submitted by 31 December 2024.
• MNEs operating in Lithuania that are not the ultimate parent entity but are part of a group subject to CbCR must notify the STI of the entity responsible for filing the CbC report and the jurisdiction in which it will be filed. This notification must be made by the end of the fiscal year.

Penalties for Non-Compliance

Penalties:

• Lithuania imposes strict penalties for non-compliance with CbCR obligations:
  • Failure to submit the CbC report, or filing it late, can result in fines ranging from €1,400 to €5,800.
  • Incorrect or incomplete reports may also lead to fines and increased scrutiny from tax authorities.
  • Repeated non-compliance or significant reporting errors can result in higher fines and additional sanctions.

Defences:

• In cases of non-compliance, MNEs may present reasonable cause or technical difficulties as a defence to mitigate penalties. However, each case is reviewed individually by the State Tax Inspectorate (STI).

Confidentiality and Use of Information

Data Protection:

• Lithuania ensures that the confidentiality of CbC report data is safeguarded according to OECD guidelines.
• CbC data is exchanged with other tax jurisdictions under competent authority agreements (CAAs), but only with jurisdictions that meet OECD confidentiality and data protection standards.
• The information is used primarily for risk assessment and the identification of BEPS-related risks, and is not disclosed to the public.