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Auditor Daiva Zumbakiene
Director of UAB Raimda auditas 
The member of ACCA
25 January 2015

Inquiry related to this article can be found in the attached file (PDF)




Usually all the official institutions to any kind of inquiries should answer within 20 (twenty) working days. The same reversionary period is given when legal person/entity or natural person has to propose an answer to respective institutions, for example replications or remarks concerning review instrument or other kind a document. 

It is widely accepted that 20 (twenty) working days period is sufficient enough for proposing formal answer. So when one is constrained to wait for a response from the Lithuanian State Tax Inspectorate for 10 (ten) months a question naturally arouses whether this king of length of period is really necessary to prepare a respective answer. What might be the reasons that caused this inadequate situation? Maybe the question proposed by a person has no analogue in the Lithuanian taxation system up to now or the reason for this delay might be the shortage of employees in STI?

According to the order No VA-66 of 9 October 2007 of the Head of State Tax Inspectorate Under the Ministry of Finance of the Republic of Lithuania (later STI) “Concerning rules for providing advice and answers to inquiries at the State Tax Inspectorate approval” Point 36 the answer to simple inquiry should be given within 20 working days. 

The Point 37 states that “If there are objective reasons (the taxation practice is different or is not formed at all, the generalized taxation law explanation is not prepared, consultation from other agency is required, etc.) that interfere with providing an answer to inquiry within the period stated in the Point 36, the period could be extended to 20 working days”. 

The indirect presumption can be made that STI can extend response period for extra 20 working days as many times as they want. 

I believe that this is the case where the criteria of fairness must be applied especially when we involve the provisions applied to all the tax payers of value-added tax (VAT). 

It has been more than 3 years since the European Union Case C-587/10 27 September 2012 judgment. To state briefly the provision of the judgment is still not validated in Lithuanian taxation system. Validation might require particular commentary for VAT law and this might be the reason why STI is delaying to give an answer to my inquiry. 

Facts about the Case C-587/10 27 September 2012: 

• Parties of the Case: German Company Vogtländische Straßen-, Tief- und Rohrleitungsbau GmbH Rodewisch (VSTR) v Plauen Tax Inspectorate Finanzamt Plauen. 
• Finanzamt Plauen refused to exempt a supply of goods made by a branch VSTR from value-added tax. 
• Key words: Taxation – Value-added tax – Supply of goods – Taxation of chain transactions – Refusal to exempt on grounds of failure to produce the VAT identification number of the person acquiring goods.

Litigious question concerns the status of a taxable person. Article 4(1) of the Sixth Directive defines a ‘taxable person’ as follows: “Taxable person” shall mean any person who independently carries out in any place any economic activity, whatever the purpose or results of that activity. 

• In November 1998 a branch of VSTR established in Germany sold two stone-crushing machines to Atlantic International Trading Co. (‘Atlantic’), established in the United States. 
• Atlantic had a subsidiary in Portugal but was not registered in any Member State of the European Union for VAT purposes. • The branch of VSTR requested Atlantic to provide its VAT identification number. Atlantic replied that it had sold the machines on to a company established in Finland and gave the seller the VAT identification number of the Finnish company. The branch verified this information.
• Those goods were subsequently collected from the premises of the branch of VSTR by a transport company contracted by Atlantic and taken first by land to Lübeck (Germany) and then by sea to Finland. 

The branch of VSTR issued Atlantic with an invoice without VAT for the supply of the stone-crushers, bearing the VAT identification number of the Finnish undertaking to which those goods were sold. 

 The scheme of the situation:


 • The Plauen Tax Inspectorate Finanzamt Plauen took the view that the supply between the branch of VSTR and Atlantic could not be exempt from VAT as the former did not provide the VAT identification number of the latter.


The final judgment of the Court (Fourth Chamber):

• Transaction is possible, that is to say legal. The Plauen Tax Inspectorate Finanzamt Plauen lost the case. 

• The condition set out in the first subparagraph of Article 28c(A)(a) of the Sixth Directive, according to which the person acquiring the goods must be a ‘taxable person … acting as such in [another] Member State’ does not, in itself, imply that the person acquiring the goods must trade under a VAT identification number in the course of the acquisition at issue. 

• The fact that the person acquiring the goods is established in a third State, as in the case in the main proceedings, cannot in principle be such as to justify a different answer.

It seems natural that new juridical practice concerning such complicate question as VAT might be problematic and any commentaries might take time to be prepared. 

On the other hand, more than 3 years since the European Union Case C-587/10 27 September 2012 judgment and 10 months since the written inquiry should be sufficient time for the State Tax Inspectorate to provide an answer and there must be ways for STI to work more efficiently. 

In my opinion VAT law is one of the most complicated laws in Lithuanian taxation system and absence of its provisions explication threatens with ambiguity and subjectivity. The more explicit and specific the situation is, the easier for all.