Plan contractor hiring in Lithuania

Engage an independent Lithuanian service provider through a civil services agreement and pay against their business invoices. The first onboarding decision is whether the person works under individuali veikla pagal pažymą, individual activity under a certificate, or a verslo liudijimas, the more restricted business certificate. Those documents support different kinds of business and different customer relationships. For genuine individual activity, the contractor declares and pays their own income tax. Record the trading status before agreeing the scope and price, then describe the service or result being purchased so the agreement matches how the person will actually work.

Sources: State Labour Inspectorate, recognising employment, VMI, individual activity guide, VMI, business-certificate restrictions

If the line is crossed

A services arrangement that has the characteristics of employment can be recognised as an employment relationship. For work in Lithuania, subordinate paid work without the required written employment contract or social-insurance notification can constitute illegal work. That changes the engagement and requires the parties to address employment obligations. Income-tax collection needs a separate check: VMI expressly classifies a Lithuanian resident's employment income from a foreign entity without a Lithuanian permanent establishment as B-class income. Do not turn a classification finding into an automatic instruction to deduct Lithuanian salary tax from the next payment; establish the employer's actual presence and tax obligations.

Sources: State Labour Inspectorate, recognising employment, VMI, Personal Income Tax Law commentary, articles 22 and 23

Individualios veiklos pažyma

Individual activity certificate

Request the individual activity certificate when creating the supplier record. It confirms that the person has registered the activity with VMI and identifies what they are registered to do. The State Data Agency explains that registration uses EVRK 2.1 activity categories, including the main activity and additional activities at the six-digit subclass level. Use those descriptions to check the scope of work. An activity code classifies the service; it does not identify the supplier for VAT. Keep the contractor's identity and any VAT registration as separate entries in the onboarding record.

Issued by: VMI to the contractor; request a copy for onboarding.

Timing: Before approving the supplier and when the registered activity changes.

Sources: State Data Agency, activity registration and classification

GPM311

Annual personal income tax declaration

The contractor submits GPM311 to VMI to declare annual individual-activity income and pay the resulting income tax. A foreign business paying outside any Lithuanian permanent establishment pays income that VMI places in class B, where the recipient handles the tax. The buyer should retain its invoices and payment records so the contractor can reconcile the amounts received. Treat GPM311 as the contractor's return to the tax authority; it is not a withholding certificate the foreign customer must issue or a routine document that must accompany each service invoice.

Issued by: The Lithuanian resident contractor files with VMI.

Timing: In the annual income-tax filing cycle.

Sources: VMI, individual activity guide, VMI, Personal Income Tax Law commentary, articles 22 and 23

A general-rule business service supplied to a customer established abroad is outside the scope of Lithuanian VAT. The rule locates the service in the business customer's country and covers both EU and non-EU customers. Establish which business is receiving the work and where it belongs before deciding what tax should appear on the invoice. Special service categories have their own place-of-supply rules, so a foreign billing address alone does not decide every case. For the ordinary cross-border professional service, record the customer's business status and the service description; avoid describing the absence of Lithuanian VAT as a universal zero-rated export exemption.

Sources: VMI, place of supply of services, Ministry of Finance, value added tax

What an invoice has to show

• PVM supplier number and the customer's applicable VAT identifier

  A Lithuanian VAT invoice carries the supplier's PVM number and the customer's VAT identifier supplied for the purchase. VMI's current content table retains these identifiers for suppliers applying SVS. Give an EU contractor the correct purchasing entity's number before billing, together with the entity details, service description and dates. A certificate's EVRK activity code cannot fill this role. For a non-EU customer, establish its business identity without inventing an EU VAT number merely to satisfy a mandatory box in the buyer's software.

  Sources: VMI, VAT invoice information, State Data Agency, activity registration and classification

• Atvirkštinis apmokestinimas where the customer accounts for VAT

  Atvirkštinis apmokestinimas is the Lithuanian reverse-charge wording for an invoice on which the customer is responsible for accounting for VAT. VMI includes it in the special requirements for both ordinary VAT payers and SVS users. Route an invoice carrying this wording to the accounts team responsible for the customer's VAT return. Apply it to a transaction with that liability, including the relevant EU business-service case; an overseas address alone does not mean every customer anywhere in the world should receive the same tax instruction.

  Sources: VMI, VAT invoice information

Agree the payment due date separately from the Lithuanian contractor's obligation to issue an invoice for the service. A non-VAT individual-activity provider issues the invoice when the service is supplied, and can state that payment will follow later. For qualifying services to another EU member state where the customer accounts for VAT, the VAT invoice must be issued by the fifteenth of the following month. That is a billing deadline. Record the service period, invoice receipt and agreed due date separately so an internal approval delay does not become a request to postpone the contractor's invoice.

Sources: VMI, individual activity guide, VMI, VAT invoice guide

The currency on the invoice

A Lithuanian VAT invoice may state its taxable value and other amounts in a foreign currency. Any Lithuanian VAT amount charged must also be shown in euros. This permits the parties to agree a service price in euros or another currency without confusing the invoice's commercial amount with its tax display. Record the agreed currency in the contract and supplier record, then check that the amount submitted for payment uses the same unit. If the service carries no Lithuanian VAT, the euro tax-display requirement does not create a Lithuanian VAT charge.

Sources: VMI, VAT invoice guide

Deducting Sodra contributions from the service invoice

For genuine individual activity, the provider pays their own Sodra contributions. The insurance includes pension, sickness, maternity and health cover, while individual activity itself does not provide unemployment insurance. These costs matter when agreeing a sustainable fee, but a contractor's contribution calculation should not be turned into a buyer payroll deduction. Record whether the quoted price includes the provider's own operating costs and taxes. If the working arrangement changes into employment, reassess the engagement before applying an employee contribution process to what is still being presented as a business invoice.

Sources: Sodra, individual activity and contributions

Treating i.SAF as a foreign customer's invoice-upload obligation

i.SAF is the Lithuanian VAT-invoice register reporting system. The reporting obligation concerns Lithuanian VAT-registered taxable persons, with an exclusion for those applying SVS in Lithuania. For an ordinary registrant, issued invoices for supplies outside Lithuanian VAT scope can still belong in that register. A foreign buyer without Lithuanian presence should give the contractor accurate invoice details and resolve corrections with them. It should not make its own upload to i.SAF a condition of payment or assume that an invoice without Lithuanian VAT is absent from the supplier's reporting.

Sources: VMI, i.SAF reporting and corrections

Leaving the contractor to explain a payment with incomplete records

The receiving institution can ask its customer to justify the source of funds, and the Bank of Lithuania names invoices and agreements among suitable supporting documents. Give the contractor a service agreement and invoice reference that explain the payment and match the supplier's identity. If a document request arrives, provide the relevant transaction records so the contractor can answer it. The institution chooses what evidence it needs for the customer and transaction. Treat that request as a bank review of the receipt, without inventing an additional buyer tax declaration or a guaranteed clearance deadline.

Sources: Bank of Lithuania, verifying the source of funds