We successfully represented a multinational agro company in a tax dispute on the application of ‘safety net’ and ‘triangulation’ provisions, which are provided in the EU VAT directive. Tax authorities argued that the client is liable to pay VAT in Lithuania, although the transportation of goods did not end in Lithuania. We convinced that our client met all the conditions provided in the EU VAT Directive and the case-law of the CJEU, thus Lithuanian domestic rules cannot add additional stricter conditions. The Commission on Tax Disputes ruled in favor of our client and explained that ‘safety net’ and ‘triangulation’ rules shall be interpreted in the light of the EU VAT Directive without adding additional requirements. Tax authorities gave up and did not appeal this ruling. The result – all calculated taxes of the amount of EUR 3 million were abolished.
It was the first tax dispute in Lithuania where ‘safety net’ and ‘triangulation’ rules were analyzed in light of the EU VAT Directive. Our tax team created a legal precedent, which admits that Lithuania did not correctly implemented the EU VAT Directive and enacted stricter provisions on ‘safety net’ and ‘triangulation’ rules.