| Status | Enacted Law |
| Law | On September 19, 2024, the Lithuanian government launched a public consultation on a draft bill to fully implement the OECD’s Pillar Two Model Rules as set out under the EU Minimum Tax Directive. This follows the previous partial implementation of the GloBE Rules to defer implementation under Article 50 of the EU Minimum Tax Directive. On June 19, 2024, the Lithuanian global minimum tax law was published in the Official Gazette. This implements the Article 50 deferral of the EU Minimum Tax Directive. The Order on the procedures for the submission of required information notifications. |
| Effective Date | December 31, 2023 |
| IIR | Article 50 Postponement (but included in the Draft Law) |
| UTPR | Article 50 Postponement (but included in the Draft Law) |
| QDMTT | No (but included in the Draft Law) |
| Filing Deadlines | Information provision under Article 50 of the EU Minimum Tax Directive. |
| Safe Harbours | No (but included in the Draft Law) |
On September 19, 2024, the Lithuanian government launched a public consultation on a draft bill to fully implement the OECD’s Pillar Two Model Rules as set out under the EU Minimum Tax Directive. This follows the previous partial implementation of the GloBE Rules to defer implementation under Article 50 of the EU Minimum Tax Directive.
On June 21, 2024 the Order on the procedures for the submission of information notifications in relation to the implementation of the Pillar 2 was published in the Official Gazette.
On June 19, 2024, the Lithuanian global minimum tax law was published in the Official Gazette. This implements the Article 50 deferral of the EU Minimum Tax Directive.
On June 6, 2024, the Lithuanian Parliament approved Law No. XIV-2680/2024 to implement the Art. 50 deferral in the EU Minimum Tax Directive.
On March 14, 2024, the Lithuanian Parliament updated the draft GloBE Law.
On October 27, 2023, Lithuania’s Ministry of Finance issued a draft law to implement the EU Global Minimum Tax Directive.
However, as Lithuania intends to delay the application of the GloBE rules under Article 50 of the EU directive, the draft law is not comprehensive and only covers limited aspects of the GloBE rules (as required for the application of Article 50).
On October 27, 2023, Lithuania’s Ministry of Finance issued a draft law to implement the EU Minimum Tax Directive. The law was published in the Lithuanian Official Gazette on June 19, 2024 as Law No. XIV-2680 of June 6, 2024 (‘the law’). (An additional law (Law XIV-2681) was enacted on June 19, 2024 to amend Article 589 of the Code of Administrative Offenses to provide for penalties for breaches of the GloBE filing provisions).
As Lithuania intends to delay the application of the GloBE rules under Article 50 of the EU Minimum Tax Directive, the law is not comprehensive and only covers limited aspects of the GloBE rules (as required for the application of Article 50).
Article 50 of the EU Minimum Tax Directive provides that EU Member States in which no more than 12 UPEs of in-scope MNEs are located may elect not to apply the IIR and the UTPR for up to six consecutive fiscal years beginning from December 31, 2023 (ie until December 31, 2029).
Member states that have postponed the application of these rules must incorporate part of the provisions of the EU Minimum Tax Directive into national law in such a way as to ensure the operation of the GloBE rules in the EU, as established by the EU Minimum Tax Directive.
The Lithuanian law, therefore, only transposes the necessary aspects of the EU Minimum Tax Directive.
On September 19, 2024, the Lithuanian government launched a public consultation on a draft law to fully implement the OECD’s Pillar Two Model Rules as set out under the EU Minimum Tax Directive.
GLOBE APPLICATION
Enacted Law
General
Article 50(2) of the EU Minimum Tax Directive provides that where a UPE is located in a Member State that has elected to apply the deferral, other member states are to ensure that the constituent entities of that MNE group are subject (in the Member State in which they are located), to the UTPR top-up tax amount from December 31, 2023.
The election for deferral under Article 50 of the EU Minimum Tax Directive applies to EU Member States in which no more than 12 UPEs of in-scope MNEs are located.
According to Ministry of Finance data, the number of in-scope UPEs in Lithuania, will not exceed 5.
The law aims to transpose and implement the relevant provisions of the EU Minimum Tax Directive. It is relatively short (22 pages) as a number of key elements of the GloBE rules are directly transposed by a static reference from the EU minimum tax directive.
The law specifically provides for:
Scope of application
Article 2 of the law provides that it applies to entities located in Lithuania included in a group (both an MNE group or a domestic group), whose annual net sales income in the consolidated financial statements of its UPE is at least 750 million in at least 2 of the 4 financial years immediately preceding the relevant financial year. Provisions of the EU Minimum Tax Directive/GloBE rules that apply to determining revenue in the cases of mergers or demergers are also included.
Article 2 also defines Excluded Entities as in the EU Minimum Tax Directive.
Definitions
A number of definitions are provided in Article 3 of the law which are necessary to comply with the information provision rules in Article 8.
These definitions tie into the EU Minimum Tax Directive and include:
-Non-profit organization
-Significant distortion of competition
-Partially-owned parent company
-Fiscally transparent entity
-Fiscal year
-Insurance investment entity
-Ultimate parent company
-Group
-Investment fund
-Investment entity
-Constituent entity
-Ownership
-Excluded entity
-Consolidated financial statements
-Controlling interest
-Parent company
-Intermediary parent entity
-Minimum tax
-Real estate investment vehicle
-Permanent establishment
-Pension fund
-Pension services entity
-Acceptable Financial Accounting Standard
-MNE group
-Entity
-Top-up tax
Location of entities
Chapter II of the law includes rules to determine the location of an entity/PE that is part of a group. This is important for determining which EU member state or third country they will be treated as being located in for Pillar 2 purposes.
Draft Law
The Draft Law proposes to apply an Income Inclusion Rule (IIR), Under-Taxed Profits Rule and a domestic minimum top-up tax (intended to be a QDMTT) for fiscal years commencing on or after 1 January 2025.
The Law specifically provides that for the purpose of calculating and administering the GloBE rules in Lithuania the domestic law is to be construed so as to ensure, as far as practicable, consistency with the OECD Model Rules and OECD guidance providing it is not inconsistent with the EU Directive.
The Draft Law is consistent with the EU Minimum Tax Directive and does not include most of the provisions of the OECD Administrative Guidance.
Administrative Guidance
Enacted Law
Whilst the law transposes relevant aspects of the EU Minimum Tax Directive, it does reflect limited aspects of the OECD Administrative Guidance (eg it provides that intermediate parent entity and partially owned parent entities do not include insurance investment entities).
Draft Law
Most aspects of the OECD Administrative Guidance are not included in the Draft Law. The only aspects included are:
-Accrued Pension Expenses (Article 2.5)
-Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity (Article 3.2)
-Restricted Tier 1 Capital (Article 3.3)
Safe Harbour and Penalty Relief Guidance
Enacted Law
Not applicable, as Lithuania is opting for the Article 50 postponement of the EU Minimum Tax Directive.
Draft Law
Article 58 of the Draft Law includes placeholder text for the OECD Safe Harbours. It provides that top-up tax will be zero where the conditions of the international agreement on safe harbours are met. The Government is authorized to provide further details on the application of the Safe Harbours.
ELECTIONS
Elections in the OECD Model Rules
Enacted Law
As Lithuania is opting for the Article 50 postponement of the EU Minimum Tax Directive, most GloBE elections are not relevant.
However, Article 2 of the law does include the Excluded Entity Election
Draft Law
All of the elections included in the OECD Model Rules and the EU Minimum Tax Directive are provided in the Law, including:
-Excluded Entity Election (Article 2(5) of the Draft Law);
-Stock-Based Compensation Election (Article 40 of the Draft Law);
-Election to use the Realization Method (Article 41 of the Draft Law);
-Election to Spread Capital Gains (Article 42 of the Draft Law);
-Consolidation Election (Article 43 of the Draft Law);
-Unclaimed Accrual Election (Article 48(6) of the Draft Law);
-GloBE Loss Election (Article 50 of the Draft Law);
-Prior Year Adjustment Election (Article 51 of the Draft Law);
-De minimis Election (Article 56 of the Draft Law);
-Substance-Based Income Exclusion Election (Article 54 of the Draft Law);
-Deemed Disposal Election (Article 62(4) of the Draft Law)
-Taxable Distribution Election (Article 70 of the Draft Law);
-Tax Transparency Election (Article 69 of the Draft Law); and
-Distribution Tax Regime Election (Article 67 of the Draft Law).
Elections in the Administrative Guidance
Enacted Law
No elections from the OECD Administrative Guidance are included in the law.
Draft Law
No elections from the OECD Administrative Guidance are included in the Draft Law.
New Elections
There are no new elections in the law.
DEVIATIONS FROM THE OECD MODEL RULES/EU GLOBAL MINIMUM TAX DIRECTIVE
Enacted Law
As Lithuania has delayed the application of the GloBE rules under Article 50 of the EU Minimum Tax Directive, the law is not comprehensive and only covers limited aspects of the GloBE rules (as required for the application of Article 50).
Member states that have postponed the application of these rules must incorporate part of the provisions of the EU Minimum Tax Directive into national law in such a way as to ensure the operation of the GloBE rules in the EU, as established by the EU Minimum Tax Directive.
In particular, even though the application of the GloBE rules in Lithuania is to be delayed, Lithuania is required to implement domestic law which ensures that a group filing entity located in another Member State is provided with the necessary information to enable it to complete a GloBE Information Return.
Whilst the law transposes relevant aspects of the EU Minimum Tax Directive, it does not reflect many relevant aspects of the OECD Administrative Guidance.
Most of the aspects of the GloBE rules, included the detailed calculation rules and operation of the IIR and UTPR are not included in the law given the postponement of the rules in Lithuania.
Draft Law
As provided in the EU Minimum Tax Directive, the Law includes a UTPR from 2025. Lithuania’s approach is to apply a UTPR top-up tax rather than a denial of deduction.
As such the carry forward provisions in Article 2.4.2 of the Model Rules for UTPR amounts not sufficient to provide for the additional cash tax expense is not relevant and these rules are not included in the Law.
As noted above, most aspects of the OECD Administrative Guidance are not included in the draft law. This could therefore result in significant divergencies in the application of the GloBE rules from other jurisdictions. Key areas such as marketable transferable tax credits, amended deferred tax transition rules, amendments to the SBIE for mobile employees, substitute loss-carry forwards and excess negative tax guidance are, for instance, not included.
DOMESTIC MINIMUM TAX
General
Enacted Law
Lithuania has not implemented a QDMTT.
Draft Law
Article 71 of the draft Law provides that Lithuania will apply a domestic minimum top-up tax (intended to be a QDMTT) for financial years beginning on or after January 1, 2025.
QDMTT Design Features
Enacted Law
Lithuania has not implemented a QDMTT.
Draft Law
Article 71 of the Draft Law provides that the standard GloBE calculation rules for determining the top-up tax apply, but they are then subject to a number of adjustments. The adjustments include:
Scope
Lithuanian QDMTT is to be paid by the taxable entities including joint ventures but excluding investment entities.
Accounting Standard
Article 71(2) of the Draft Law provides that when determining the net profit or loss for QDMTT purposes, the accounting standard used under Lithuanian accounting law can be used if all the following conditions are met:
-all taxable entities of the group with a location in Lithuania have prepared financial statements in accordance with such a financial accounting standard and their reporting period coincides with the tax period;
-those taxable entities are required to prepare the financial statements under Lithuanian accounting law and if not required, the financial statements must have been audited.
Amended Top-Up Tax Calculation
Article 71(3) of the draft Law amends the standard top-up tax calculation so that the determination of the QDMTT payable does not itself require the deduction of QDMTT (which would include an element of circularity).
Ownership Interests
The Top-up Tax that is subject to the QDMTT is based on the whole amount of the Jurisdictional Top-up Tax irrespective of the Ownership Interests held in the Constituent Entities located in the QDMTT jurisdiction by any Parent Entity of the MNE Group (unlike the general GloBE Rules).
Initial Stage of International Activity Exemption
The UTPR exclusion for MNEs in their initial phase of international activity does not need to be included in a QDMTT, however, it can be included. The Second Set of OECD Administrative Guidance provides jurisdictions with three options regarding the temporary UTPR exclusion in their QDMTT legislation.
Option one allows the jurisdiction not to adopt it.
Option two allows the jurisdiction to adopt it but limits it to cases where no Parent Entity is required to apply a Qualified Income Inclusion Rule with respect to Constituent Entities of an MNE Group located in the QDMTT jurisdiction.
Option three allows the jurisdiction to adopt it without any limitations. (Note, if a jurisdiction opts for Option three, for the purposes of the QDMTT Safe Harbour the Switch-Over Rule would apply).
Lithuania applies option two in Article 71(5) of the Draft Law.
Taxes Pushed Down
Tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules must be excluded, as provided in the OECD Administrative Guidance. This is included in Article 71(8) of the Draft Law.
This preserves Lithuania’s primary right to tax income accruing to a Lithuanian member entity which is also a CFC. If there were no statutory derogation from the general GloBE rules for the calculation of the domestic minimum tax, and the CFC tax paid by the controlling company abroad were included in the included taxes of the Lithuanian CFC, the effective tax rate would be increased. Therefore, excluding the CFC tax from the Lithuanian CFCs covered taxes allows Lithuania to tax low-taxed income at a higher rate than would be the case under an IIR.
Article 71(8) also prevents the pushdown of tax to hybrids, PEs and for taxes on distributions (aside from Lithuanian withholding tax on distributions).
Registration
Enacted Law
Not provided in the Law, but there is a requirement to notify the tax authority of the designated data reporting entity.
Draft Law
Not provided in the Draft Law.
Filing
Enacted Law
The law provides for three key information provision rules:
Notification on the designated taxable entity providing data
Under Article 8(2) of the GMT law the main parent entity whose location is in Lithuania must appoint a designated data reporting entity whose location is in another European Union member state that applies the provision of the minimum effective level of taxation.
Under Article 8(3) of the GMT law, if the MNE group does not have taxable entities located in other European Union member states, the main parent entity must appoint a designated data reporting entity located in the jurisdiction of a third country, with which Lithuania applies a relevant competent authority agreement in of the financial year for which the supplementary tax information declaration is submitted.
Article 8(6) of the GMT law provides that the main parent entity, whose location is in Lithuania, must submit a notification to the State Tax Inspectorate (‘STI’) about the designated data-providing entity.
Section 18 of the Order on Information Notices (the ‘Order’) states that the report on the designated entity is completed and submitted to the STI no later than within 12 calendar months from the last day of the reporting financial year.
Notification of the designated entity is provided by MNEs main parent entity, whose location is in Lithuania.
Section 20 of the Order provides that other taxable entities belonging to the same MNE group located in Lithuania do not have an obligation to submit a Notice of Designated Entity, if it was performed by the main parent entity of the MNE group, whose location is in Lithuania.
Notification of data transfer
Article 8(4) of the GMT Law provides that taxable entities located in Lithuania must submit specified data to the designated data reporting entity, which is required for the GIR Return.
Section 29 of the Order provides that the obligation falls to the main parent entity in Lithuania, which must provide the data no later than within 13 calendar months from the end of the financial year and submit a confirmation notification on the fulfilment of this requirement to the STI no later than within 15 calendar months from the last day of the reporting financial year ( 18 calendar months for the first year).
Section 34 of the Order provides that other taxable entities located in Lithuania and belonging to the same MNE group are not required to submit a Data Transfer Notification, if it was submitted by the main parent entity of the MNE group, whose location is in Lithuania.
If the MNE group consists of several parent entities, located in Lithuania, the Notification of data transfer is submitted by one designated main parent entity.
In cases where the MNE group operates only in member states which have elected for an Article 50 deferment, Section 37 of the Order provides that the MNE group is not required to submit a Data Transfer Notification to the STI.
Notification of the beginning of the initial stage of activity
Chapter VI of the Order requires a notification to be submitted of the start of the initial stage of a groups international activity (for the purposes of the initial stage of international activity exemption in Article 9 of the OECD Model Rules).
Section 49 of the Order provides that the notification must be submitted no later than within 15 calendar months from the last day of the reporting financial year.
Section 51 of the Order provides that the Notification of the beginning of the initial stage of activity is submitted to the STI by one of the following entities:
The taxable entity whose location is in Lithuania,
Another entity of the same group that is located in Lithuania that is appointed by them.
Section 52 of the Order provides that if the main parent entity, whose location is in Lithuania, submits a Notice on the start of the initial stage of activity to the STI, other taxable entities belonging to the same MNE group, whose location is in Lithuania, are not obliged to submit this notification .
Section 53 of the Order provides that if there are several group entities located in Lithuania, one designated taxable entity submits the Notification on the start of the initial stage of activity on behalf of the group.
Draft Law
The relevant aspects of the submission of a GloBE Information Return (GIR) are included, as provided in the EU Directive.
Every Constituent Entity located in Lithuania will have an obligation to file a GIR in Lithuania. However, this obligation can be discharged if the GIR is filed by:
-The Ultimate Parent Entity, or
-The Designated Filing Entity.
Where the GIR is being filed by either the Ultimate Parent Entity or the Designated Filing Entity, the Constituent Entity, must file a notification with the Tax Authority.
The notification must contain:
-Details of the entity that is filing the GIR, and
-The jurisdiction in which such an entity is located.
Where the GIR is filed by the Designated Local Entity it needs to outline the Constituent Entities that it is filing on behalf of.
Both the GIR and associated notifications must be filed no later than 15 months after the end of the fiscal year (with an 18-month deadline for the Transition Year).
As well as the GIR, Articles 73/74 of the Draft Law requires the submission of an IIR/UTPR Return, and QDMTT Return (all by the GIR filing deadline).
Payment
Enacted Law
Not provided in the law.
Draft Law
Articles 73/74 of the Draft Law requires payment of top-up tax by the filing deadline.
Penalties
Enacted Law
The law on the Amendment of Article 589 of the Code of Administrative Offenses proposes to set fines for non-compliance with the filing requirements (generally from 1,800 euros to 3,800 euros).
Draft Law
Not provided in the law, however, Article 82 of the Draft Law does propose to implement the Transitional Penalty Relief regime.
Article 5(3) of the GloBE Regulation (as inserted by the December 2024 amended GloBE Regulation) provides that domestic constituent entities of an in-scope MNE or domestic group (including excluded entities) must submit a registration notification to the tax administration within 6 months after the end of the financial year after the group has entered the scope of the GloBE rules in Liechtenstein.
On January 9, 2025, the GloBE Registration form was issued.
| Lithuania | |||
|---|---|---|---|
| Effective Date: | Accounting periods beginning on or after January 1, 2025 | ||
| Section/Article | |||
| First Set of OECD Administrative Guidance | |||
| 1.1 | Rebasing monetary thresholds in the GloBE Rules | ||
| 1.2 | Deemed consolidation test | ||
| 1.3 | Consolidated deferred tax amounts | ||
| 1.4 | Sovereign wealth funds and the definition of Ultimate Parent Entity | ||
| 1.5 | Clarifying the definition of ‘Excluded Entity’ | ||
| 1.6 | Meaning of ancillary for Non-Profit Organisations | ||
| 2.1 | Intra-group transactions accounted at cost | ||
| 2.2 | Excluded Equity Gains or Loss and hedges of investments in foreign operations | ||
| 2.3 | Excluded Dividends- Asymmetric treatment of dividends and distributions | ||
| 2.4 | Debt release Election | ||
| 2.5 | Accrued Pension Expenses | Draft Law, Art 34 | |
| 2.6 | Covered Taxes on deemed distributions | ||
| 2.7 | Excess Negative Tax Carry-forward guidance | ||
| 2.8 | Substitute Loss carry forwards | ||
| 2.9 | Equity Gain or loss inclusion election | ||
| 2.9 | Qualified Ownership Interest/Flow through entity | ||
| 2.1 | Allocation of taxes arising under a Blended CFC Tax Regimes | ||
| 3.1 | Application of Taxable Distribution Method Election to Insurance Investment Entities | ||
| 3.2 | Exclusion of Insurance Investment Entities from the definition of Intermediate Parent Entity and Partially-Owned Parent Entity | Draft Law, Art 3(16)/(62) | |
| 3.3 | Restricted Tier 1 Capital | Draft Law, Art 39 | |
| 3.4 | Liabilities related to Excluded Dividends and Excluded Equity Gain or Loss from securities held on behalf of policyholders | ||
| 3.5 | Simplification for Short-term Portfolio Shareholdings | ||
| 3.6 | Application of Tax transparency election to Mutual insurance companies | ||
| 4.1 | Deferred tax assets with respect to tax credits under Article 9.1.1 | ||
| 4.2 | Applicability of Article 9.1.3 to transactions similar to asset transfers | ||
| 4.3 | Asset carrying value and deferred taxes under 9.1.3 | ||
| Second Set of OECD Administrative Guidance | |||
| 1 | Currency conversion rules | ||
| 2 | MTTCs | ||
| 3 | SBIE Rules | ||
| – Foreign rules | |||
| Stock-based compensation election | |||
| Leases | |||
| – Impairment losses inc in tangible asset value | |||
| 4.1 | QDMTT Safe Harbour | ||
| 4.2 | UTPR Safe Harbour | ||
| Third Set of OECD Administrative Guidance | |||
| 1 | Transitional CbCR – Purchase Accounting Adjustments (consistent reporting condition, goodwill impairment adjustment) | ||
| 2.2.1 | Transitional CbCR – JVs | ||
| 2.3.1 | Transitional CbCR – Same Financial Statements/Local Financial Statements for Statutory Reporting | ||
| 2.3.2 | Transitional CbCR – Using different accounting standards | ||
| 2.3.3 | Transitional CbCR – Adjustments to Qualified Financial Statements/Dividend Mismatches | ||
| 2.3.4 | Transitional CbCR – MNEs not required to file CbC Reports | ||
| 2.3.5 | Transitional CbCR – Qualified Financial Statements for PEs | ||
| 2.4.2 | Transitional CbCR – Treatment of Taxes on income of PEs, CFCs, and Hybrid Entities | ||
| 2.6 | Transitional CbCR – Treatment of hybrid arbitrage arrangements | ||
| 3.1 | Identifying Consolidated Revenue | ||
| 3.2 | Mismatch between Fiscal Years of the UPE and another Constituent Entity | ||
| 3.3 | Mismatch between Fiscal Year and Tax Year of Constituent Entity | ||
| 4.2.1 | Blended CFCs -multiple GloBE Jurisdictional ETRs | ||
| 4.2.2 | Blended CFCs – not required to calculate an ETR | ||
| 4.2.3 | Blended CFCs – income of non-GloBE Entities | ||
| 5.3 | 30 June 2026 Filing deadline | ||
| 6 | NMCE Simplified Calcs | ||
| Fourth Set of OECD Administrative Guidance | |||
| 1.2.1 | Aggregate DTL Category basis | ||
| 1.2.1 | Exclusion of certain types of GL accounts and separate tracking | ||
| 1.2.1 | Exclusion of GL accounts that generate standalone DTAs | ||
| 1.2.1 | Exclusion of swinging accounts and separate tracking | ||
| 1.2.2 | FIFO/LIFO Basis | ||
| 1.2.3 | Aggregation of Short-term DTLs | ||
| 1.2.2 | Reversal of DTLs that accrued before the Transition Year | ||
| 1.2.2 | 5 year unclaimed accrual election | ||
| 2.1.2 | Recalculated deferred tax where GloBE carrying value differs from accounting carrying value | ||
| 2.1.2 | GloBE and accounting carrying values and the Transition Rules | ||
| 2.1.2 | Additional provisions for Intragroup transactions accounted for at cost | ||
| 2.1.2 | Exclusion of GloBE carrying value from SBIE | ||
| 3.1.3 | General rules for allocating cross-border, current taxes under a cross-crediting corporate tax system: 4 Steps | ||
| 3.1.3 | Specific rules for foreign PEs/CFCs, Hybrids/rev hybrids with domestic source income | ||
| 3.1.3 | Cross-crediting between Permanent Establishments and distributions from foreign subsidiaries | ||
| 4.1 | Extension of the Substitute Loss Carry-forward DTA to PEs, hybrids and rev hybrids | ||
| 4.2 | Allocation of deferred tax expenses and benefits from a Parent Entity to a CFC, PE Hybrid or Rev Hybrid: 5 step process | ||
| 4.2.2 | Five-Year Election to exclude the allocation of all deferred tax expenses and benefits to CFCs, PEs, Hybrids and Rev Hybrids | ||
| 4.2.3 | Exclusion of deferred tax assets or liabilities arising under a Blended CFC regime from transition rules | ||
| 5.2.2 | Determining GloBE status when a Flow-through Entity is held directly by another Flow-through Entity | ||
| 5.3.2 | Non-group owners: Partially owned Flow-through Entities | ||
| 5.3.5 | Non-group owners: Indirect minority ownership | ||
| 5.4.2 | Taxes allocated to a flow-through entity | ||
| 5.5.2 | Hybrid entities – Taxes pushed down include indirect owners | ||
| 5.5.4 | Hybrid entities – Entities located in jurisdictions without a Corporate Income Tax system | ||
| 5.6.2 | Extension of taxes pushed down to include Reverse Hybrids | ||
| 6.1.4 | Option to exclude a Securitization Entity from scope of QDMTT | ||
| 6.1.4 | Option to not impose top-up tax liabilities on SPVs used in securitization transactions | ||
| 6.1.4 | Amendments to the Switch-Off rule | ||
| 6.1.4 | New definition: Securitization Entity | ||
| 6.1.4 | New definition: Securitization Arrangement | ||
| January 2025 OECD Administrtive Guidance | |||
| 1 | Articles 8.1.4 and 8.1.5 | ||
| 1 | Amendments to CbCR Safe Harbour for 9.1 | ||
| 1 | Amendments to QDMTT Safe Harbour for 9.1 | ||
| 1 | Article 9.1 of the GloBE Rules | ||
| 1 | Central Record of Legislation with Transitional Qualified Status |
| Note | Lithuania | |
|---|---|---|
| QDMTT?(Enacted/Draft) | Is there a QDMTT in the Legislation? | Enacted Law |
| Effective Date: | Effective from January 1, 2025 | |
| Administrative Guidance/Safe Harbour Guidance? | Are the provisions of the OECD Administrative Guidance and Safe Harbour Guidance reflected in the current legislation? | Partially |
| Separate/Transposed QDMTT | Is the QDMTT a Separate QDMTT or a Transposition of the GloBE Rules (with Amendments) | Transposed |
| Domestic Groups | A QDMTT can also apply to purely domestic groups. | Yes |
| Scope Definitions | The definitions of Ultimate Parent Entity, MNE Group, and Constituent Entity correspond with the definitions in the GloBE Rules. | Yes, transposed from Art. 71(1) |
| Income and covered taxes of Constituent Entities | The QDMTT must compute the tax liability for the jurisdiction by taking into account the income and covered taxes of Constituent Entities under the GloBE Rules. | Yes, transposed from Art. 71(1) |
| Separate ETRs | A QDMTT must determine a separate ETR and Top-up Tax amount for MOCEs, Joint Ventures and JV Subsidiaries. | Yes, transposed from Art. 71(1) |
| Charging | A QDMTT must impose a Top-up Tax on one or more domestic Constituent Entities on the Excess Profits of all domestic Constituent Entities, including the domestic Parent Entity. | Yes, transposed from Art. 71(1) |
| Enforceability | The legal liability for the domestic top-up tax needs to be enforceable against at least one Constituent Entity in the jurisdiction. | Yes, Art. 74 |
| Different Accounting Standard? – Optional | Is the use of a local accounting standard optional? | No |
| Different Accounting Standard? – Mandatory | Is the AG2 guidance followed? | Yes, Art. 71(2) – draft law |
| Different Accounting Standard? – Default GloBE rules | Do the general GloBE rules apply for the QDMTT accounting standard? | No |
| Require 100% ownership? | The QDMTT )can require 100% ownership | No |
| Differences to GloBE Rules: tighter restriction is consistent with local tax rules | The QDMTT can be more restrictive than the GloBE Rules where the tighter restriction is consistent with local tax rules. | None |
| Differences to GloBE Rules: Not relevant to in the context of its domestic tax system | The QDMTT can exclude adjustments that are not relevant to in the context of its domestic tax system. | None |
| Income/Loss of a PE | The QDMTT must exclude the income or loss of a foreign Permanent Establishment from the income or loss of the Main Entity. | Yes, transposed from Art. 71(1) |
| Tax Transparency | A QDMTT must include certain tax transparent provisions. | Yes, transposed from Art. 71(1) |
| Adjusted Covered Taxes Consistency | The range of taxes included in Covered Taxes needs to be the same or narrower, as under the GloBE rules. | Yes, transposed from Art. 71(1) |
| GloBE Loss Election? | Not Required in QDMTT | Yes, transposed from Art. 71(1) |
| No Pushdown to CFC or PE | A QDMTT must exclude: (1) tax paid or incurred by a Constituent Entity-owner under a CFC Tax Regime that is pushed down to a domestic Constituent Entity in the GloBE Rules and (2) tax paid or incurred by a Main Entity that is allocated to a PE in the jurisdiction. | Yes, Art. 71(8) |
| Exclude tax allocated to Hybrids | Second AG Guidance | Yes, Art. 71(8) |
| Exclude allocated net basis tax on dividends (except WHT) | Second AG Guidance | Yes, Art. 71(8) |
| UPE that is a Flow-Through Entity | Second AG Guidance | Yes, transposed from Art. 71(1) |
| UPE subject to Deductible Dividend Regime | Second AG Guidance | Yes, transposed from Art. 71(1) |
| Eligible Distribution Tax Systems | Second AG Guidance | Yes, transposed from Art. 71(1) |
| ETR Computation for Investment Entities | Second AG Guidance | Yes, transposed from Art. 71(1) |
| Investment Entity Tax Transparency Election | Second AG Guidance | Yes, transposed from Art. 71(1) |
| Taxable Distribution Method Election | Second AG Guidance | Yes, transposed from Art. 71(1) |
| Multi-Parented MNE Groups | Second AG Guidance | Yes, transposed from Art. 71(1) |
| Additional Top-Up Tax/Excess Negative Tax Expense | A QDMTT needs to have provisions for additional top-up tax where there is no Net GloBE Income and the Adjusted Covered are less than zero and less than the Expected Adjusted Covered Taxes. Amount. Excess Negative Tax Carry-forward rules also need to be in place. | Yes, transposed from Art. 71(1) |
| Modified Top-Up Tax Formula | The QDMTT top-up tax formula needs to be modified as the GloBE Rules subtract tax paid under a QDMTT from the current GloBE Top-up Tax. | Yes, Art. 71(3) |
| Same Approach As GloBE Rules | A QDMTT must require that top-up tax is taken into account by the relevant Constituent Entity at the same time and in the same manner as under the GloBE Rules (eg it can’t be carried forward). | Yes, transposed from Art. 71(1) |
| SBIE Included? | Not Required in QDMTT | Yes, transposed from Art. 71(1) |
| SBIE Rates same as GloBE? | Not Required in QDMTT | Yes, transposed from Art. 71(1) |
| De Minimis Rule Included? | Not Required in QDMTT | Yes, transposed from Art. 71(1) |
| Restructuring Rules? | A QDMTT needs to include restructuring rules as provided in the GloBE rules to the extent necessary to conform to the tax reorganization rules in the jurisdiction. | Yes, transposed from Art. 71(1) |
| Safe Harbours? | A QDMTT needs to contain GloBE safe harbours. | Yes, transposed from Art. 71(1) |
| Deferred Tax Transition Rule? | A QDMTT must include the deferred tax starting point under Article 9.1.1 of the Model Rules. | Yes, transposed from Art. 71(1) |
| SBIE Transitional Rates? | Not Required in QDMTT | Yes, transposed from Art. 71(1) |
| Initial Phase of International Activity Exemption | Not Required in QDMTT | Yes, Art. 71(5) |
| Elections? | Where the GloBE Rules permit an election, a QDMTT must generally also provide for the election and require the MNE Group to make the same election under the QDMTT as is made under the GloBE Rules. | Yes, Art. 71(4) |
| Deferred Tax transition: First time or refreshing rule? | Second AG | Yes, Art. 71(7) |
| New transition year – amend tax attributes? | Second AG | – |
| Currency provisions? | Second AG | – |
| DTL Recapture rules – Aggregate DTL Categories | Fourth AG, 1.2.8 | – |
| DTL Recapture rules Unclaimed Accrual Five-Year Election | Fourth AG, 1.2.8 | – |
| Reverse Hybrid Pushdown | Fourth AG, 5.6.2 | – |
| Securitization Entities – A QDMTT may also exclude a Securitisation Entity from its scope | Fourth AG, 6.1.4 | – |
| Securitization Entities – A jurisdiction may allocate the QDMTT liability for any QDMTT top-up tax to another Constituent Entity (if any) that is located in the jurisdiction | Fourth AG, 6.1.4 | – |
| Note |
TODO
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