The expert's eye
This case is a perfect illustration of the dangers incurred by a company that decides to trade abroad without considering the VAT treatment of its activity.
By considering VAT as a subordinate issue, the machine has completely seized up. And the results?
- A cash flow burdened by a €3.4 million VAT credit blocked for several years;
- A fierce administrative and legal battle against the Lithuanian tax authorities, which (fortunately) ended in court.
In short, a lot of trouble and money spent for nothing. Because if the company had taken the trouble to inform itself correctly from the start, it would have known that Lithuanian VAT regulations required prior VAT registration in order to be able to reclaim VAT on its purchases.