Law on Charity and Sponsorship

Published: 1993-04-06

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Article 1. Objectives of the Law
The objective  of the  Law on Charity and Sponsorship of the
Republic of Lithuania shall be to regulate and foster charity and
sponsorship in  the Republic  of Lithuania  by establishing cases
where the  reliefs of  state taxes, customs duties and state dues
shall apply.
Article 2. Objectives of Charity and Sponsorship
Charity shall be dispensed in order to:
1)  aid   and  render   assistance  and   free  services  to
individuals for  whom it  is  indispensable:  disabled,  sick  or
lonely individuals  incapable of  work, orphans  or children  who
have  lost   parental  care,  large  families  or  families  with
insufficient means,  unemployed, as  well  as  individuals  whose
income cannot guarantee the minimum standard of living;
2)  aid   charitable  organizations  and  the  Caritas  (the
Lithuanian women's  association) organizations,  as well as funds
and religious  centers which  dispense  charity  to  and  sponsor
individuals indicated  in Item  1 of  Part 1  of Article  2,  and
Lithuanian communities in foreign states;
3) aid  individuals who  have suffered from wars and natural
or ecological  disasters, epidemics  of infections,  and help  to
liquidate the consequences of said disasters and epidemics; and
4) help  to find  work by  establishing  working  places  or
requalifying socially-needy individuals who have lost their jobs.
Sponsorship shall be provided in order to:
1) promote  the programmes  of the  development of  science,
culture, education,  art, religion, sports, health care or social
care and support;
2) promote  the programmes  of environmental  protection and
the works of environmental planning;
3) support  the programmes  of works aimed at the protection
and  restoration   of   the   monuments   of   history,   nature,
architecture, culture and art; and
4) foster  other activities and programmes of social utility
which  are   launched  by  the  Government  of  the  Republic  of
Article 3. Acknowledgment of Charity and Sponsorship
The  voluntary  and  not  repayable  material  aid  or  free
rendering of  services excluding  any material  obligation of the
donee with  regard to  the donor  thereof, aimed for the purposes
specified in  Part 1 of Article 2 of this Law shall be recognized
as charity.
Voluntary material  support or  free rendering  of  services
provided directly  to legal  persons and  aimed for  the purposes
specified  in  part  2  of  Article  2  shall  be  recognized  as
The agreement  on charity  or sponsorship  may provide for a
special promotional  obligation by the donee thereof with respect
to the  donor of  charity  or  sponsor,  with  the  exception  of
advertising   tobacco    products   and    alcoholic   beverages.
Pursuant to  this Law,  direct transferring of material valuables
to natural  persons, with  the  exception  of  such  transferring
carried out  by charitable  organizations or  funds, shall not be
recognized as charity.
Article 4. Charity Donors and Sponsors
The following may be charity donors or sponsors:
1) economic entities of the Republic of Lithuania which have
or have not the rights of a legal person;
2)   public   organizations   and   religious   centers   or
communities, provided  such actions  do not come counter to their
bylaws and regulations;
3) charitable  organizations and  funds whose  main types of
activities are congruent with the objectives set forth in Article
2 and which have been registered in accordance with the procedure
established by the Government of the Republic of Lithuania;
4) citizens of the Republic of Lithuania; and
5)  foreign   legal  and   natural  persons,   as  well   as
international organizations.
In the  Republic of  Lithuania, foreign  legal  and  natural
persons, as  well as  international  organizations  may  dispense
charity and  sponsor  individuals  both  directly  or  via  third
parties, as  well as  via bodies  of power  of  their  respective
states, provided  such activities  comply with the objectives set
forth in Article 2.
Political parties  shall not be recognized as charity donors
or sponsors  and reliefs  provided for  in this  Law shall not be
applicable with respect to them.
Article 5. Recipients of Charity and Sponsorship
Donees of  charity shall  be the institutions of social care
and support,  health care,  charitable organizations  and  funds,
societies as  well as enterprises, institutions and organizations
of the disabled, as well as orthopedic and prosthetic enterprises
which are  established by  and financed from the resources of the
State,  local   governments,  public  organizations  and  private
Donees of  sponsorship shall  be institutions of science and
studies,  institutions   and  organizations   of   health   care,
education, science,  culture, sports,  environmental  protection,
and the  publications thereof;  the object of sponsoring may also
be governmental  or local  government  programmes  on  education,
science, culture, environmental protection and sports.
According to  this Law,  political  parties  and  commercial
organizations may not be donees of charity or sponsorship.
Article 6. Ways of Dispensing Charity and Sponsoring
Charity donors  and  sponsors  shall  dispense  charity  and
sponsor by:
1) transferring  of money or material values to the donee of
charity or sponsorship in accordance with the procedure set forth
in the Law on the Notary Office of the Republic of Lithuania;
2) rendering  free services  to  the  donee  of  charity  or
sponsorship; and
3) providing  the property  of which they are holders to the
disposal of  the donee  of charity or sponsorship according to an
operating agreement.
Charity and  sponsoring may  also be dispensed through other
means which  are not  prohibited by  the laws  of the Republic of
Charity and  sponsoring shall  be not repayable and based on
mutual understanding.
Article 7. Object of Charity and Sponsoring
The object  of charity  and sponsorship shall be the donor's
or sponsor's:
1) received income;
2) acquired or held property;
3) products which are manufactured or acquired by his or her
funds; and
4) rendered services.
Article 8. Freedom of Charity and Sponsorship
Donors and  sponsors of  charity shall themselves choose the
donee of charity and sponsorship and the ways of dispensation.
State institutions  and their  officers must  guarantee  the
freedom  of   charity  and   sponsorship.   Officers   of   state
institutions as  well as  legal and natural persons who interfere
with the  dispensation of charity and sponsorship shall be liable
under laws of the Republic of Lithuania.
Article 9. Accounting of Charity and Sponsorship
Economic entities  which dispense charity and sponsorship in
the Republic  of  Lithuania  as  well  as  public  or  charitable
organizations  and   religious  communities   must   manage   the
accounting of  donees of  charity and  sponsorship to  whom  they
donate money  and material  values: specifying in it the concrete
donees  of   charity  and  sponsorship,  amount  and  purpose  of
donations. Each  quarter donors  and  sponsors  of  charity  must
furnish the  information  in  the  established  manner  to  state
institutions which  exercise the  control of financial activities
and manage accountability.
The accounting  of  money  and  material  values  which  are
received as  charity or  sponsorship must be managed by all legal
persons and enterprises which do not have the rights of the legal
person.  The   information  about   the  received   charity   and
sponsorship  must   be  furnished  to  state  institutions  which
exercise  the   control  of   financial  activities   and  manage
accountability according to the established unified manner.
Upon withholding  the information  about money  and material
values which  are received  as  charity  or  sponsorship,  profit
(income) tax shall be imposed on that part of funds regardless of
the donee of charity or sponsorship.
Funds and  material values transferred by donors or sponsors
of charity must be used properly only for purposes of charity and
sponsorship. The  concrete purposes  of utilization may be set by
the donor  or sponsor  of charity  himself upon  the transfer  of
money and material values.
Funds and  material values  which are received as charity or
sponsorship and  used not  properly may  be  confiscated  on  the
court's ruling and transferred to state charitable funds.
Charitable organizations  and funds  shall have the right to
use up  to 20  percent of  funds collected for charity to develop
activities of  these organizations  and cover  the expenditure of
administrating if the donor of charity is not against it and does
not set the concrete purpose and way of using the donation.
Article 10. Stimulation of Charity and Sponsorship
Expenditure of  donors  or  sponsors  made  on  charity  and
sponsorship and  confirmed by  documents shall  be included  into
actual expenses  upon  the  calculation  of  taxable  profit  and
income, and  taxable profit of legal persons or taxable income of
natural persons  shall be  reduced one more time by the amount of
expenditure which  is made  on charity  or sponsorship if it does
not exceed 20 percent of taxable profit (income).
Funds allocated  for charity  or sponsorship which exceed 20
percent  of  taxable  profit  (income)  shall  be  taxed  in  the
established procedure.
Maximum tax  exempt expenditure  on charity may be increased
as much  as maximum  tax exempt  expenditure  on  sponsorship  is
reduced.       Income  of  charitable  organizations  and  funds,
societies and  unions of  disabled persons  and their enterprises
which are  used for  the purposes of charity or sponsorship shall
be exempt  from profit (income) taxes regardless of the amount of
Privileges provided in the second part of this Article shall
not be  granted to  charity or  sponsorship which is dispensed to
legal persons  of foreign  states, with  the exception  of  those
cases when  such charity  or  sponsorship  is  dispensed  through
international charitable  organizations or Lithuanian communities
Material values  allocated for  charity or sponsorship which
are imported  into the Republic of Lithuania or exported from it,
shall be  exempt from  customs duty.  The procedure  of exporting
material values which are exported from the Republic of Lithuania
and allocated  for charity shall be established by the Government
of the Republic of Lithuania.
Persons  who  allocate  property  as  a  gift  or  otherwise
transfer it  to the  donees of  charity or  sponsorship shall  be
exempt from state duty.
Article 11. Control of Charity and Sponsorship
The legality  of funds  which are allocated and received for
charity  and   sponsorship  shall  be  controlled  by  state  tax
inspectorates as  far as  the application  of tax  privileges  is
concerned, and  the legality of the utilization of received funds
shall be controlled by the State Control Department.
Disputes  concerning   the   recognition   of   charity   or
sponsorship shall be settled in the court.
Upon the  establishment of concrete purposes and ways of the
utilization  of   aid  or   sponsorship  donors   of  charity  or
sponsorship shall  have the  right  to  acquire  information  and
control themselves  how charitable organizations or funds fulfill
the set conditions.
Article 12. Publication of Charity and Sponsorship
Charitable organizations  and funds  shall have the right to
announce freely  the aims,  donees and  objects through  the mass
Information about  the donors  and sponsors of charity shall
be furnished  through the  mass media  and  to  other  legal  and
natural persons  who are  not specified  in Article 9 of this Law
only upon the consent of the donor or sponsor of charity.
Article 13. Conditions of the Entry into Force of the Law on
Charity and Sponsorship of the Republic of
The Law  on Charity  and  Sponsorship  of  the  Republic  of
Lithuania shall  enter into  force from  1  July  1993  upon  the
establishment by  the Government of the Republic of Lithuania the
procedure and  conditions of  the foundation  and registration of
charitable  organizations   and  funds   as  well   as  upon  the
establishment of  the procedure  of sanitary and hygienic control
of material  values which  are  exported  from  the  Republic  of
Lithuania and received shipments which are allocated for charity.
The Law  on Charity  and Sponsorship  shall  be  valid  until  31
December 1995  except as  otherwise provided by the Seimas of the
Republic of Lithuania.
I promulgate  this Law adopted by the Seimas of the Republic
of Lithuania.
President of the Republic
4 June 1993