Tax rates in Lithuania

Tax Rates

Consumption Taxes

Nature of the Tax: Value Added Tax (VAT) - Pridetines vertes mokestis (PVM)
Tax Rate: 21%
Reduced Tax Rate: A reduced rate of 9% applies to:
1. Thermal energy supplied for space heating (including thermal energy transmitted through hot water supply systems), to hot water or cold water used for the preparation of hot water, and to thermal energy used to heat water supplied to living quarters.

2. Books and non-periodical information publications (including textbooks, workbooks, encyclopedias, dictionaries, manuals, information leaflets, photo and reproduction albums, children's picture books, drawing and coloring books, music printed or in manuscript form, maps, diagrams and drawings, however, excluding calendars, notebooks and other similar publications).

3. Accommodation services provided in accordance with the procedure laid down in the legislation governing tourism activities, until 31 December 2022.

4. Passenger and luggage thereof transport services on regular transport routes established by the Ministry of Transport and Communications or an institution authorized by it or by municipal authorities.

5. Firewood and timber products intended for heating purposes supplied to household consumers as defined in the Law on Energy.

6. Catering and take-away services provided by restaurants, cafés and other similar catering services, excluding services or part thereof linked to alcoholic beverages, until 31 December 2022.

7. Accessing all types of art and cultural institutions and events, sporting events and sports clubs, and to using services of persons providing services similar to those of sports clubs, when provisions of Article 23 of Law on VAT do not apply, until 31 December 2022.

8. Performance services provided by performers (actor, singer, musician, conductor, dancer or any other person acting, singing, reading, reciting or otherwise giving literary, artistic, folklore or circus performances), until 31 December 2022.
A further reduced rate of 5% applies to:
1. Supply of pharmaceuticals and medical aid equipment, when acquisition costs thereof are fully or partially reimbursed in accordance with the procedure established by Law on Health Insurance of the Republic of Lithuania, as well as to non-reimbursed prescription medicines, except for medicines subject to a VAT rate of 0%.

2. Technical aids and repairs thereof for persons with disabilities.

3. Printed and/or electronic newspapers, magazines and other periodicals (including those published by electronic means), including electronic information documents and/or collections thereof periodically updated by the disseminator of public information or consisting of content substantially similar to that of a printed periodical (regardless of whether the electronic information documents and collections thereof are printed or not). The provisions thereof do not apply to technical, bibliographic and other similar databases, publications of erotic and/or violent nature, publications failing to comply with professional ethics as established by authorized institutions, and to publications where paid advertising makes up more than 4/5 of the total publication or where most of or all of the paid advertising is consisting of music or video content.

VAT rate of 0% applies to certain supplies of goods and services. and to COVID-19 vaccines and COVID-19 vitro diagnostic medical devices (until 31 December 2022).

VAT-exempt goods and services include health care services and goods; real estate rent and disposals; insurance and reinsurance services; certain financial services; cultural and sporting activities; educational services; betting and gaming services; universal postal services; social and related services; radio and television services.
Other Consumption Taxes: Excise duty is imposed on ethyl alcohol and alcoholic drinks, processed tobacco, energy products, electric energy, energy-related products, coal, coke, and lignite. More detailed information on excise duties concerning alcoholic beverages, tobacco products, and energy products is availableon the European Commission website.

Corporate Taxes

Company Tax: 15%
Tax Rate For Foreign Companies: Lithuanian entities are subject to tax on their worldwide income, non-resident companies are subject to corporate income tax on Lithuania-source income and on income received by a permanent establishment in the country.
A company is a tax resident in Lithuania if it is incorporated in the country. It may also be deemed resident if it has a permanent establishment in Lithuania.
Capital Gains Taxation: Capital gains of resident and non-resident companies are taxed as general taxable income at a rate of 15%. Capital gains from the sale of shares of a company that is resident in Lithuania or in another EU/European Economic Area member state may be exempted if the investor (Lithuanian firm or permanent establishment of a foreign company) maintains uninterrupted participation of more than 10% for at least two years (three years in the case of a reorganization).
Main Allowable Deductions and Tax Credits: Depreciation of tangible and intangible assets is tax-deductible at rates ranging from 5% (residential buildings) to 33.3% (computer, software). Goodwill is also deductible over 15 years.
Start-up expenses, interest charges and bad debts are generally deductible whereas provisions for doubtful debts are not deductible.
Donations to charitable organisations give rise to a 200% tax deduction, capped at 40% of taxable income (before the deduction of donations and the carryforward of tax losses).
Fines and penalties are not deductible. Taxes are deductible except for VAT and corporation tax.
Entertainment fees are deductible up to 50% and their deduction is capped at 2% of the company's income. Travel expenses related to the business are generally deductible, the same as contributions and expenses for the benefit of employees.
Tax losses can be carried forward indefinitely, yet for each year, they can only be offset by 70% of taxable income. The rest of the losses can be offset against income from previous years. Losses from the sale of shares may be carried forward for up to five years and may only be offset against income from the sale of shares. The carryback of losses is not permitted.
Other Corporate Taxes: ), the same as for the tax on land leases. The property tax varies between 0.5% and 2% (the rate is determined by municipal councils - properties with a value of up to EUR 150,000 are exempt).
There are no stamp duties in Lithuania. On the other hand, a small fee is payable for the issuance of certain documents by public services.
Social security contributions payable by the employer vary between 1.77% and 2.49% for income up to EUR 90,246 per year (employees' contributions are lower for incomes above this threshold). Employers withhold 0.16% of the gross salary for the Guarantee Fund (which provides financial assistance to employees in case their employers go bankrupt). They also pay a contribution equal to 0.16% of the gross salary for the Long-Term Employment Fund.
An environmental tax is levied on pollutants released into the environment, and a separate tax is payable on the value of extracted natural resources.
Other Domestic Resources: Consult the Doing Business Website, to obtain a summary of taxes and mandatory contributions.

Country Comparison For Corporate Taxation

	Lithuania	Eastern Europe & Central Asia	United States	Germany
Number of Payments of Taxes per Year	10.0	13.9	10.6	9.0
Time Taken For Administrative Formalities (Hours)	95.0	226.2	175.0	218.0
Total Share of Taxes (% of Profit)	42.6	36.5	36.6	48.8

Source: Doing Business, Latest available data.

Individual Taxes

Tax Rate

Income tax (employment income up to EUR 90,246 in 2022 - 60 average salaries)	20%
Income above EUR 90,246	32%
Business and professional income	5% on income up to EUR 20.000 with the rate increasing progressively to a maximum of 15% where annual profit is at least EUR 35,000
Income from royalties, interest, sale of property	15% (20% if the amount exceeds EUR 180,492 for 2022 - 120 average salaries)

Allowable Deductions and Tax Credits

The following items among others are allowed for income tax deductions (cumulatively capped at 25% of the taxable income):
- Repair (except for building renovation), car repair, childcare (up to EUR 2,000 per year)
- Pension contributions, life insurance premiums (up to EUR 1,500)
- Expenses for vocational studies and training.

A monthly tax-exempt amount (TEA) applies to employment-related income of Lithuanian tax residents, equal to EUR 460/month for incomes up to EUR 730 (minimum monthly salary for 2022) or reduced progressively for incomes above that amount, up to an income limit of EUR 2,864.22/month. The annual TEA can be applied to Lithuanian tax non-residents only at the end of the tax period by submitting the annual PIT return, provided their annual gross income does not exceed EUR 34,370.67.
Allowances are given for each child (EUR 70, EUR 111 for children with disabilities, large or low-income families).
Business expenses of self-employed individuals are deductible (taxpayers can opt for a lump-sum deduction of 30% or for itemized deductions supported by the relevant documentation).

Special Expatriate Tax Regime

Residents are taxed on their worldwide income whereas non-residents are only taxed on Lithuania-source income and on income derived from activities through a fixed base in the country. However, only the following income sourced in Lithuania by a non-resident is subject to personal income tax:

Employment-related income or income arising from substantially similar relations.
Income from distributed profits and payments to the members of the Board or Supervisory Board.
Interest income, except for interest received on government non-equity securities.
Royalties.
Income from sports activities, including income directly or indirectly related to those activities irrespective of whether the payment is made directly to the sportsman concerned or a third party acting on behalf of and for that sportsman.
Income from performing activities, including income directly or indirectly related to those activities irrespective of whether the payment is made directly to the performing artist concerned or a third party acting on behalf of and for that performing artist.
Income from the lease of immovable property located in Lithuania.
Income from the sale or transfer of movable property if that object is subject to legal registration in accordance with the local regulations and such object is (or must be) registered in Lithuania, as well as income from the sale of immovable property located in Lithuania.
Income derived from individual activities carried out through a fixed base, as well as income earned abroad that is attributed to that fixed base in Lithuania, where the said income is related to the activities of a non-resident through the fixed base in Lithuania.
Compensation for copyright infringement.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of the tax conventions signed by Lithuania.
Withholding Taxes: Dividends: 15%, Interest: 0 (paid to residents, EEA-resident companies and companies resident in countries that have concluded a tax treaty with Lithuania)/10% (non-resident companies)/15% (non-resident individuals), Royalties: 0 (paid to resident companies)/10% (non-resident companies)/15% (resident and non-resident individuals).
The rates can be reduced under a tax treaty.
Bilateral Agreement: The United Kingdom and Lithuania are bound by a double taxation treaty.

Sources of Fiscal Information

Tax Authorities: Overview of Lithuania's tax measures in response to Covid-19
State Tax Inspectorate under the Ministry of Finance
Other Domestic Resources: Lithuanian Investment Promotion Agency - Overview of taxes
Lithuanian tax legislation

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