LITHUANIAN TAX GUIDE
Financial Year – 1 January – 31 December
Currency – Euro (EUR)
Corporate Tax Summary
Residence – A company is a resident if it is incorporated in the Republic of Lithuania.
Basis of Taxation – The tax base of a Lithuanian entity is all income which is sourced inside and outside of the Republic of Lithuania, i.e. earned in the Republic of Lithuania or earned in foreign states.
Income from activities carried out through permanent establishments of Lithuanian entities in a state of the European Economic Area (EEA), or states with which the Republic of Lithuania has concluded and brought into effect a treaty for the avoidance of double taxation (DTA) shall not be attributed to the tax base of the Lithuanian entities where, in accordance with the prescribed procedure, income from activities carried out through these permanent establishments is subject to corporate income tax or equivalent tax in those states.
Tax Base for Foreign Entities
- Income from activities carried out by a foreign entity through permanent establishments situated in the territory of the Republic of Lithuania.
- Income from international telecommunications earned through permanent establishments in the Republic of Lithuania, as well as 50% of the income from transportation which begins in the territory of the Republic of Lithuania and ends abroad, or begins abroad and ends in the territory of the Republic of Lithuania.
- Income earned in foreign states attributed to the permanent establishments in the Republic of Lithuania where such income is related to the activities of the foreign entity carried out through the permanent establishments situated in the Republic of Lithuania.
- Income sourced in the Republic of Lithuania and received by a foreign entity other than through permanent establishments situated in the territory of the Republic of Lithuania (Article 4 paragraph 4 of the Law on Corporate Income Tax).
| Reference | ||
| Corporate Income Tax Rate (%) starting from 01st. January 2026 | 17% (general rate), 7%, 0% | The 7% rate applies to the following entities:
1. Entities with gross annual revenue is less than EUR 300,000. This rule does not apply when the total annual income exceeds these limits in the following cases:
2. Cooperative societies (cooperatives) whose income during the tax period comprises more than 50 percent income from agricultural activities, including the income of cooperative societies (cooperatives) from the sale of agricultural products produced by their members. 3. In certain other cases in accordance with Article 5 paragraph 7 of the Law on Corporate Income Tax. The 0% tax rate applies to newly registered entities for the first and second tax period and only for an entity whose participant(s) is/are a natural person(s), if:
This rule does not apply when the total annual income exceeds these limits in the following cases:
Additional Corporate Income Tax The taxable profits of credit institutions, calculated on the basis of non-taxable income, allowable and limited deductions (excluding the amount of increased deductions for research and experimental development costs, the amount of tax-free reductions for the production of a film or part thereof, the amount of aid granted and the amount of losses of previous tax periods deductible from income for the tax period) is taxed at the rate of 5 percent of the additional income tax for credit institutions. Main Tax Benefits and Exemptions |
| Branch Tax Rate (%) starting from 01st. January 2026 | 17% (general rate), 7% | The 7% rate applies to the following entities:
1. Entities where gross annual revenue is less than EUR 300,000. This rule does not apply when the total number of employees and the total annual income exceeds these limits in the following cases:
2. Cooperative societies (cooperatives) whose income during the tax period comprises more than 50 percent income from agricultural activities, including the income of cooperative societies (cooperatives) from the sale of agricultural products produced by their members. 3. In certain other cases in accordance with Article 5 paragraph 7 of the Law on Corporate Income Tax. The 0% tax rate applies to newly registered entities for the first and second tax period and only for an entity whose participant(s) is/are a natural person(s), if:
This rule does not apply when the total number of employees and the total annual income exceeds these limits in the following cases:
Additional Corporate Income Tax The taxable profits of credit institutions, calculated on the basis of non-taxable income, allowable and limited deductions (excluding the amount of increased deductions for research and experimental development costs, the amount of tax-free reductions for the production of a film or part thereof, the amount of aid granted and the amount of losses of previous tax periods deductible from income for the tax period) is taxed at the rate of 5 percent of the additional income tax for credit institutions. Main Tax Benefits and Exemptions |
| Withholding Tax Rate: | ||
| Dividends– Franked starting from 01st. January 2026 | 17% | Dividends are taxable at a rate of 17%, unless the participation exemption applies. Dividends are exempt from corporate income tax if a parent company holds or intends to hold at least 10% of the shares of the subsidiary for at least 12 months. |
| Dividends – Unfranked | – | – |
| Dividends – Conduit Foreign Income | – | – |
| Interest starting form 01st January 2026 | 0%, 10%, 17% | There is no withholding tax on interest paid to EEA-resident companies and companies resident in countries that have concluded a tax treaty with Lithuania. Otherwise, the applicable withholding tax rate is 10%. The withholding tax rate for non-resident individuals is 17%, unless it is reduced under a tax treaty. |
| Royalties from Intellectual Property | 10% | Royalties paid to a non-resident company are subject to a 10% withholding tax, unless the rate is reduced under a tax treaty or eliminated in accordance with the EU interest and royalties directive. The withholding tax rate for non-resident individuals is 15% if annual income do not exceed 12 average salaries. The rest amount is subject for progressive tax rate (please see below- personal income tax rate for more details. The tax rate can be reduced under a tax treaty. |
| Fund Payments from Managed Investment Trusts | – | – |
| Branch Remittance Tax | – | – |
| Net Operating Losses (Years) | ||
| Carry Back | – | |
| Carry Forward | Operating losses may be carried forward for an indefinite period, provided that certain requirements are met. Current year operating losses can be transferred to another legal entity of the group if certain conditions are met. Losses incurred due to the transfer of securities and/or derivative financial instruments may be carried forward for five years (indefinitely for financial institutions). Reduction of taxable profit by accumulated tax losses is limited to 70% of the taxable profit for the current year (except for entities that are subject to the reduced CIT rate of 7%). The rest of the accumulated tax losses can be carried forward for an unlimited period of time. |
Individual Tax Summary
Residence – An individual is treated as a resident if at least one of the following conditions is satisfied:
(i) The individual’s permanent place of residence during the tax period is in Lithuania.
(ii) The individual’s center of personal, social or economic interests during the tax period are in Lithuania.
(iii) The individual is present in Lithuania for at least 183 days during the tax period.
(iv) The individual is present in Lithuania for at least 280 days during two consecutive tax periods and has stayed in Lithuania for at least 90 days in either of the tax periods.
(v) The individual is a citizen of Lithuania who does not meet the criteria in (iii) and (iv) above and who receives employment-related remuneration or whose costs of living in another country are covered by the state budget or municipal budgets of Lithuania (e.g. diplomats, consuls, etc.).
Basis of Taxation
- Lithuanian residents are subject to taxation on their worldwide income.
- Non-residents are subject to tax only on Lithuanian source income and on income derived from activities through a fixed base in Lithuania, including foreign source income attributed to that fixed base.
Taxable income includes employment income, income from commercial activities, royalties, income from the lease of assets and all other personal income.
Filing Status – Joint filing is not allowed.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| Progressive tax rate for employment-related income, self employed income and other income starting from 01st. January 2026 | 20%-income which do not exceed 36 average salaries (2026-approx.82 962 |EUR)
25%- income which exceed 36 but is less than 60 average salaries (2026-approx. 82 962 and 138 270 |EUR) 32%- income which exceed 60 average salaries (2026-approx. 138 270 |EUR). |
20%-income which do not exceed 36 average salaries (2026-approx.82 962 |EUR)
25%- income which exceed 36 but is less than 60 average salaries (2026-approx. 82 962 and 138 270 |EUR) 32%- income which exceed 60 average salaries (2026-approx. 138 270 |EUR). |
| Progressive tax rate for income related to agricultural activities | 15%/20% | 15%/20% |
| Dividends | 15% | 0%/15% |
| Other income | 15% | 0%/15% |
| Capital gains | 15% | 0%/15% |
When determining tax progressivity, this income is calculated:
- income from employment;
- income from self employment (individual) activities;
- bonuses, remuneration for activities on the supervisory board or board, in the loan committee;
- royalties from the employer;
- income from management activities of the head of a small partnership who is not a member of that partnership;
- the annual portion of income from non-individual activities for the sale of waste, exceeding 12 average salaries;
- the annual portion of income received from individual activities with a business certificate, exceeding 50,000 EUR;
- the annual portion of income not from employment, exceeding 12 average salaries.
Other income is subject to personal income tax at a rate 15%:
- income from distributed profits (dividends);
- sickness, maternity, childcare and long-term employment benefits;
- income from the sale of shares, units or units acquired outside the investment account, if they were held for more than 5 years before their sale or other transfer into ownership;
- part of the life insurance benefit received after the expiration of the term of the life insurance contract, equal to the premiums paid under the contract, which were deducted from income in accordance with the procedure established in Article 21 of the Income Tax Act, as well as upon termination of the life insurance contract, the premiums that were deducted from income in accordance with the procedure established in Article 21 of the Income Tax Act are returned;
- a portion of the pension benefit received from the pension fund equal to the contributions paid, which were deducted from income in accordance with the procedure established in Article 21 of the Income Tax Act, and also upon the individual’s withdrawal from the pension fund, the pension contributions paid, which were deducted from income in accordance with the procedure established in Article 21 of the Income Tax Act, are returned to the fund;
- funds paid out from an investment account that exceed the contribution in the investment account at the time of payment;
- income from the sale of shares acquired under an option agreement with the employer or a person related to the employer, if the shares were sold no earlier than 3 years after the right to acquire the shares arose.
Additional Comments
Non-residents are taxed at the same rate as residents (for income obtained in Lithuania).
Permanent residents of Lithuania have a duty to declare their income and taxes paid for the previous year by 1 May each year.
Goods and Services Tax (GST)
| Rate. Starting from 01st January 2026 | 21%, 12%, 5%, 0% |
| Taxable Transactions | VAT is levied on a taxable person’s supply of services and goods for consideration if such supply is considered as made in Lithuania according to the Law on VAT. VAT may also be levied on the acquisition of goods and services for consideration within Lithuania from another member state. Import VAT is levied on the import of goods if the import is made in Lithuania. |
| Registration | A special scheme for small enterprises has been implemented in Lithuania. This means that Lithuanian taxable persons are allowed to not register as a VAT payer if their turnover during the last 12 calendar months does not exceed EUR 45,000. However, it should be noted that if during the last calendar year the Lithuanian taxable person has acquired goods from other EU member states and the taxable amount of those goods has exceeded EUR 14,000, or it is foreseen that it will exceed this threshold during the current year, then such a taxable person is obliged to register as a VAT payer, even in cases where the annual turnover threshold (EUR 45,000) is not exceeded. Foreign taxable persons carrying out economic activity in Lithuania are not subject to the above mentioned special scheme. This means that foreign taxable persons must register as VAT payers from the start of their activities and the turnover of such activities does not have any impact on the obligation. However, there are some exceptions when foreign taxable persons are not obliged to register as VAT payers, despite their economic activity in Lithuania. It should be noted that although in some cases there is no obligation for a foreign taxable person to register as a VAT payer in Lithuania, the VAT on the purchases can be refunded only via VAT deduction (this means that the foreign taxable person must register). |
| Filing and Payment | Form FR0600 must be filed for the tax period (calendar month, calendar half-year, other tax period). It should be submitted not later than 25 days after the end of the tax period. The VAT accounted for a certain tax period should also be paid not later than 25 days after the end of the tax period. There are some exceptions. |
Other Taxes Payable
| Tax | Reference |
| Social Security Contributions: The employer must withhold 12.52% of the employee’s gross salary for social security contributions (8.72% for pension social insurance, and 1.99% and 1.81% for sickness and motherhood social insurance, respectively) and 6.98% for health insurance contributions, as well as an additional 3.0% for participants in the second pillar pension fund programme. The employer’s share is usually equal to 1.77%-3.75% (depending on the type of employment agreement and risk group). Contributions are made to unemployment insurance, social insurance for accidents at work and occupational diseases, and the long-term employment benefit fund. |
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| Stamp Duty | There is no stamp duty, but a notary fee may be applied to certain transactions. |
| Real estate tax starting from 01st January 2026 | Rate for legal entities: 0,5 – 3,0 %. The exact rate is determined by each municipal council.
Rate for personal main real estate: 0,1 – 1,0 % with minimal not taxable amount 450 000EUR . The exact rate and minimal taxabale amount are determined by each municipal council.
Taxation rate for each personal subsequent real estate depending on value are: 1) not exceeding 50,000 euros, a 0 percent tax rate is applied; 2) exceeding 50,000 euros, but not exceeding 200,000 euros, a 0.2 percent tax rate is applied; 3) exceeding 200,000 euros, but not exceeding 400,000 euros, a 0.4 percent tax rate is applied; 4) exceeding 400,000 euros, but not exceeding 600,000 euros, a 0.6 percent tax rate is applied; 5) exceeding 600,000 euros, but not exceeding 1,000,000 euros, a 0.8 percent tax rate is applied; 6) exceeding 1,000,000 euros, a 1 percent tax rate is applied.
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| Land Tax | Rate 0,01 – 4,0%. The exact rate is determined by each municipal council.
Tax exemptions: land occupied by public roads; public land located in the territory of an amateur garden; natural persons whose families do not have any able-bodied persons at the beginning of the tax period and for whom a 0–40 percent participation level (until 2023-12-31 working capacity level) has been established or who have reached the old-age pension age or are minors, the area of the land plot owned by them does not exceed the size of the tax-exempt land plot established by the municipal councils by September 1 of the current tax period. Several land plots owned by a natural person by right of ownership, located in areas (areas) of the same municipality, for which the same tax-exempt land plot size has been established, are in this case considered to be one land plot. If a natural person is entitled to a tax relief and owns more than one land plot, the largest relief is applied to one land plot; land of state parks, landscape, cultural, geological, geomorphological, botanical, zoological, botanical-zoological, hydrographic and pedological reserve territories and their protection zones, except for agricultural land located in the aforementioned territories, as well as land occupied by built-up areas, roads and waters; land of coastal protection zones of surface water bodies; land of natural monuments, except for land occupied by built-up areas and roads; land of archaeological (except for the cultural layers of old towns) and memorial (non-functioning cemeteries and burial grounds) territories of immovable cultural heritage objects entered in the Register of Cultural Properties, except for land occupied by built-up areas, roads and waters located in the aforementioned territories; land of historical, architectural and fine art immovable cultural heritage objects entered in the Register of Cultural Values; land of ethnographic homesteads located in rural areas and in the territories of ethnographic villages; land acquired by a farmer for the establishment of a farm – three tax periods from the acquisition of the right of ownership. This type of relief, including the one applied before the entry into force of this Law, is applied to the same person only once; land owned by traditional and other state-recognized religious communities, associations and centers; from 2020-01-01 land falling within the territories specified in the Law on Special Land Use Conditions of the Republic of Lithuania, established to meet the public interest in cases specified in the Law on Special Land Use Conditions, when due to the application of special land use conditions in these territories, the land owner loses the opportunity to use the land plot in accordance with the established main purpose of land use and (or) the method (methods) of land use. This provision does not apply if, after changing the established main purpose of land use and/or the method of use of the land plot, the land owner could use the land plot in accordance with the newly established main purpose of land use and/or the method of use of the land plot. |
Last updated: 26.06.2025
Inga Karulaitytė-Kvainauskienė
Lawyer, attorney at law, partner of the law firm
+370 5 212 40 84
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