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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
Reduced rates of 9% apply to public transport, heating and water for residential use, books and publications, firewood for household energy users and accommodation services supplied to tourists (until 31 December 2022).
A further reduced rate of 5% applies to the sale and repair of equipment for the disabled, pharmaceutical goods, medical devices and periodical publications.
A 0% rate applies to exports of goods from the EU and related services, international transport and related services, supplies related to ships and aircraft, intra-Community supplies of goods, certain works on movable tangible property. Until 31 December 2022, vaccines against COVID-19 and in-vitro diagnostic medical devices of COVID-19 are also zero-rated.

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 is available concerning alcoholic beverages, tobacco products, energy products on the European Commission website.
 
Find out more about Taxes and Accounting in Lithuania on GlobalTrade.net, the Directory for International Trade Service Providers.
 

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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.
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 land tax varies between 0.01% and 4% (the rate is determined by the municipalities), the same as for the tax on land lease. The property tax varies between 0.5% and 3% (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 1.45% and 2.71% for income up to EUR 81,162 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.

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Individual Taxes

Tax Rate

Income tax (employment income up to EUR 81,162 in 2021 - 60 average salaries) 20%
Income above EUR 81,162 32%
Income from royalties, interest, sale of property 15% (20% if the amount exceeds EUR 162,324 for 2021 - 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
- Expenses for vocational studies and training.

A monthly tax-exempt amount (TEA) applies to employment-related income of Lithuanian tax residents, equal to EUR 400/month for incomes up to EUR 642 (minimum monthly salary for 2021) or reduced progressively for incomes above that amount, up to an income limit of EUR 2,864.22.
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.

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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% (individuals).
The rates can be reduced under a tax treaty.

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Find out more about Taxes and Accounting in Lithuania on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: April 2022