Taxes in Lithuania, Taxation in Lithuania, Taxes system in Lithuania
Income tax on individuals.
Regulated by the Law on Income Tax of Population
(Gyventoju pajamu mokesčio istatymas) of 2 July 2002 No. IX-1007
(As amended. Was.) ÷ s Valstyb žinios 2002 No. 73-3085.
The amendment was adopted on 7 June 2005 (No. X-235, Valstyb ÷ s
žinios 2005 No. 1976-2743)
Rate: 33% from the monthly income minus
non-taxable minimum of EUR 290 LTL. Untaxed
the minimum is increased by LTL 29 per each child.
This amendment amends the above rates
taxation. From 1 July 2006, the rate decreases to 27%, and from 1
January 2008 to 24%.
Individual companies pay 15% of the profits (after
paying tax on their profits for operators of
15%). For them, tax-free shall be a minimum of 580
LTL. They can not count depreciation.
Lawyers, notaries can choose the form of taxation: 33% profit
as a natural person or 15% of revenues. For them, also in 2006 and
2008 reduces the tax rate individuals.
Royalties are taxed at 15%.
Every taxpayer is entitled to 25% of income exempt from
taxation, if income is spent on:
- Payment of premiums for life insurance companies,
- Payment of contributions to the pension fund
- Loan repayment on their education,
- Return-rate mortgage,
- In the years 2004 - 2006 for the purchase of computer software (up to
Each taxpayer may contribute up to 2% of its tax for the purposes
charity with an indication of the addressee.
You pay every month or once every six months.
Taxable income not subject to the following:
- All kinds of social benefits,
- Operating income of seafarers at sea on board,
- Farm incomes,
- Interest on deposits in credit institutions,
- Government bonds,
- Winning the lottery if the lottery organizer pays tax on turnover,
- Revenue from the European Union if the tax is levied
The tax on profits of operators.
The tax on business profits is governed by the law
the profit tax (Fully mokesčio istatymas) dated. 5 July 2005, No.
X-327 Valstyb ÷ s žinios 2005 No. 88-3292.
For small enterprises (employing up to 10 people with a turnover
Annual up to 500 000 LTL), the rate is 13% and so is used. "Relief
depreciation ", whereby the method of investment opportunities once the
For small businesses tax-free shall be a minimum of 25 000 Litas.
For a number of production goods can be used accelerated
Foreign entities are taxed at the rate of 10% for
The following revenues:
- From the lease or real estate
- The know-how,
- Interest (except for government bonds).
The tax is paid once a year.
Corporate Income Tax
The tax base for local entities (i.e. those registered in Lithuania) comprises all income
sourced inside and outside Lithuania.
Income sourced through permanent establishments in countries which are members of
EU or which have a Double Taxation Treaty (DTT) with Lithuania and where that income
was subject to tax is exempted.
The tax base for foreign entities (i.e. those registered in foreign countries) comprises
income received from activities carried out through permanent establishments in
Lithuania and other income sourced in Lithuania, such as:
• proceeds from rent/sale of immovable property;
• annual payments to the Board and Supervisory Board members, etc.
A permanent establishment shall mean a fi xed place of business in Lithuania through
which the activities of a foreign entity are carried on. A foreign entity is deemed to carry
on its activities through a permanent establishment, if at least one of the following
criteria is met:
• it permanently carries on its activities in Lithuania;
• the activities are carried on through a dependent agent, or
• it uses a building site, a construction, assembly or installation project in Lithuania, or
• it uses installations or structures in Lithuania for prospecting or extracting natural
resources, including wells or vessels used for that purpose.
The standard corporate income tax rate is reduced from 20% to 15% as from 1 January
2010. The taxable profi t of small entities (i.e. entities whose average number of listed
employees does not exceed 10 and whose income in the tax period does not exceed
LTL 500,000 (EUR 144,810) are subject to corporate income tax at 5%, with certain
Computation of taxable profi t
For the purpose of computing the taxable profi t of a Lithuanian entity, the following is
deducted from its income:
• non-taxable income;
• allowable deductions;
• limited allowable deductions.
Personal tax income
With certain exceptions, all income received by a Lithuanian resident is subject to
personal income tax. In general, individuals are deemed to be residents of Lithuania, if:
• their permanent place of residence during the tax period is in Lithuania, or
• the location of their personal, social or economic interests during the tax period is in
Lithuania rather than in a foreign country.
Other criteria for deciding the existence of residence are also applicable.
The general personal income tax (PIT) rate is 15%. PIT rate of 20% is applied to income
from distributed profi ts (dividends, etc.).
The following types of income are generally non-taxable:
• income from the sale of movable property that is legally registered in Lithuania or
within a European Economic Area (EEA) member state, or other immovable property
that is located in Lithuania or within an EEA member state, if the property was
acquired more than three years before its sale;
• income from the sale of housing (including land) located in an EEA member state, if
the individual’s place of residence was declared there during the last two years prior
to the sale. If the place of residence was declared for a shorter period but income
received from sale was invested into the acquisition of another housing located in an
EEA member state where the place of residence was declared, such income would
also be treated as non-taxable;
• income from the sale of securities if they were acquired more than 366 days before
their sale and the individual has been the owner of not more than 10% of securities for
three years preceding the tax year during which the securities are sold;
• non-life insurance benefi ts to compensate for expenses, damages or losses;
• awards, sport contest prizes, and lottery winnings herein the value of which does not
exceed LTL 700 (EUR 203) provided such prizes are received from the same person
not more than 6 times during the tax period;
• contributions made by the employer on behalf of the employee, such as life insurance
premiums (when the term of the insurance contract is longer than 10 years or
disbursements are made after retirement), additional (voluntary) health insurance
contributions and pension contributions to the insurance companies and third tier
pension funds established or otherwise organized in the EEA member states provided
that the total contributions are not greater than 25% of the employees annual
employment related income;
• income received as charity, etc.
Value Added Tax (VAT)
Taxable event and rates
The standard VAT rate is 21% (applicable from 1 September 2009).
The reduced rate of 9% applies to:
• books and non-periodical publications (applicable by 31 December 2010);
• supply of heating to residential premises and the supply of heating water (applicable
by 31 August 2010).
The reduced rate of 5% applies to:
• pharmaceuticals and medical aid devices, when their acquisition cost is wholly
or partly compensated following the provisions of the Law on Health Insurance
(applicable by 31 December 2010).
The VAT rate on exports of goods, intra-community supplies of goods and certain
services is 0% (i.e. exemption with credit).
Some supplies are VAT-exempt (i.e. exempt without credit), such as:
• fi nancial services, etc.
Sale of new buildings is subject to VAT at the standard rate. Sale of buildings used for
more than 24 months is VAT-exempt. A sale or any other transfer of land is exempt
(except for land transferred together with a new building that has been used for less
than two years and land for construction).
Rent of real estate is also VAT-exempt (with some exceptions).
However, a Lithuanian VAT payer has an option to tax the sale of real estate, including
land, or rent of real estate if the real estate is sold or rented to another Lithuanian VAT
payer being a taxable person which performs business activities. The option applies for
a period of not less than 24 months.
Companies that render fi nance lease services may opt to sell leased immovable
property with or without VAT provided that the property was acquired in a similar manner
(i.e. using the same VAT treatment), irrespective of whether an option to calculate VAT
on the sale of immovable property has already been declared to the tax authorities.
Moreover, a taxable person can opt to calculate VAT on interest provided that a loan is
granted to a VAT payer being a taxable person which performs business activities. If a
VAT payer decides to use the option to tax, it is valid for not less than 24 months (the
option may be revoked in certain cases).
Irrecoverable input VAT
Input VAT cannot be recovered if a VAT payer purchases or rents a passenger vehicle.
25% of input VAT on representation expenses is irrecoverable.
Value Added Tax (VAT)
A Lithuanian entity/individual must register for VAT purposes if turnover exceeds LTL
100,000 (approx. EUR 29,000) for a period of 12 successive months. This threshold,
however, is not applied to registrations of a foreign entity/individual, which should apply
for registration from the commencement of their activities in Lithuania. Registration is
completed within 7-12 business days. Retrospective registration is not possible.
Taxable persons of other Member States may register either directly, or through their
subdivision/fi scal agent in Lithuania. Other foreign companies are obliged to appoint a
fi scal agent for VAT registration purposes.