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Taxes in Lithuania

Lithuania is a beautiful Baltic country that offers an excellent environment for business and living. Many who have considered doing business in there or relocating to this country have wondered about taxes in Lithuania applicable to activities or residency there. It's worth noting right away that from a tax perspective, Lithuania is an advantageous jurisdiction, offering a system of reduced tax rates.

Below is the basic information about who needs to pay taxes in Lithuania, how, and what taxes are required for individuals and legal entities.

Taxes in Lithuania

Posted 14 June 2024

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Who Are Taxpayers in Lithuania?

Taxes in Lithuania must be paid by all individuals recognized as residents of Lithuania, or individuals who, while not residents of Lithuania, earn income from sources within Lithuania.

Resident individuals include Lithuanian citizens and individuals who stay in Lithuania for more than 183 days a year, as well as individuals with their center of vital or business interests in Lithuania.

A company is considered a resident company in Lithuania if it is registered in the Lithuanian Register of Companies and also has its effective management center in Lithuania.

What Taxes Must be Paid in Lithuania?

The main taxes in Lithuania that are worth knowing about are:

Income Tax (Personal Income Tax)

Income tax is paid by both residents and non-residents of the country. Residents pay tax on income earned worldwide, while non-residents pay tax on income earned from sources within Lithuania.

The standard income tax rate is 15%, but a reduced rate of 5% is also allowed for certain types of income.

Corporate Profit Tax

Residency status plays a significant role in determining the principle of profit taxation. Resident companies are taxed on their worldwide profit, while non-resident companies are taxed only on profits derived from sources within Lithuania.

The standard corporate profit tax rate in Lithuania is 15%, but for micro-enterprises with an annual turnover not exceeding 300,000 euros and fewer than 10 employees, a reduced rate of 5% is set.

Dividend Tax

The dividend tax rate in Lithuania is 15% (unless otherwise provided by a tax treaty between countries).

Exceptions apply if one company is a parent company of another and owns at least 10% of the company’s shares for at least 12 months. In such cases, dividends are not subject to tax.

Moreover, dividends received by a foreign person registered in an EEA state, whose profit is already subject to corporate income tax or its equivalent, are also not taxed.

Value Added Tax (VAT)

Value-added tax in Lithuania has several rates that apply to different categories of goods and services.

The standard VAT rate in Lithuania is 21% and applies to most goods and services.

There are also reduced rates: 9%, 5%, and 0%.
– The 9% rate applies to passenger transport and books.
– The 5% rate applies to medical and pharmaceutical products.
– The 0% rate applies to insurance activities and some financial services.

Contributions to the Social Insurance Fund

Lithuania pays close attention to ensuring income for insured persons, so both employees and employers contribute to the Social Insurance Fund monthly.

In total, the amount of insurance contributions can be around 30-40% of the gross wage before tax deductions.

Excise Duty

As in many countries, Lithuania imposes excise duty on certain categories of goods.

Taxes in Lithuania have attractive low rates, which, combined with the fast and straightforward company registration process, as well as the uncomplicated process of obtaining a residence permit, make Lithuania an excellent place for business and living.

How Can We Assist?

– Provide tax consultation;
– Prepare a personalized list of taxes to consider in your situation;
– Assist with company registration;
– Provide accounting services and reporting for your company;
– Assist in the process of obtaining a residence permit in Lithuania;
– Assist with opening a bank account.

GFLO Consultancy experts are pleased to assist and help you with any inquiries, just get in touch or leave a request through the form right below.

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