🇱🇹 Lithuania Tax Guide — Income, Corporate & VAT Rates

The tax rates in Lithuania range from 20% to 32% for personal income tax, with a corporate tax rate of 15% and a standard VAT rate of 21%, making it an attractive destination for expats and businesses alike.

Tax System Overview

Lithuania has a territorial taxation system, meaning that only income earned within the country is subject to tax, unless the individual is considered a tax resident. To be considered a tax resident, an individual must have a permanent home in Lithuania, or spend more than 183 days in the country within a calendar year. Non-residents are only taxed on their Lithuanian-sourced income.

The tax system in Lithuania is relatively straightforward, with a focus on simplicity and ease of compliance. The country has a well-developed tax administration system, with online filing and payment options available. Taxpayers can also access their tax accounts and submit returns online, making it easier to manage their tax obligations. Additionally, Lithuania has a network of double taxation treaties with 55 countries, which helps to prevent double taxation and fiscal evasion.

Personal Income Tax

Corporate & Business Tax

• The corporate tax rate in Lithuania is 15%, which is one of the lowest in the EU.
• Small businesses with annual turnover of less than EUR 500,000 are eligible for a reduced corporate tax rate of 5%.
• Lithuania has several free economic zones, which offer exemptions from corporate tax, VAT, and other taxes for a period of up to 10 years.
• Companies must register with the State Tax Inspectorate within 30 days of establishment, and obtain a VAT registration if their annual turnover exceeds EUR 45,000.
• Companies are also required to file annual tax returns and financial statements with the tax authorities.

VAT / Sales Tax

• The standard VAT rate in Lithuania is 21%, which applies to most goods and services.
• A reduced VAT rate of 9% applies to certain goods and services, such as food, pharmaceuticals, and hotel accommodation.
• A zero-rated VAT applies to exports, international transportation, and certain other services.
• Tourists can claim a refund of VAT paid on purchases made in Lithuania, provided they have a tax-free shopping document and leave the country within three months.

For Expats & Foreign Workers

• Expats are considered tax residents in Lithuania if they spend more than 183 days in the country within a calendar year.
• Double taxation treaties are in place with 55 countries, which help to prevent double taxation and fiscal evasion.
• Expats are entitled to social security benefits, including healthcare and pension benefits, if they have made contributions to the Lithuanian social security system.
• Remittances of foreign-earned income are subject to a 20% withholding tax, unless a double taxation treaty applies.
• Expats may also be entitled to tax credits for foreign taxes paid on foreign-earned income.
• It's recommended that expats consult with a tax professional to ensure they are meeting their tax obligations in Lithuania.

Crypto & Investment Income

• Investment income, including dividends, interest, and capital gains, is subject to a 20% tax rate.
• Cryptocurrency is considered a financial instrument and is subject to capital gains tax, which is 20% of the gain.
• Dividends received from foreign companies are subject to a 15% withholding tax, unless a double taxation treaty applies.
• Taxpayers are required to report their investment income, including cryptocurrency gains, on their annual tax return.