Lithuanian Tax Laws and Regulations
Lithuanian Tax Laws
Lithuania’s location at the geographical center of Europe means it enjoys access to huge markets in Western Europe, Scandinavia, and the Baltics. It is a hotspot for startups, with a ranking of 11 in the World Bank’s Doing Business Report (2019) due to government funding and tax incentives, as well as straightforward registration procedures. However, dealing with complicated tax matters is a major issue for companies seeking to develop an international presence.
Overview of Taxes in Lithuania
Lithuania boasts a multilingual and international workforce, and a formidable technology industry with thriving sectors such as biotechnology, information and communication, and laser technology. The country offers many opportunities to make your business grow.
Tax, and especially overseas tax, can be complicated. The table below provides an overview, and this guide will explain the tax rates and administration concerning Lithuanian Tax.
Tax Type Percentage
- Individual Income Tax: 20%
- VAT: 21%
Corporate Income Tax
- 20% for credit institutions
Employer Social Security Contributions
- 1.77% or 2.49%
Capital Interests (With-holding Tax)
- Royalties & Interests: 10%
- Dividends & Profits: 15%
Malta Individual Tax – Single, Married
Any individual earning an income must pay local taxes in Lithuania, regardless of their residential status. Permanent residents are taxed on their worldwide income, whilst foreign nationals living and working in Lithuania are only taxed on the income they receive in Lithuania.
Individuals are subject to pay Income Tax (GPM). Income tax can be with-held by the employers and paid to the Tax Inspectorate monthly or paid by the individual in certain cases.
Under tax payment procedure, an individual’s income can be divided into 2 classes: Class A (tax is calculated and withheld by the employer/organization making the payment), and Class B (tax is paid personally through the individual filling a tax return). Income can be divided by class like so:
- Class A Income Class B Income
- Employment-related income. Gambling and lottery winnings.
- Income from sports and performance activity. Income from individual activities (with certain exceptions).
- Income from rent or sale of immovable or movable property in Lithuania (except for income received under a business certificate). Income from the sale or other transfer of financial instruments.
- Interest income. Other income not attributed to Class A.
- Royalties (for residents, and non-residents are exempt).
- A non-resident individual (as well as a Lithuanian entity, or a foreign entity through its permanent establishment) that has spent Class B income must submit an annual statement on this income on or before 15th of February of the next calendar year.