• Lithuania Tax System

  • TAX RESIDENCY

    Tax Residency

    A company is considered to be a tax resident of Lithuania if it is incorporated in Lithuania or if its activities create a Permanent Establishment for tax purposes.

    Taxable Basis

    Lithuanian tax resident companies are taxed on their worldwide income.

    Foreign companies are taxed only on income generated in Lithuania.

  • TAX ADMIN

    Taxable Period

    The tax year in Lithuania is a calendar year.

    However, a corporation may apply to adopt a substitute year of reporting.

    Tax Returns

    Corporation tax returns are due on the 15th day of the sixth month of the following tax period.

    Tax Assessments

    The Tax Authorities may investigate current and previous 5 tax years.

    However, this period is extended to 10 years if there is a suspicion for fraud.

  • CORPORATION TAX

    Corporation Tax

    The standard corporate tax rate in Lithuania is 15%.

    However, small companies can apply for a reduced corporation tax rate of 5%, subject to the following conditions:

    • They employ less than 10 employees; and
    • They have less than €300,000 annual gross revenues.
  • DIVIDENDS

    Dividends from Foreign Investments

    Dividend income of a Lithuanian tax resident company from abroad is subject to 15% corporation tax in Lithuania. However, such dividend income is exempt from corporation tax if received from an EEA company, subject to foreign corporate tax, or other foreign company, subject to foreign corporate tax, in which the Lithuanian company has held more than 10% of the voting shares of the distributing company for a period of at least 12 months.

    Dividends from Local Investments

    Dividend income of a Lithuanian tax resident company from another Lithuanian tax resident company is subject to 15% corporation tax. However, if the shareholder has held more than 10% of the voting shares of the distributing company for a period of at least 12 months then the corporation tax rate is 0%.

    Withholding Tax on Dividends

    Dividend payments from one Lithuanian tax resident company to a foreign shareholder are subject to 15% withholding tax. However, if the shareholder has held more than 10% of the voting shares of the distributing company for a period of at least 12 months (except shareholders resident in "tax heaven" countries) then the withholding tax is 0%.

  • INTEREST

    Interest Income

    Interest income in Lithuania is taxable under corporation tax at the normal rate of 15%.

    Interest Expense Deductibility

    Interest expense is allowed as tax-deductible, yet thin-capitalization rules apply.

    Lithuania applies a thin capitalization debt-to-equity ratio of 4:1 in respect to borrowings from related parties as well as borrowings from third parties guaranteed by related parties.

    Withholding Tax on Interest

    Interest payments to foreign companies are subject to 10% withholding tax in Lithuania whereas if paid to a foreign individual the withholding tax is 15%.

  • ROYALTIES

    Royalty Income

    Royalty income is subject to corporation tax in Lithuania at the rate of 15%.

    Royalty Expense Deductibility

    Royalty expense is allowed as tax-deductible.

    Withholding Tax on Royalties

    Royalty payments to foreign companies are subject to 10% withholding tax in Lithuania whereas if paid to a foreign individual the withholding tax is 15%.

  • TAX LOSSES

    Ordinary Tax Losses

    Ordinary tax losses may be carried forward indefinitely in Lithuania and be set off against future profits.

    As of 1 January 2014, the amount of ordinary tax losses that can be set off against taxable profit is limited to 70% of the taxable profit.

    There is no carry back of ordinary tax losses in Lithuania.

    Group Relief

    Current year group relief is available, subject to conditions, in Lithuania between entities of the same group of companies.

  • CAPITAL GAINS

    Disposal of Shares by Foreign Shareholder

    The disposal of shares of a Lithuanian company by its foreign shareholder is exempt from taxation in Lithuania.

    Capital Gains

    Capital gains are taxed in Lithuania at the rate of 15%.

    Capital Losses

    Capital losses can only be used to set off capital profits resulting from the transfer of securities or derivative financial instruments.

  • PARTNERSHIPS

    Partnership Profits

    Partnership profits in Lithuania are taxed in the hands of each partner.

  • BRANCHES

    Branch Profits

    The profit of a Lithuanian Branch generated in Lithuania is taxed under Lithuanian corporation tax at the normal rate.

    There is no tax in Lithuania on the remittance of the profit of a Lithuanian Branch to its foreign head office.

  • STAMP DUTY

    Stamp Duty

    There is no stamp duty in Lithuania. However, services of state institutions may carry minor fees.

  • CAPITAL DUTY

    Capital Duty

    There is no capital duty on the issue of shares in Lithuania.

  • VAT

    VAT Taxable Transactions

    VAT is levied on the supply of goods and services in Lithuania, as well as imports of goods.

    VAT Standard Rate

    The standard VAT rate in Lithuania is 21%.

    VAT Reduced Rate(s)

    The reduced rates of VAT are 9%, 5% and 0%.

    VAT Registration Threshold

    The registration threshold for VAT purposes in Lithuania is €45,000.

    VAT Filing & Payment

    VAT filing and payment is performed monthly whereas an annual declaration for the previous fiscal year is also required.

Compare Lithuania to other jurisdictions and see the difference in corporation tax rates, tax residency requirements, VAT rates, capital gain taxes, etc.

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