Lithuania

In Lithuania, Value-Added Tax (VAT) is applied to the supply of goods and services for consideration within the country, performed by a taxable person engaged in economic activity. The standard VAT rate is 21%. A reduced rate of 12% applies to public transport services and accommodation services. A further reduced rate of 5% applies to books and non-periodical publications (including e-books), periodical publications (printed and/or electronic), technical aid devices and their repair services for the disabled, drugs and medical aid devices compensated by the state, and non-prescription drugs. VAT exemptions apply to essential services such as healthcare, education, financial transactions, and insurance. Zero-rated VAT (0%) applies to exports of goods outside the EU and to supplies to VAT-registered businesses in another EU member state.

In Lithuania, Real Estate Tax (RET) applies to both individuals and legal entities who own real estate, including both Lithuanian residents and foreigners. The rate for RET ranges between 0.5% and 3% of the real estate's tax value. This rate is determined by local municipal councils, who establish a specific tax rate for properties within their territories each year. The flexibility of the rate allows municipalities to adjust tax requirements based on local needs, ensuring that real estate owners in Lithuania contribute to municipal budgets through this important tax mechanism.

Corporate Income Tax (CIT) in Lithuania is charged at a standard rate of 17% (effective 1 January 2026), as confirmed by the Lithuanian Tax Inspectorate. Small companies (fewer than 10 employees and gross annual revenue not exceeding EUR 300,000) may qualify for a reduced rate of 0% for the first two years of operations, and 7% thereafter (from 1 January 2026). Credit institutions with taxable profits exceeding EUR 2 million are subject to a 22% CIT rate (17% standard rate plus 5% additional surcharge, effective from 1 January 2026 for an indefinite period). A special CIT regime applies to certain maritime activities at a fixed 17% rate based on the functional capacity of the ship. Companies must file their CIT returns and make the final CIT payment by the 15th day of the sixth month following the end of the tax period. Advance CIT payments are made quarterly, due before the 15th of the last month of each quarter. Lithuania's CIT system is straightforward and competitive, making it attractive for foreign investment.

The Personal Income Tax (PIT) rate in Lithuania is set at 20% applied to income amounts not exceeding EUR 126,532 per calendar year in 2025 and at a 32% rate for the exceeding part, although individual tax rates may vary depending on the income source, such as employment or non-employment income. Taxpayers must submit their PIT return by May 1st, with the final payment also due on that date. Employers are required to withhold and make monthly PIT payments on behalf of their employees. Lithuania's PIT system aims to balance the fiscal burden on individuals while ensuring sufficient tax revenues for public services and infrastructure.

Capital gains in Lithuania are taxed as part of the corporate or personal income tax regime. For corporations, capital gains are subject to the standard Corporate Income Tax (CIT) rate of 17% (from 1 January 2026), which applies to gains from the sale of shares, real estate, or other capital assets. For individuals, capital gains are taxed at the Personal Income Tax (PIT) rate of 20%, which applies to gains from the sale of shares or immovable property. Lithuania's capital gains tax framework ensures that profits from investments and property sales are appropriately taxed, contributing to national revenue while maintaining a competitive tax environment for businesses and investors.