Capital Gains Tax in Lithuania
Alongside standard income tax, in Lithuania individuals are subject to three types of investment-related tax. That includes interest income tax, dividend tax, and capital gains tax. Capital gains tax applies to income gained from selling or otherwise trading stock units.
Importantly, unlike in some other countries, in Lithuania capital gains tax is paid only for realized profit. If stock units are retained for multiple taxation periods, no tax is paid – unless stocks are sold. Following the sale, it is the responsibility of an individual to declare financial gains as part of income declaration for that taxation period.
Capital gains tax applies only to the gain – not the total amount of money received.
SELLING PRICE – INITIAL PURCHASE PRICE = CAPITAL GAINS
Capital gains tax rate and exemptions
Capital gains tax adheres to a standard income tax rate and is currently set at 15%. However, a non-taxable limit of 500 euros applies on capital gains when:
- Stocks are sold or otherwise returned to their original issuer
- Stocks are considered as sold in the case of entity liquidation
If capital gains are very high, however, an increased tax rate may apply. In Lithuania, a tax rate of 20% applies when total profit gained from stock trading and other income that is not related to work is 120 or more times greater than the average salary for that taxation period (1352,7 euros in 2021).
Another tax privilege applies when stocks are bought through a commercial bank or a stockbroker. In this case, commission paid for trading services is added to the stock acquisition price, in turn lowering taxable capital gains once stocks are sold.
Contact Company in Lithuania UAB to receive professional guidance on regulations and other nuances related to correct administration and declaration of capital gains tax. Our team of competent and experienced professionals will gladly assist you, providing valuable input and assurance on tax-related and other questions.