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Dividend Tax in Lithuania

Dividend Tax in Lithuania

When it comes to declaring and paying dividend tax in Lithuania, the rule of thumb indicates a standard income tax rate of 15%. Nevertheless, it’s important to take into account the two parties that participate in the exchange: the issuer and the recipient. This dynamic itself may not affect the tax rate, but certain combinations and circumstances may carry beneficial exceptions and tax deductions due to international tax laws and double tax treaties.

DIVIDEND TAX FOR NATURAL PERSONS

Dividends paid by foreign companies to Lithuanian nationals are subject to a 15% income tax rate. However, if the country that the payer is registered in is a signatory to a double tax treaty alongside Lithuania, tax exemptions and/or reduced rates may apply.

Dividends paid by Lithuanian companies to Lithuanian nationals are subject to a 15% income tax rate.

Dividends paid by Lithuanian companies to foreign nationals are also subject to a 15% income tax rate. However, if the country that the payee resides in is a signatory to a double tax treaty alongside Lithuania, tax exemptions and/or reduced rates may apply.

DIVIDEND TAX FOR COMPANIES

Similarly to transfer of dividends between a corporate entity and a natural person, exchanges between two corporate entities also carry their country of registration as an important dividend tax variable. Another important variable is the amount of time for which dividend-paying stock had been held.

Dividends paid by foreign companies to Lithuanian companies are subject to a 15% income tax rate. This rate does not apply to dividends that are registered or otherwise administered in other countries within the EEA and are already subject to income tax. Another exception applies if a Lithuanian company holds a voting power, owning no less than 10% of shares for no less than 12 months. In that case, dividend-related income is tax-free.

Dividends paid by Lithuanian companies to Lithuanian companies are also subject to a 15% income tax rate. One important point to note in such cases is that the recipient of dividends can offset income tax by the amount of tax already paid by the company that distributed and paid the dividends. Another exception applies if the recipient of dividends holds a voting power, having owned no less than 10% of shares for no less than 12 months. In that case, dividend-related income is tax-free.

Finally, dividends paid by Lithuanian companies to foreign companies are subject to a 15% income tax rate as well. However, if the country of the dividend recipient is a signatory of a double tax treaty alongside Lithuania, tax exemptions and/or reduced rates may apply. Another exception applies if the recipient of dividends holds a voting power, having owned no less than 10% of shares for no less than 12 months. In that case, dividend-related income is tax-free.

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