Taxes in Lithuania in 2022

 Taxes in Lithuania

Lithuania’s location in the geographical centre of Europe means that it has access to huge markets in Western Europe, Scandinavia and the Baltic countries. It is a hot spot for startups, thanks to government funding and tax breaks, as well as simple registration procedures. Lithuania offers many opportunities to develop your business. In 2022 there were some changes in the tax rates and taxation of Lithuania, more information can be found below.

 Income tax

  • Tax on dividends 15%
  • Corporate tax – 20%/15%/5%/0
  • Social tax – 33% for employee, 2.49% for employer
  • Insurance against unemployment 0.16%
  • For contributory pension system participants, the contribution rate increases from 2.4 per cent to 2.7 per cent. No change for those whose rate was already 3 per cent.
  • Turnover tax 21%/9%/5%/0

Accounting services in Lithuania

Minimum wage

From 1.01.2022 minimum wage for full-time work is EUR 730 per month or EUR 4.47 per hour.

Tax-deductible income accounting

From 01.01.2022 the tax-free income is increased from 400 euros to 460 euros for those who receive the minimum wage. The calculation of the non-taxable income will also be changed:

  • If the gross salary is less than or equal to the minimum wage – 730 euros, a fixed monthly indemnity of 460 euros is used;
  • If the gross salary is between 730 euros and, 1678 euros, the formula should be as follows: Monthly non-taxable income = 460-0.26 x (monthly wage – minimum monthly wage).
  • If the gross wage exceeds 1,678 euros, the following formula is applied: Monthly non-taxable income = 400-0.18 (monthly wage – 642).
  • For wages above 2,864 euros, the non-taxable minimum is not applicable.

So far, employers have been able to pay their employees in cash. As of 2022, the salary, daily subsistence allowance and reimbursement of work-related expenses will have to be paid by bank transfer.

Income tax

The 20% rate is applied if the annual income is up to 90,246 euros. If income exceeds €90,246, the income tax rate is 32 per cent.

Income received by a tax resident of Lithuania worldwide is subject to income tax.

  • The following income is taxed for non-residents of Lithuania:
  • Income from work in the territory of Lithuania
  • Income from Distributed Profits and Payments to Board Members
  • Interest income (excluding interest on securities of the Government of Lithuania)
  • Income of athletes and artists
  • Royalties including copyrights
  • Income from the rental of real estate located in Lithuania.
  • Income from the sale or transfer of movable property if the object is legally registered in according to local law and such an object is registered (or must be registered) in Lithuania, as well as income from the sale of immovable property located in Lithuania.
  • Income derived from an individual activity, carried out through a permanent base, as well as income,  received abroad, which belongs to this permanent base in Lithuania, if the said income is connected with the activity of a non-resident through a permanent base in Lithuania.
  • Compensation for copyright infringement.

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Value added tax

The standard rate of 21 per cent applies to most goods and services.

There is also a reduced VAT rate of 9 per cent, which applies to public transport, heating, and water for domestic use, household and hotel wood, and books and publications, which is valid until the end of 2022.

An even lower VAT rate of 5% applies to the sale and repair of equipment for the disabled, pharmaceuticals, medical products and periodicals.

However, there are certain goods and services in Lithuania that are not subject to VAT:

  • Medical services and goods
  • Leasing and sale of immovable property
  • Insurance services
  • Some financial services
  • Cultural and sporting events
  • Remittances
  • Bookmaking and Gaming Services
  • Postal services
  • Social and related services
  • Radio and television services

Corporate tax

The standard corporate tax rate is 15%. However, if certain conditions are met, small companies and agricultural enterprises may apply for a reduced tax rate of 0 per cent or 5 per cent.

From the beginning of 2020 until the end of 2022, the taxable profits of credit institutions exceeding the threshold of 2 million euros are subject to an increased tax rate of 20%. Special rules apply for calculating this taxable profit.

Company in Lithuania UAB will be pleased to advise on tax-related issues in Lithuania and provide accounting services.