What Taxes Must Be Paid If the Board Member Is a Foreigner in Lithuania

If you’re a new individual taxpayer in Lithuania, who’s just received a work permit through the Lithuanian Labour Exchange, a heap of local legislation might seem daunting to you due to the varied and meticulous requirements applied to different types of resident status and sources of income. This article will cover the main information pertinent to mandatory taxation in Lithuania, which will place you on the right path to the efficient management of your tax contributions.

Based on the number of days spent in Lithuania during a particular tax year, Lithuanian taxation system categorises individuals into permanent residents and non-permanent residents. It determines what taxes must be paid to the Lithuanian government for the tax year, which runs from the 1st of January until the 31st of December.

A foreign board member of a Lithuanian company will be considered non-permanent on the following instances:

• If he/she is present in Lithuania for less than 183 days during the tax period.
• If he/she is present in Lithuania for less than 280 days during two successive tax periods, and if he/she stays in Lithuania for less than 90 days in any of such tax periods.

If the above-mentioned conditions aren’t met, it’s required to declare permanent residence via the Migration Office, who will forward the records on to the State Enterprise Centre of Registres. It’s important to note that a work permit is required to start the application.

Non-permanent residents aren’t required to pay Social Insurance (social security) contributions to the Lithuanian government, provided that a European A1 certificate is issued. However, paying a Personal Income Tax (20%-32%) is compulsory to everyone who earns income in Lithuania. On the other hand, if your income related to employment in Lithuania is received from a foreign country, you’re not subject to the Personal Income Tax.

The most common taxed income received in Lithuanian by a board member who’s a non-permanent resident is as follows:

• Income from employment relations sourced in Lithuania
• Interest, excluding interest on non-equity government securities
• Income from distributions and payments to the members of the Management Board and Supervisory Board

If an individual engages in such additional profitable activities as real estate sales, sports or performing activities or sales of a Lithuanian-based movable property, he/she also must pay Personal Income Tax.

Income tax declarations should be submitted to the State Tax Inspectorate either electronically or by filing a hard copy of the declaration form at one of the departments of the State Tax Inspectorate.

Company in Lithuania UAB offers comprehensive personal accounting support to non-permanent residents who intend to declare their income in Lithuania, including advice on possible relief from double taxation. Contact our experienced specialists now to receive the best personalised offer.

In addition to the accounting services, we also offer assistance in opening a new bank in Lithuania as well as a variety of legal services, including company formation and ownership transfer. Our knowledgeable advisers here at Company in Lithuania UAB guarantee efficiency, confidentiality and meticulous attention to every detail that affects your financial success.