Social Security tax (Social Insurance in Lithuania) contributions are mandatory payments to the Lithuanian government who in return provides such social benefits as medical care, parental leave, unemployment insurance, retirement pension and disability allowance. They are administered by the State Social Insurance Fund Board (SoDra) and are collected in the form of a payroll tax. The whole contribution is made up of both employee and employer’s obligatory and voluntary contributions.
In 2026, Lithuanian employers generally pay social security and related contributions ranging from 1.77% to 3.03% of an employee’s gross salary under an indefinite-term employment contract, depending on the employer’s occupational accident risk category. For fixed-term employment contracts, the applicable rates generally range from 2.49% to 3.75%. These rates include unemployment insurance, occupational accident and disease insurance, and contributions to the Guarantee Fund and Long-Term Employment Benefits Fund, where applicable. Certain employers may qualify for statutory exemptions.
In 2026, employees in Lithuania generally pay mandatory social security and health insurance contributions amounting to 19.5% of their gross salary. The contributions consist of 8.72% pension insurance, 1.99% sickness insurance, 1.81% maternity insurance and 6.98% compulsory health insurance. Employees participating in the supplementary second-pillar pension accumulation system generally contribute an additional 3% of their gross salary.
Lithuania operates a supplementary second-pillar pension accumulation system in which participating employees generally contribute 3% of their gross salary. The state provides an additional contribution calculated according to the applicable statutory rules. From 1 January 2026, reforms to the second-pillar pension system introduced more flexible participation arrangements, including changes to automatic enrolment, contribution suspension and withdrawal opportunities. Individuals should assess the applicable conditions before joining, suspending contributions or withdrawing accumulated funds.
Lithuania’s third-pillar pension system provides voluntary private pension savings through eligible pension funds. Participants may generally determine their contribution amounts and investment strategy, subject to the terms of the selected pension fund. However, withdrawals may have tax consequences depending on the participant’s age, contribution history and applicable legislation. From 2025, the Personal Income Tax deduction for third-pillar pension contributions is no longer available for newly concluded pension accumulation contracts. Transitional tax relief may remain available for eligible contracts concluded before 1 January 2025, subject to statutory conditions and deduction limits.
Key deadlines:
- The tax year runs from the 1st of January until the 31st of
- Lithuanian employers must generally submit the monthly SAM social insurance report and pay the corresponding social insurance contributions to Sodra by the 15th day of the following month. Where the statutory deadline falls on a weekend or public holiday, the applicable deadline adjustment rules must be followed. Other social insurance notifications, including employee commencement and termination reports, are subject to separate submission deadlines.
Key governmental authorities:
New employees cannot begin to work until they are registered at the Social Security Tax Office by submitting a 1-SD form designed for notifying about the beginning of the personal social income. This must be completed no later than a day prior to the start of the employment.
When an employee’s employment relationship ends, the employer must submit a 2-SD notification to Sodra no later than the next working day after the termination of social insurance coverage. This obligation applies regardless of whether the employee leaves Lithuania. The notification is linked to the actual termination of employment, not the date on which the employee gives notice of resignation.
Under Regulations (EC) No 883/2004 and No 987/2009, employees temporarily posted to Lithuania from another EU or EEA Member State or Switzerland may remain subject to the social security legislation of their home country where the applicable conditions are satisfied. An A1 certificate confirms the social security legislation applicable to the employee during the relevant period. The exemption from Lithuanian social security contributions is not automatic merely because the employee resides in another EU or EEA country. The applicable rules depend on the posting arrangements, duration of employment, cross-border working circumstances and relevant EU coordination provisions.
Where an employee comes from a country outside the EU, EEA or Switzerland and no applicable bilateral social security agreement exists, Lithuanian social insurance obligations must be assessed under Lithuanian national legislation. Liability may arise from employment performed in Lithuania, even where the assignment is temporary. There is no universal rule exempting all foreign employees from Lithuanian social security contributions during their first year of work. The applicable treatment depends on the employment relationship, place of work, social insurance status and any relevant statutory exemptions.
Social Tax For a Sole Trader
Lithuanian legislation distinguishes between individuals conducting individual activities (individuali veikla) and owners of individual enterprises (individuali įmonė, IĮ). These categories are subject to different social insurance contribution rules. In 2026, individuals conducting individual activities generally pay social insurance and compulsory health insurance contributions at a combined rate of 19.5% on 90% of their taxable income, subject to statutory limits and exemptions. Owners of individual enterprises are generally subject to a combined rate of 20.81% on the applicable contribution base for funds withdrawn for personal needs. From 1 July 2026, this contribution base generally increased from 50% to 90% of such withdrawals. Additional pension accumulation contributions may apply.
In 2026, self-employed individuals participating in Lithuania’s second-pillar pension accumulation system generally pay an additional 3% pension contribution on the applicable contribution base. The standard social insurance contribution rates depend on the legal form of activity and the relevant insurance coverage. Individuals conducting registered individual activities generally pay VSD contributions at 12.52%, or 15.52% when participating in supplementary pension accumulation, in addition to compulsory health insurance contributions of 6.98%. Different rates and contribution bases apply to owners of individual enterprises and members of small partnerships.
Self-employed individuals in Lithuania must pay compulsory health insurance (PSD) and state social insurance (VSD) contributions according to the rules applicable to their legal form and social insurance status. In 2026, the standard minimum monthly PSD contribution is EUR 80.48, calculated as 6.98% of the statutory minimum monthly wage of EUR 1,153. Certain individuals are exempt from monthly PSD payments because they are insured on another legal basis. VSD contributions may be paid in advance or calculated and settled following annual income reporting, depending on the applicable requirements.
- Monthly – if a taxpayer pays contributions in advance, the contributions are paid once a month by the last day of the current month.
- Self-employed individuals whose social insurance contributions are calculated on the basis of annual taxable income must generally calculate and settle their outstanding VSD and PSD liabilities by the statutory annual deadline, usually 1 May of the following year, subject to adjustments where the deadline falls on a non-working day. The applicable reporting and payment requirements depend on the individual’s legal form, contribution base and whether advance contributions have been made.
Taxpayers can calculate the amount of contributions they should pay by using the Self-Employment Tax Calculator.
Social Tax Allowance in Lithuania
There are several instances when the requirement to pay social tax contributions might be waived, subsidised, or it may enable access to tax allowances.
Lithuanian Personal Income Tax legislation provides deductions for certain eligible pension contributions, subject to statutory conditions and limits. From 2025, contributions under newly concluded third-pillar pension contracts generally no longer qualify for the previous personal income tax deduction. Transitional relief remains available for qualifying pension contracts concluded before 1 January 2025, subject to the applicable conditions. Additional second-pillar contributions exceeding the standard statutory 3% contribution may qualify for a deduction in certain circumstances. Ordinary compulsory health insurance contributions do not automatically entitle an employee to a Personal Income Tax refund.
Certain categories of self-employed individuals in Lithuania may qualify for an exemption from VSD contributions during their first year of self-employment, provided that the statutory eligibility conditions are satisfied. The exemption is not automatically available to every self-employed person and does not generally eliminate compulsory health insurance obligations. Individuals who qualify for the first-year VSD exemption should also consider that periods for which contributions are not paid may affect their entitlement to certain social insurance benefits.
The government also favours employment of individuals with disabilities. For each disabled person employed for a specified period, a subsidy is paid each month to partially reimburse social security tax contributions calculated on the basis of the agreed salary.
In conclusion, social security tax calculation might be bewildering. If you’re wondering where to start, highly qualified accounting consultants of the Company in Lithuania UAB team will be pleased to assist you. We very well understand the ecosystem of Lithuanian social security legislation and thus can guide you through the peculiarities. Order our accounting consultation now.
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