Lithuania taxes

Taxation in Lithuania, Taxes for companies in Lithuania.

Lithuania is very attractive jurisdiction in respect to other European jurisdictions regarding taxes. In addition to corporate profit tax, companies having place of business in Latvia have to pay value added tax (VAT), real estate tax, customs and excise duties, social security contributions and a natural resource tax.

The standard profit tax rate applied to legal entities is 15%. Small enterprises with an annual income not exceeding LTL 500,000 and an average number of employees not exceeding 10 are subject to a 5% profit tax rate.

A 15% tax is applied to dividends received both from Lithuanian and foreign enterprises. Withholding tax deducted and paid from Lithuanian company dividends by foreign enterprise may be credited against Lithuanian enterprise profit tax.     Dividends received from Lithuanian and foreign enterprises shall not be taxed if the recipient (including permanent establishments, provided that the shares are owned by a foreign entity, the permanent establishment of which is the recipient of the dividends) thereof has owned no less than 10% of the shares for at least 12 months (a participation exemption rule). The recipient may consider such dividends as non-taxable income in Lithuania.

Apart from dividends, certain other income of non-residents sourced in Lithuania is taxed with a 15% withholding tax:

  • income from distributed profit;
  • income from the sales, other transfer into ownership or lease of property immovable by nature located in the territory of the Republic of Lithuania;
  • income from performers activities and sports activities in the Republic of Lithuania;
  • annual payments to supervisory board members.

Certain income of non-residents sourced in Lithuania is taxed with less 10% withholding tax:

  • interest, except of interest on securities issued by the Government on international financial marks, interest accrued and paid on deposits, and interest on subordinated loans which meet the criteria set down by the legal acts the Bank of Lithuania;
  • royalties;
  • compensations for violations of copyrights and ancillary rights.

Corporation tax is tax charged on profits calculated from incomes that are shown through financial statements. Some expenses are not allowed like in other jurisdictions.

Other factors that make Lithuania very attractive location:

  • 15% corporate tax on trading profits
  • Tax exemption on capital gains on the disposal of shares
  • Exemptions from dividend, interest and royalty withholding tax
  • Wide range of signed treaties
  • Holding company allowance
  • Access to the EU funds

Lithuania has wide network of double tax treaties signed based on the OECD model.

Revenue Commissioners is the tax authority in Ireland with primary duty to collect taxes and duties.

Standard VAT rate is 21%. The reduced tax rate is 9% and 5% in some cases. The 9% reduced tax rate applies to: heating; books; newspapers and other publications; regular inland transportation services of passengers and their baggage. The 5% reduced tax rate is for medicine and medical aid equipment. Normally tax period of a legal person is a calendar month and tax period of a natural person is a calendar half-year.

If you have questions about taxation in Lithuania, do not hesitate to contact us.