Lithuania

Value-added tax (VAT)

Supply of goods and services for consideration within the territory of Lithuania, performed by a taxable person engaged in economic activity, is subject to VAT in Lithuania.

The standard VAT rate is 21%.

The reduced rate of 9% applies to:

• Books and non-periodical information publications (including electronic books and electronic non-periodical information publications).
• Public transport services.
• Supply of heating to residential premises and supply of hot water (as of 1 October 2023 VAT compensation mechanism is applicable).
• Firewood for household energy users.
• Accommodation services.
• Attendance of all types of artistic and cultural institutions, as well as artistic and cultural events (when VAT exemption is not applicable).
• Attendance of sports events, sports clubs, and other persons providing services similar to those provided by sports clubs (when VAT exemption is not applicable) (applicable until 30 June 2023).
• Performance services provided by performers (actor, singer, musician, conductor, dancer, or other person who plays, sings, reads, recites, or otherwise performs literary, artistic, folklore, or circus numbers) (applicable until 30 June 2023).
• Catering services and take-away food provided by restaurants, cafeterias, and similar catering establishments, with the exception of alcoholic beverages and services or parts of services relating to alcoholic beverages (applicable until 31 December 2023).

The reduced rate of 5% applies to:

• Periodical publications (printed and/or electronic).
• Technical aid devices and their repair services for the disabled.
• Drugs and medical aid devices as well as food products of special medical purpose where they all are compensated by the state (under certain conditions). Food products of special medical purpose compensated by the state (under certain conditions) as well from 1 January 2023.
• Not compensated prescription drugs.

Supply of goods exported outside of the European Union as well as supply of goods to VAT payers registered in another EU member state is subject to VAT at the rate of 0% (exempt with credit). There are other supplies of goods and services that are exempt with credit (e.g. goods and services for vessels and aircraft, transportation and linked services related to export or import of goods).

In order to apply zero-rated VAT on goods carried out from Lithuania, VAT payers must hold supporting documents as evidence that these goods were actually exported from the European Union or carried out from Lithuania to another EU member state.

Goods and services that are exempt without credit include, but are not limited to, the following:

• Supply of goods/services related to health care.
• Social services supplied by non-profit entities.
• Education and training services.
• Cultural and sports services rendered by non-profit entities.
• Services provided by political parties, trade unions, and other non-profit membership based legal entities to their members, meeting certain requirements.
• Services provided by religious communities, other communities, and centres to their members, meeting certain requirements.
• Postal services.
• Radio and TV broadcasting services provided by non-profit legal entities.
• All types of insurance and re-insurance services.
• Financial services meeting certain requirements (option to tax may be exercised for some financial services).
• Lotteries and gambling.
• Rent or sale of immovable property (option to tax may be exercised, certain conditions apply).
• Supply of goods where the VAT payer has not deducted any proportion of the VAT on purchases and/or importation thereof (certain conditions apply).

Sale and contribution in kind of a business or part of a business is treated as being out of scope of VAT (under certain conditions).

Customs duties

EU customs law is applicable in full.

EU customs law, also known as the Union Customs Code, compiles the rules, arrangements, and procedures applicable to goods traded between the European Union and non-member countries. The Union Customs Code indicates an obligation on a person to pay the amount of the import or export duties that apply to specific goods under the EU provisions in force. The application of the EU customs law means that:

• trade between Lithuania and other EU countries is customs-free
• imports from non-EU countries are subject to EU customs tariffs, and
• numerous free trade agreements concluded between EU and non-EU countries apply to Lithuania.

Excise taxes

Excise duty is imposed on the following goods produced in or imported into Lithuania: ethyl alcohol and alcoholic drinks, including beer and wine; processed tobacco, including cigarettes, cigars, cigarillos, and smoking tobacco; unprocessed tobacco; heating tobacco products; electronic cigarettes liquid; energy-related products, including petrol, kerosene, gasoline, fuel oil, lubricating oils, natural gas, and their substitutes and additives; coal, coke, and lignite; and electricity. The tax rate depends on the type and quantity of goods.

Land tax

Lithuanian and foreign entities are subject to land tax collected by the municipalities for the land they own in Lithuania. Roads for general use and forestland are exempt. The assessment and payment terms are set forth by the municipalities, which are also entitled to grant land tax incentives.

The annual land tax rate ranges from 0.01% to 4% of the land tax value, depending on local municipalities. Please see the table below describing the main features of the land tax:

Land lease tax

State-owned land that is leased for Lithuanian and foreign companies is subject to land lease tax at a rate established by the municipalities. The minimum tax rate set by the government is 0.1%, and the maximum rate is 4% of the value of the land. Municipalities have an opportunity to apply tax incentives.

Real estate tax (RET)

The RET rate ranges from 0.5% to 3% of the real estate tax value. The tax is paid by the owners of real estate - individuals and legal entities of Lithuania and foreign countries (with some exemptions). Municipal councils establish a specific tax rate for real estate situated in their territories annually.

State duties (stamp taxes)

There are no stamp duties applied in Lithuania; however, minor fees for the services of state institutions, such as the issuance of documents having legal force and other deeds, may apply (e.g. notary fees apply on share purchase agreements [SPAs] meeting certain criteria).

Payroll taxes

Employers should withhold PIT at the rate of 20% from the employee’s salary. In case employment related income exceeds a certain threshold (EUR 90,246 for 2022 or EUR 101,094 for 2023) per calendar year, the employee is required to pay the higher 32% PIT rate on the part exceeding such threshold while filing the annual PIT return (i.e. to additionally transfer 12% on such income part after the calendar year ends). 

There are no additional payroll taxes applicable to an employer other than the employee’s and employer's SSC and the employer’s contributions to the Guarantee Fund and to the Long-term Employment Fund (see below).

Social security contributions (SSC)

SSC is composed of employee’s and employer’s parts (both payments are administered by employer). Rates are higher for annual income up to a certain threshold (EUR 90,246 for 2022 or EUR 101,094 for 2023).

Employee’s income up to this threshold is subject to the standard rate of SSC for employers in the range from 1.45% to 2.71% (for time limited employment agreements at 2.17% to 3.43%) and 19.5% (including health insurance contributions at 6.98%) for employees. Income above this threshold is subject to lower employee’s SSC of 6.98%, and the employer's SSC part is not capped.

Also, SSC (employee’s and employer’s parts) must be paid by the employer on the official minimum monthly salary amount in force regardless of the fact that an employee receives lower salary (not applicable when an individual is employed in another company, receives an old age pension benefit, is not older than 24 years, has limited capacity to work, or receives maternity/paternity or childcare benefit, etc.).

Contributions to the Guarantee Fund and Long-term Employment Fund

Contributions to the Lithuanian Guarantee Fund are calculated by employers at a rate of 0.16% on the gross salary payable to employees. The Guarantee Fund provides support to employees in case of an employer’s bankruptcy.

Employers also pay an additional contribution to the Long-term Employment Fund amounting to 0.16% on employee remuneration in order to entitle the individuals to receive payment from this fund if their employment agreement is terminated upon employer’s initiative without employee’s fault (special conditions apply). 

Environmental tax

Environmental tax is imposed on pollutants discharged into the environment, dumped waste, a few specified products (e.g. tyres, batteries), and certain types of packaging.

According to the Law on Tax on Environmental Pollution:

• Tax for environmental pollution by packaging waste is paid for filled packaging supplied to the domestic market of the Republic of Lithuania. The list of taxed packaging includes glass, plastic, PET, combined, metal, paper and cardboard, wooden, as well as other packaging. The tax is paid according to the amount of filled taxable packaging actually supplied to the internal market of the Republic of Lithuania during the tax period. The producer and/or importer pays the tax for environmental pollution by packaging waste.
• Tax for environmental pollution by product waste is paid for specific products supplied to the domestic market of the Republic of Lithuania, which are supplied to the domestic market of the Republic of Lithuania as separate products, not included in the composition of another product. The tax is paid according to the amount of products actually supplied to the internal market of the Republic of Lithuania during the tax period. The producer and/or importer pays the tax for environmental pollution by product waste.
• Tax for environmental pollution from:
  • mobile pollution sources (except air vehicles used for the transport of passengers and cargo and non-road machinery used for agricultural activities) is paid for the amount of fuel consumed during the tax period
  • air vehicles, used to transport passengers and cargo, is paid for the number of take-off and landing cycles, and
  • non-road moving machinery used for agricultural activities is paid when registering for the first time in Lithuania or when the owners of non-road moving machinery used for agricultural activities are changed in the Register of Tractors.

The tax for environmental pollution from mobile pollution sources is paid by natural persons, legal entities, other organisations, and their divisions, which use mobile pollution sources for commercial activities in order to receive and/or earn income or other economic benefits.

• The tax for pollution from stationary sources applies to the amount of pollutants released into the environment during the tax period. The tax is paid by individuals, legal entities, other organisations, and their divisions, which, in cases established by Law, must have a permit, which sets pollution norms, or which operate equipment using organic solvents, which must be registered.
• The tax on waste disposal in a landfill site applies to waste disposed of in a landfill site. The tax is paid according to the amount of waste actually disposed of in the landfill during the tax period.

Tax on natural resources

A tax on natural resources is payable on the amount of extracted natural (mineral, water, soil) resources. The object of the tax also includes hunting animals, taxed according to categories of hunting areas. According to the Law on Taxes on Natural Resources, the taxpayers are legal and natural persons extracting Lithuanian natural resources, for which a permit is required, and natural and legal persons who have permission to use hunting animal resources in a unit of hunting areas in accordance with the Law on Hunting of the Republic of Lithuania.

Tax on extraction of hydrocarbon resources

The tax applies to conventional and dispersed (shale) hydrocarbons (petroleum, gas, condensate) extracted in the territory of the Republic of Lithuania and its economic zone in the Baltic Sea. The taxpayers are Lithuanian and foreign taxable entities and individuals extracting conventional and dispersed hydrocarbons.

Tax on lotteries and gambling

The taxpayers are legal entities which organize lotteries according to the Law on Lotteries and organize gambling according to the Law on Gambling.

The tax base for lotteries and gambling is:

• when organizing lotteries - the nominal value of distributed lottery tickets;
• when organizing games with slot machines, table games, bingo, totalizator, betting and remote gambling - the amount received from the bets of gamblers, after deducting the winnings actually paid out to the gamblers (until 1 July 2022, when organizing gambling with slot machines and table games - only a monthly fixed fee was charged for the gambling device (slot machine, roulette, card or dice table) specified in the permit to open slot machines, bingo halls, gambling houses (casino)).

These tax rates for lotteries and gambling are applied to the tax base (specified above):

• when organizing lotteries:
• from 1 January 2023 - 18%;
• from 1 July 2022 to 31 December 2022 - 13%;
• until 1 July 2022 - 5%;
• when organizing games with slot machines, table games, bingo, totalizator, betting and remote gambling:
• from 1 July 2022 - 20%;
• until 1 July 2022 - when organizing games with bingo, totalizator and betting - 18%, when organizing remote gambling - 13% (until 1 January 2020 - 10%), when organizing games with slot machines and table games - a fixed amount of tax (varying from EUR 130 to EUR 2.3k per month) was established for each gambling device specified in the gambling activity permit).

Also, legal entities seeking to obtain a license to organize gambling are charged with a one-time fee (varying from EUR 100k to EUR 1m, depending on the type of license) from 1 July 2022.

The tax period is a quarter of the calendar year. The tax is calculated and paid after the end of each tax period until the 15th day of the first month of the next tax period.

A one-time fee for issuing a license to organize gambling is paid before the license is issued.