Lithuania

Amendments to the tax laws from 2026

The following amendment to the Law on Corporate Income Tax (CIT) have entered into force from 1 January 2026. 

• The standard tax rate increases from 16% to 17%, while the reduced tax rate increases from 6% to 7%. 

• A concession for immediate depreciation of long‑term assets (e.g., equipment, computer hardware, software, freight vehicles) is introduced, provided that such assets are used in the company's activities for 3 years. 

• Companies will be able to deduct up to EUR 2,500 per year for scholarships paid to students studying natural sciences, technology, engineering or mathematics (STEM). 

• Newly registered companies whose taxable period revenue does not exceed EUR 300,000 will be able to apply a 0% corporate income tax rate for as many as two taxable periods (the condition regarding the number of employees has been removed). 

• The conditions for transferring (taking over) tax losses within a group of entities have been updated, establishing that compliance with the required criteria (extent and duration of participation in the group) must be assessed on the last day of the relevant taxable period for which the tax losses are transferred (taken over). 

Amendments to the tax laws from 2025 

The following amendment to the Law on Corporate Income Tax (CIT) have entered into force as of 2025. 

Amendments to the tax laws from 2025

The following amendment to the Law on Corporate Income Tax (CIT) will enter into force as of 2025.

Car purchase and rental costs

From 1 January 2025, the part of the purchase price of a passenger car that is considered as an asset of a unit can be deducted from income, not exceeding: 

• 75,000 euros (EUR) when purchasing a passenger car with carbon dioxide (CO2) emissions equal to 0 g/km.
• EUR 50,000 when purchasing a passenger car with CO2 emissions not exceeding 130 g/km. 
• EUR 25,000 when purchasing a passenger car with CO2 emissions exceeding 130 g/km but not exceeding 200 g/km.
• EUR 10,000 when purchasing a passenger car with CO2 emissions exceeding 200 g/km. 

The part of the purchase price of a passenger car that exceeds the established limitations will have to be attributed to non-deductible expenses during the period that the passenger car will be depreciated.

There are no restrictions on the cost of the purchase of passenger cars if these cars are used only for rental activities, for the provision of driving training services, or for the provision of transport services.

The monthly rental costs of a passenger car that is not considered as an asset of a unit are deducted from income within (i) the limit set above and (ii) the applicable depreciation normative ratio (in years) divided by 12 of the fixed asset group to which the leased passenger car should be assigned if it were considered as an asset of a unit. This shall not apply to leases with a total period of no longer than 30 days during the tax period.

Amendments to the tax laws from 2023/24

The following amendments to the laws on CIT, personal income tax (PIT), and social security contributions (SSC) entered into force as of 2023/24.

Corporate income tax (CIT)

From 1 January 2023, the new amendments to the Law on CIT relating to anti-hybrid rules have come into force.

With the new amendments, it is aimed to prevent non-taxation of income achieved by the foreign shareholders of Lithuanian hybrid entities, i.e. to prevent situations when the income is neither taxed as being that of a Lithuanian hybrid entity nor as being that of foreign shareholders.

The tax base of a Lithuanian hybrid entity shall include the part of income (attributable to the foreign shareholder[s] of the Lithuanian hybrid entity) that is not otherwise subject to CIT or an equivalent tax in accordance with the legislation of the Lithuanian Law on CIT or any other country whose resident is a participant of the Lithuanian hybrid entity for tax purposes.

More detailed information explaining the application of this rule is currently not available (should be provided by the tax authorities later). However, the provision does not apply to collective investment vehicles meeting certain criteria.

Other significant amendments

Implementation of Pillar I and Pillar II

From 1 July 2024, the Lithuanian Pillar II Law (hereinafter referred to as the Law) for ensuring the minimum level of taxation of groups of entities entered into force, which partially transfers and implements the 14 December 2022 Provisions of the Council Directive EU 2022/2523 on ensuring the universal minimum level of taxation of international corporate groups and large groups of local entities in the Union (hereinafter referred to as the Directive). The current Law delays application of top-up tax in Lithuania that is aligned with the election permissible per the Directive.

The Law applies to international groups of entities and groups of Lithuanian entities, whose location is in Lithuania and whose annual consolidated income is at EUR 750 million or higher for least two out of four financial years, if the minimum effective rate for such groups of entities in any jurisdiction is less than 15% (minimum level of taxation). According to the general rule, the effective tax rate is calculated at the level of the jurisdictional territory, i.e. by summing up the profit earned (loss incurred) by the taxable entities located in that jurisdiction and the profit tax paid or payable from it. The special cases of calculation of the income limit of EUR 750 million when groups of entities are merged or divided are also included in the law. 

With the exception of the initial stage of activity, the additional tax that should be calculated and paid by the main parent entity of an international group of entities located in Lithuania on the profits earned by such group in Lithuania, as well as the additional tax that would be assigned to international entities located in the territories of third countries for taxable entities of the group, whose location is in Lithuania, is reduced to zero in each financial year in which such group implements the initial stage of activity, but not longer than five financial years. The additional tax, which would be calculated for the group of Lithuanian entities, is reduced to zero for the entire transition period, i.e. also for five financial years. 

The Law does not apply to entities deemed to be exempt entities, i.e. public interest entities (e.g. government entities, international organisations, non-profit organisations), tax-neutral investment entities (e.g. mutual funds and real estate investment entities when they are part of a chain of ownership of a group of entities above, as well as pension funds), and certain entities controlled by excluded entities that substantially complement the activities of those excluded entities or are established for the purpose of managing their assets. 

The Law, however, transposes the Directive only partially, taking into account the fact that Lithuania has chosen to apply the exception set out in Article 50 of the Directive (postponing mandatory taxation rules for no more than six years), the application of the income inclusion rule, and the rule of undertaxed profit. This means that the Law transposes and implements the provisions of the Directive governing its scope, the procedure for determining the location of a unit, and the procedure for providing the information necessary to ensure the minimum level of taxation of profits earned by large groups of units in each jurisdiction.

At this moment, the Lithuanian parliament (Seimas) is not considering to fully transfer and implement the Directive and apply the top-up tax sooner.

For more detailed information and the most recent updates, please visit PwC’s Pillar Two Country Tracker.

Pillar II notifications in Lithuania 

According to the provisions of the currently applicable legal acts, the general Pillar 2 notifications rules are as follows: 

1. Notification about the designated data-reporting entity. If the Multinational Group’s Ultimate Parent Entity is not located in Lithuania, other taxable entities of the group located in Lithuania are not obliged to submit the notification about the designated entity. Deadline is 12 months post financial year end. 

1. Notification confirming that the data necessary for preparing the supplementary tax information declaration have been transferred to the designated data-reporting entity. If the ultimate parent company of an international group of entities is not located in Lithuania, other companies within the international group that are located in Lithuania are not obligated to submit a notification about data transfer to the Lithuanian tax authority on behalf of the international group. Deadline is 15 months post financial year end (or 18 months when the Group falls within Pillar 2 rules for the first time). 

1. Notification about the beginning of the initial stage of the group's operations. This notification would be required if the group is considered to be in the initial stage only if it operates in less than 6 jurisdictions and has less than 50 in tangible assets. Deadline is 15 months post financial year end. 

Provision of information about the activities carried out on online platforms

From 1 January 2023, online platform operators are required to collect and, once a year, submit information on sellers using the platforms (name, address, current accounts, country of residence, income received, etc.) for the previous calendar year to the tax authorities (with some exceptions). The requirement applies to all operators of online platforms (including mobile apps).

Information must be provided if income is received from one of the following activities:

• Rent of real estate.
• Personal services.
• Sale of goods.
• Rent of vehicle.

For the first time, platform operators will have to submit data for the previous calendar year until 31 January 2024. Standardised information collection requirements will be applied throughout the EU internal market, and a common EU register will be created. Tax administrators of all EU member states will participate in this system and exchange information about the platforms.

If the platform operator (except for the foreign platform operator) does not fulfil the obligation to provide information, there is a possibility for the tax authorities to cancel access to the platform operator's website until the platform operator eliminates the violation. If the foreign platform operator does not fulfil the obligation to provide information, the tax authorities cancel the registration of the foreign platform.

Provision of data on international payment transactions

From 1 January 2024, in accordance with Council Directive (EU) 2020/284, payment service providers will have to store and provide to the tax authorities data on international payments made through them every calendar quarter.

Data will have to be provided by the following payment service providers specified in the Law on Payments of the Republic of Lithuania:

• Credit institutions.
• Electronic money institutions.
• Payment institutions.
• Postal money transfer system institutions, which have the right to provide payment services in accordance with the law.

Payment service providers will have to provide information only on international payments when:

• The payment service provider performs more than 25 international payment transactions for the same recipient during a calendar quarter.
• The payment is received from another member state of the European Union or the payment is made to a third territory or a third country.

Payment service providers must submit the collected information for the calendar quarter no later than the end of the month following the end of the calendar quarter. When the tax authorities receive information from payment service providers, it will submit this data to the Central Electronic System of Payment information (CESOP). Payment service providers will be required to store data for at least three calendar years from the end of the calendar year in which the payment transaction was completed, and the data will be able to be revised/adjusted for the same period (three calendar years).

CIT information report

From 22 June 2023, the requirement for companies to prepare the CIT information report, to submit it to the manager of the Register of Legal Entities, and to publish it on the company's website entered into force.

The CIT information report contains all the information related to the company's activities (company name, list of corporate groups, number of employees, brief information on activities, income, profit, etc.). These reports would be prepared for reporting periods starting on 22 June 2024 and later (the template of this report is set by the European Commission).

The requirements will apply to:

• Groups of companies (including when the parent company is established outside the European Union), their companies or individual companies, whose annual consolidated or annual revenue in each of the last two consecutive financial years has exceeded EUR 750 million, and which are established or have a permanent place of business in more than one tax jurisdiction.
• Branches (opened in Lithuania by legal entities established outside the European Union) whose net sales revenue in each of the last two consecutive financial years exceeds EUR 8 million.

Provision of taxi dispatch data

In order to reduce the conditions for the shadow economy in the passenger transport sector by light vehicles for a fee, from 6 May 2024, the obligation for taxi dispatch centres to collect, store, and provide the data to the tax authority (at the frequency and in the manner specified by it) and to law enforcement and state road transport supervision institutions (on their request) came into effect. This data includes: (i) the name and surname of the individual conducting passenger transport by light vehicle for a fee, (ii) the taxi permit number, (iii) the estimated trip cost.

The mentioned data must be submitted no later than 15 February for the previous reporting period (the data for the period from 6 May 2024 to 31 December 2024 must be submitted by 15 February 2025).

Fines and penalties

From 1 May 2023, if the tax administrator determines during the tax inspection that the taxpayer did not calculate the undeclared tax (including the tax calculated in the customs declarations) or did not declare the declared tax or illegally applied a lower tax rate and for these reasons illegally reduced the tax payable, in addition to the amount of tax payable, a fine from 20% to 100% (up till then, 10% to 50%) of the unpaid taxes may be imposed, unless the relevant tax law provides otherwise.

Late payment interest applied from 1 May 2023 to 31 October 2023 is 0.029%, from 1 November 2023 to 30 April 2024 is 0.03%, from 1 May 2024 to 31 October 2024 is 0.029%, and from 1 November 2024 is 0.027% per day. From 1 February 2026 the late payment interest applied is 0.026% per day.