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 CIT rate increases from 16% to 17%, while the reduced CIT rate for small companies and agricultural companies 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 three years. 

• Companies will be able to deduct up to 2,500 euros (EUR) 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% CIT 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) entered 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: 

• EUR 75,000 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.

Other significant amendments

Implementation of Pillar One and Pillar Two

From 1 July 2024, the Lithuanian Pillar Two 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 Two notifications in Lithuania 

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

• 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.

• 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 Two rules for the first time).
• 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 six jurisdictions and has less than EUR 50 million in tangible assets. Deadline is 15 months post financial year-end.