Amendments to the tax laws
The following amendments to the laws on corporate income tax (CIT), personal income tax (PIT), and social security contributions (SSC) entered into force as of 2023/2024.
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.
Starting from 1 January 2024, the threshold when the higher PIT rate is applicable increased for employment related income from 101,094 euros (EUR) per calendar year to EUR 114,162. A 32% PIT rate for the income exceeding this threshold is applied.
Social security contributions (SSC)
Starting from 1 January 2024, the ceiling for SSC withholding increased from EUR 101,094 to EUR 114,162 per calendar year. The ceilings are not applicable to the health insurance contributions and employer's contributions.
Other significant amendments
Temporary solidarity contribution
From 16 May 2023, the Law on Temporary Solidarity Contribution came into force.
According to the provisions of the Law on Temporary Solidarity Contribution, this contribution is paid by banks established in the Republic of Lithuania in accordance with the Law on Banks, branches of banks licensed in the member states of the European Union (EU) and member states of the European Economic Area (EEA) and foreign banks, and financial groups of central credit unions operating in accordance with the Law on Central Credit Unions.
The base of this contribution consists of net interest income, calculated by applying the principles established by the Law on Temporary Solidarity Contribution. The contribution payment period used for calculating the contribution for the year 2023 is the period from 16 May 2023 (Enforcement of the Law on Temporary Solidarity Contribution) until 31 December 2023, and the payment period used to calculate the contribution for the year 2024 is the calendar year ending on 31 December 2024.
The contribution must be declared (using form KIT713) and paid (only the calculated difference of the amount of the contribution stated in the annual contribution return and the paid amount of advance contributions for that payment period, if any) after the end of the payment period until 15 June of the following year.
The Law on Temporary Solidarity Contribution also stipulates an advance contribution. The advance contribution return must be submitted and the advance contribution is paid after the end of the quarter of the payment period, until the last day of the second month of the next quarter.
The Law on Temporary Solidarity Contribution is valid until 17 June 2025.
The Law on Implementation of Regulation 2022/1854
From 1 January 2023, the the Law of the Republic of Lithuania On the Implementation of Regulation 2022/1854 No. XIV-1680 came into force as a limited measure to mitigate the effects of high energy prices.
The obligation to pay solidarity contribution is established for entities and permanent establishments (PEs) of the European Union defined in point 17 of Article 2 of Regulation (EU) 2022/1854 performing activities in the crude oil, natural gas, coal, and oil refinery sectors.
The base for calculating the solidarity contribution and the solidarity contribution are calculated for the tax year starting in 2023. The calculation of the excess profit of the entities subject to solidarity contribution and/or the amount of their solidarity contribution to be paid is guided by the provisions of the Law on CIT.
The application of Article 6(1) of Regulation (EU) 2022/1854 shall be ensured by collecting excess revenue from the market revenues of electricity generators producing electricity from resources referred to in Article 7(1) of Regulation (EU) 2022/1854. The excess revenue is collected from the market revenues received in relation to the electricity produced and actually delivered during the period referred to in Article 22(2)(c) of Regulation (EU) 2022/1854 (i.e. 1 December 2022 - 30 June 2023), exclusive of those referred to in paragraph 6 of this Article.
Provision of information about the activities carried out on the platforms
From 1 January 2023, 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. Standardized information collection requirements will be applied throughout the European Union internal market, and a common European Union register will be created. Tax administrators of all European Union 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 fulfill 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.
Provision of data on international payment transactions (CESOP)
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 with data on international payments made through them every calendar quarter.
Data will have to be provided by 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 3 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 (3 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 came 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 2 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;
- for branches (opened in Lithuania by legal entities established outside the European Union) whose net sales revenue in each of the last 2 consecutive financial years exceeds EUR 8 million.
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 November 2023 is 0.03% (from 1 May 2023 to 31 October 2023 - 0.029%) per day.