Social security contributions
The following income is subject to social security and health insurance contributions (only the main types of income are commented):
- Income derived under employment agreements: Social security contributions at 1.45% to 2.71% (for time limited employment agreements at 2.17% to 3.43%) are applied to employers (no threshold applies), and social security contributions at 19.5% (including health insurance contributions at 6.98%) are withheld from employees income of EUR 101,094 per calendar year. A 6.98% rate applies above this threshold, withheld from the employee. Employers (with certain exceptions) also pay an additional contribution to the Guarantee Fund amounting to 0.16% and to the Long-term Employment Fund amounting to 0.16% on employee remuneration.
- Income from distributed profits and other remuneration received by the members of the Board or Supervisory Board: Individuals are subject to social security contributions at 15.7% up to income of EUR 101,094 and 6.98% (health insurance contribution) above this threshold.
- Income received from individual activities, except for income derived under business certificates: Social security contributions at 19.5% (including health insurance contributions at 6.98%) are applied to individuals. Social security and health insurance taxes are paid from 90% individual activity income overall (not profit).
- Income received from individual activities derived under business certificates: Social security contributions at 15.7% (including 6.98% of health insurance contribution) are paid by individual per month on the amount of official minimum monthly salary amount in force.
- Income derived from sports activities, performers’ activities, and under copyright agreements (when it is received from the company that is also the employer of such individual): Income is subject to the same rates and thresholds for the company and individual as stated above for employment agreements (the additional contributions to the Guarantee Fund and Long-term Employment Fund are not applicable).
- Income derived from sports activities, performers’ activities, and under copyright agreements (when it is received from the company that is not the employer of such individual): Social security contributions at 19.5% (including health insurance contributions at 6.98%) are applied to individuals. The social security contributions base is limited to 50% of taxable income. The aforementioned income subject to social security contributions derived from one company cannot exceed EUR 72,450.70 per year.
Individuals are also able to choose to additionally contribute for pension to the second-tier pension fund. Not contributing individuals under 40 years old as at 1 January of the respective year who are included in the register of insured individuals on 2 January of the same year are automatically involved in the participation in such pension accumulation system (such involvement will be performed every three years); however, they are allowed to choose whether to participate or not. Individuals over 40 years old are able to choose such a participation voluntarily.
Individuals who did not historically participate in this pension accumulation system are able to start contributing from the lowest contribution rate amounting to 2.7%, which will increase to 3% in 2023. The state respectively adds the contribution of 1.2% on the state average remuneration amount, which will increase up to 1.5% in 2023. Such individuals are also able to choose to contribute at the highest rate of 3% (with a subsidy of the state at 1.5%) from the beginning of enrolment to such system.
There is also an option to pay higher contributions (above 3%) either by individuals themselves or their employers. Such expenses are PIT deductible for individuals and corporate income tax (CIT) deductible for employers.
Social security returns should be submitted by employers on a monthly basis by the 15th day of the following month, and the contributions should be paid on a monthly basis by the 15th day of the following month. The social security returns must be submitted electronically.
International social security
The Lithuanian legislation on social security has been harmonised with the European Union (EU) regulations. Foreign employees seconded to Lithuania from a European Economic Area (EEA) country or Switzerland and their employers are not required to pay social security contributions in Lithuania if an A1 certificate is obtained.
The reciprocal social security agreements exist between Lithuania and the following countries: Belarus, Canada, the Czech Republic, Estonia, Latvia, Moldova, the Netherlands, Russia, Ukraine, and the United States (US). The agreements with Belarus, Canada, Moldova, and Ukraine regulate the payment of social security contributions. Consequently, foreign employees seconded from the aforementioned countries to Lithuania who obtain relevant certificates on social security coverage in their home countries are also not required to pay social security contributions in Lithuania.
Employees temporarily seconded to Lithuania from third countries, with which Lithuania has no reciprocal social security agreements, are not required to pay the Lithuanian social security contributions as well, unless their permanent place of employment becomes Lithuania or the secondment exceeds one year.
Value-added tax (VAT)
The standard VAT rate is 21%.
See the Other taxes section in the Corporate tax summary for more information.
Net wealth/worth taxes
There are no net wealth/worth taxes in Lithuania.
Property for inheritance tax purposes is defined as real estate and movable property as well as securities and cash. Foreigners pay this tax in the same manner as citizens of Lithuania, however, only inherited real estate and movable property subject to registration in Lithuania is subject to taxation.
Inheritance tax is not imposed if:
- Property is inherited by the remaining spouse following the death of one's spouse.
- Property is inherited by a child (adopted child), a parent (foster parent), a custodian, a child in custody, a grandparent, a grandchild, a brother, or a sister.
- The taxable value of inherited property does not exceed EUR 3,000.
Otherwise, the tax rates for inherited property are 5% (if the taxable value is up to EUR 150,000) and 10% (if the taxable value exceeds EUR 150,000).
There is no gift tax applicable in Lithuania.
Real estate tax (RET)
Real estate owned by individuals and used for commercial purposes is subject to RET at rates ranging from 0.5% to 3%. Every year, Municipal Councils establish a specific tax rate for real estate situated in their territory.
- The value of immovable property owned or acquired by an individual exceeding EUR 150,000 is subject to real estate tax.
- If the value of immovable property exceeds EUR 150,000, but is lower than EUR 300,000, RET at a rate of 0.5% will be applied on the part of the value of immovable property exceeding EUR 150,000.
- If the value of immovable property exceeds EUR 300,000, but is lower than EUR 500,000, RET at a rate of 1% will be applied on the part of the value of immovable property exceeding EUR 300,000.
- If the value of immovable property exceeds EUR 500,000, RET at a rate of 2% will be applied on the part of the value of immovable property exceeding EUR 500,000.
For families raising three or more children until the age of 18, as well as for families raising older disabled children with special need of constant nursing, the value of immovable property exceeding EUR 200,000 is subject to RET. All other above stated values of immovable property are increased by 30%.
There is no luxury tax applicable in Lithuania.