Lithuania

Personal Income Tax (PIT)

Starting from 1 January 2026, almost all types of income received by individuals will be subject to progressive personal income tax (PIT) rates, with all income types being aggregated. For example, for PIT calculation purposes, the total PIT base will include income from employment, individual activities, income from copyright agreements, royalties, etc., and, depending on the total amount of income, the following PIT rates will apply: 

• 20% for annual income up to 36 average wages (c. EUR 82,962 per year); 

• 25% for income from 36 to 60 average wages (from c. EUR 82,963 to c. EUR 138,270 per year); and 

• 32% for the portion of income exceeding 60 average wages (from c. EUR 138,271 per year). 

However, there are exceptions to income aggregation. Certain types of income are not subject to progressive PIT rates and are instead taxed at a reduced 15% PIT rate, such as: 

• income from distributed profits (dividends); 

• the portion of pension benefits received from a pension fund equal to the contributions paid; 

• income from the sale of shares acquired outside an investment account and held for at least 5 years; 

• funds withdrawn from an investment account that exceed the contributed amount; and others. 

• A 15% PIT rate also applies to income from the sale of shares acquired under stock option agreements, provided the shares are sold no earlier than 3 years after the right to acquire the shares was granted. 

Investment account (IA)

Since 1 January 2025, Lithuania has implemented a new IA scheme, creating more favourable conditions for individual investors. An IA gives the opportunity to defer income tax payments until the funds in the account are used for non-investment purposes. 

Key points of the IA scheme:

• The IA tax regime applies only to accounts opened in the European Economic Area (EEA), Organisation for Economic Co-operation and Development (OECD) member states, or countries with which Lithuania has and applies Double Tax Treaties (DTTs).
• Only an individual account (not joint) can be used as an IA.
• The IA has to be reported to the Lithuanian tax authority by the owner.
• The amount of the contribution paid in the IA is not limited. The number of accounts is not limited as well.
• The IA regime allows to invest in listed financial products (e.g. shares, bonds) named in art.12¹ of the Law on PIT. An IA cannot be used for direct investments into start-ups and crypto currency.
• The main principle of IA operation is that only the final investment result is taxed, funds withdrawn from the account (earned profits) that are not being reinvested further.
• An IA allows to deduct losses from one year from the profits of other years, taxing only the actual final result.
• Only Lithuanian tax residents are allowed to use the IA scheme.
• An IA is not mandatory, and individuals who do not want to use an IA should have their investments (e.g. capital gains taxed under the regime described under Capital gains in the Income determination section.
• The tax relief of EUR 500 is not applicable in the IA. 
• PIT of 15% applies to profits up to 120 AW (c. EUR 253,065), and 20% applies on the excess.