Lithuania

Starting from 1 January 2025, the higher 32% personal income tax (PIT) rate for the income exceeding the threshold of 126,532 euros (EUR) should be applied. 

Employment income exceeding the EUR 126,532 threshold is subject to a lower rate of social security contributions at 6.98%. Employer‘s social security contributions of 1.77% (standard rate) are not capped.

The legislation was amended where the possibility to refund social security contributions paid during the calendar year at a standard rate was foreseen for the employees having more than one employer and exceeding the aforementioned annual income threshold in total. In previous years, social security contributions ceilings were applied to each employer separately, and the refund was not possible even if the annual threshold was reached by adding the individual's income from all employers.

Taxation of other personal income was slightly reduced, and the progressive PIT rate at 20% is applied to annual income exceeding EUR 253,065.

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• The main principle of IA operation is that only the final investment result is taxed, funds withdrawn from the account (earned profits) that are not being reinvested further.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 EUR 253,065, and 20% applies on the excess.