A self-employed person that obtains a business certificate pays a fixed income tax depending on municipality. Municipalities are allowed (if certain conditions are met) to reduce the fixed income tax on income received from self-employment. Income derived from self-employment exceeding EUR45,000 during a tax period is taxed at progressive rates up to 15%.
Investment income. Dividends received from Lithuanian and foreign companies (with certain exceptions) are taxed at a rate of 15%.
Annual interest income not exceeding 120 AMS is taxed at a rate of 15%. The amount exceeding the 120 AMS threshold is subject to a 20% income tax rate. However, the following types of interest are exempt from taxation:
• Interest income from non-equity government and company bonds, interest from deposits held in banks and other credit institutions, provided that the total amount of interest does not exceed EUR500 during a calendar year and that the bonds were acquired or the deposit agreement was concluded on or after 1 January 2014
• Interest from government securities issued by European Economic Area (EEA) countries that were acquired before 31 December 2013
• Interest from non-equity bonds that were acquired before 31 December 2013 and that the issuer started to redeem not earlier than 366 days from the date of issuance (additional criteria apply)
• Interest from banks and other types of credit institutions of EEA countries under contracts concluded before 31 December 2013
• Interest from consumer credits granted via peer-to-peer lending platforms or funds loaned via crowdfunding platforms in Lithuania or in another EEA country, provided that the total amount of interest does not exceed EUR500 during a calendar year
The above exemptions for interest income do not apply to interest received from tax havens.
Royalties paid to resident and nonresident authors and inventors are taxed at a rate of 15% on the amount up to 120 AMS and 20% on the amount exceeding 120 AMS.
Exempt income. The following amounts are excluded from taxable income:
• Death allowances to the spouse, children (including adopted children) and parents (including foster parents)
• Allowances paid from state and municipal budgets
• Life insurance payments (in certain cases)
• The difference between annual proceeds received from the sale of property not requiring legal registration and its acquisition price, not exceeding EUR2,500
• Income received from the sale of movable property legally registered in Lithuania or immovable property located in Lithuania (in certain cases)
• Income from the sale of securities, provided that the amount of total capital gains received from sale of securities (difference between the sales price and the acquisition price of all securities) during the tax year does not exceed EUR500 (additional criteria apply)
• Shares received under stock option plans (provided that the agreement is concluded after 1 February 2020) if the right to the shares is exercised not earlier than after three years from the grant date
• Certain other income listed in the Law on Personal Income Tax
Capital gains. Capital gains are generally taxable at a rate of 15% on the amount up to 120 AMS or 20% on the amount exceeding 120 AMS. Exceptions are mentioned in Exempt income
Capital gains via investment account. Starting from 1 January 2025, an investment account concept comes into force. Any account (or several accounts) chosen by a Lithuanian resident and reported to the tax authorities, used solely for investments, will be considered an investment account. Taxation of investmentrelated income from qualifying investments received through the investment account is deferred until withdrawal of such income from the investment account.
Dividends will not be considered as income received through the investment account, and their taxation regime does not change after the introduction of the investment account.
When withdrawn, investment income will be taxed at a rate of 15% not exceeding the 120 AMS threshold. The amount exceeding the 120 AMS threshold will be subject to a 20% income tax rate.
The tax-exempt amount of EUR500 during a calendar year will not apply.
Deductions
Personal deductions and allowances. Residents and nonresidents may deduct the general nontaxable minimum amount, which depends on the income received. The annual nontaxable minimum amount for 2024 may not be greater than EUR8,964 if annual income does not exceed 12 monthly minimum wages in force on 1 January of the current calendar year. If annual income is greater than 12 monthly minimum wages, the nontaxable minimum amount is calculated according to formulas provided in the Law on Personal Income Tax. For specified groups of residents, including disabled persons, the nontaxable minimum amount is greater.
Nonresidents may deduct the general nontaxable minimum amount from Lithuanian-source income at the end of the tax year.
Deductible expenses. The following deductions from a resident’s personal taxable income are allowed:
• Cumulative life insurance premiums (these are premiums paid under a life insurance agreement providing that the insurance payments may be received not only in the event of accidents, but also after the expiration of the agreement) paid on the individual’s own behalf and on behalf of his or her spouse and minor children.
• Pension contributions to pension funds on the individual’s own behalf and on behalf of his or her spouse and minor children.
• Pension contributions to pension funds in EEA or in other Organisation for Economic Co-operation and Development (OECD) countries (additional criteria apply).
• Expenses relating to vocational training or studies (if higher education or qualification is obtained on graduation). This includes tuition paid for the spouse and children. If a loan is obtained to pay tuition, only the amount of loan repaid during a tax year may be deducted.
The total amount of all the deductions mentioned above may not exceed 25% of taxable income (taking deductions into account).
In addition, the total amount of deductible expenses regarding life insurance premiums and pension contributions to pension funds may not exceed EUR1,500. As of 1 January 2025, the Law on Personal Income Tax comes into force and will provide a transitional period of 10 years, after which Lithuanian residents will no longer be able to deduct expenses regarding life insurance premiums and contributions to pension funds. According to the amendment, Lithuanian residents who have entered into pension accumulation contracts or life insurance contracts before 31 December 2024 will be able to apply deductible expenses regarding life insurance premiums and pension contributions paid not exceeding EUR1,500 until 31 December 2034. If Lithuanian residents enter into pension accumulation contracts or life insurance contracts after 31 December 2024, there will be no possibility to reduce taxable income with the contributions paid under such contracts.
Rates. For information regarding tax rates, see Overview of income tax rates and the subsections of Income subject to tax.
B. Other taxes
Land tax and state land lease tax. Land tax is imposed on landowners, both individuals and legal entities, at rates ranging from 0.01% to 4% of the estimated value of the land. State land lease tax is imposed on users, both individuals and legal entities, of state land at rates ranging from 0.1% to 4% of the estimated value of the state land.
Inheritance tax. Inheritance tax is applied to both residents and nonresidents, unless international treaties provide otherwise. The tax base for a Lithuanian permanent resident is inherited property, such as movable property, immovable property, securities and cash. The tax base for a nonresident is inherited movable property requiring legal registration in Lithuania (for example, vehicles) or immovable property located in Lithuania. The rate of inheritance tax applied to inheritors is 5% if the taxable value is less than EUR150,000 and 10% if the taxable value EUR150,000 or more. Close relatives, such as children, parents, spouses and certain other individuals, may be exempt from this tax. Inherited property with taxable value of less than EUR3,000 is also exempt from this tax.
Real estate tax. Real estate owned by individuals that is used for business activities (with several exceptions) or given for use to legal persons for a period longer than one month or indefinitely is subject to 0.5% to 3% real estate tax (RET) based on the taxable value of the real estate. Real estate owned by individuals that is not used for the purposes described in the preceding sentence is taxed at the following rates:
which contain special provisions regarding social security and welfare.
Health insurance. The employee’s gross salary is subject to mandatory health insurance contributions of 6.98%. The employer must withhold this tax. The annual mandatory health insurance contribution of income received by resident authors, sportspersons and artists who do not receive any employment-related income is calculated on 50% of the amount of income received up to the amount of 43 AMS. Individuals engaged in individual business activities pay mandatory health insurance contributions of 6.98% based on the minimum monthly salary. Annual mandatory health insurance contribution on their income is calculated based on 90% of income received, but the tax base cannot exceed 43 AMS per year.
Mandatory health insurance contributions at a rate of 6.98% of the amount that is subject to social insurance contributions is paid by the individual enterprise for the owner, by the micro company for the member and by the partnership for the partner.
Farmers and their partners must pay mandatory health insurance contributions depending on the area (size) of their farm. The following are the rates:
• If the area of the farm does not exceed two European area units, farmers and their partners must pay mandatory health insurance contributions of 2.33% based on the minimum monthly salary per month.
• If the area of the farm exceeds two European area units, farmers and their partners must pay mandatory health insurance contributions of 6.98% based on the minimum monthly salary per month.
D. Tax filing and payment procedures
A Lithuanian tax resident that receives income during a tax year must file an annual income tax return by 1 May of the following year. A Lithuanian tax resident must pay the difference in income tax between the amount specified in his or her annual income tax return and the amount paid (withheld) during the tax year by 1 May of the following year.
A Lithuanian tax resident may elect not to file the annual income tax return if any of the following apply:
• The individual will not exercise his or her right to deduct the annual nontaxable income amount.
• The individual will not exercise his or her right to deduct certain expenses incurred from income.
• During the tax period, the individual received only A class income related to employment and no additional tax is payable.
Tax residents who hold specified positions in certain Lithuanian institutions must file annual tax returns and special asset tax returns.
A person who is engaged in individual activity under a business certificate or who has registered his or her individual activity must submit his or her annual income tax return even if he or she did not earn any income from the individual business activity.
G. Right to work
A Lithuanian-registered enterprise may usually employ foreigners with a valid temporary or permanent residence permit issued by the Migration Department of Lithuania
Work permits are not required for citizens of the EU and for foreigners holding a permit for temporary or permanent residence issued by Lithuania. However, a specific procedure still applies. The following are a few of the possible alternatives when a residence permit is required to reside and work in Lithuania:
• A non-EU citizen who intends to take a job requiring high profession qualification (local employment). Additional requirements apply.
• A non-EU citizen who intends to take a job but does not meet the requirements of high profession qualification (local employment).
• An employee who is transferred from a foreign company as a manager, specialist or intern in a group structural unit established in Lithuania (intra-corporate transfer). Additional requirements apply.
• An individual who has a permanent residence permit obtained in another EU country.
• An individual who is a citizen of Australia, Canada, Japan, Korea (South), New Zealand, the United Kingdom or the United States.
Other alternatives are also available.
A foreign employer (home company) who temporarily posts its employee for work in Lithuania for more than 30 days or employees who will perform construction work must inform the State Labour Inspectorate about the employment conditions of the posted employee not later than one day before the start date of the posting. The required form must be completed and submitted by the foreign employer to the State Labour Inspectorate. In addition, the host company must inform the State Social Insurance Fund Board about the conditions of the posted employee from the foreign employer no later than one day before the start date of the posting.
H. Residence permits
To legally enter and stay in Lithuania, in general, a non-EU citizen must have a residence permit and/or a certain visa, unless a visa-free regime is applicable. A visa allows an individual to enter and stay in Lithuania for up to 90 days in a 180-day period. The same length of stay applies to non-EU citizens who fall under the visa-free regime.
An EU citizen who spends fewer than three months per half-year in Lithuania does not need to have a temporary residence permit.
Temporary residence permits usually are issued to persons who spend more than three months per half-year in Lithuania, most often for work, business or educational purposes. A foreigner applying for a residence permit must submit the application through a specific Migration Department e-system and submit biometric data at an external service provider office abroad of the Migration Department or in Lithuania if the foreigner’s stay is
legal. Citizens of EU Member States may obtain the EU certificate for a maximum period of five years depending on the purpose of stay. On the expiration of the temporary residence permit, the person must request a new temporary residence permit.
A temporary residence permit for foreigners from third countries is issued for a maximum period of three years.
A temporary resident permit also may be issued to a foreigner who either is or was an employee of an investor or an investor’s group of companies that meet the investor’s requirements set in the Law on Investments of the Republic of Lithuania. In this case, a temporary residence permit can be issued for up to three years upon providing a justifying document confirming that a foreigner meets the required conditions. Meeting the criteria of qualification for work experience and the labor market test are not required.
A permanent residence permit may be issued after five years of legal stay in Lithuania or after five years in an EU Member State with at least two years without termination in Lithuania.
I. Electronic resident
A foreigner who wishes to use the administrative, public or commercial services provided electronically (remotely) in Lithuania may submit an application for granting the status of an electronic resident (e-resident) of Lithuania.
A foreigner may start using the opportunities provided by the status of an e-resident when they have been granted the status of an e-resident in accordance with the procedure established by the Law on the Legal Status of Foreigners of the Republic of Lithuania and has been issued an electronic identification and electronic signature means.
A foreigner of at least 18 years old must fill in an application for granting the status of an electronic resident of Lithuania through the Lithuanian Migration Information System and submit it to the Migration Department.
After examining the foreigner’s application for granting the status of an e-resident and in the absence of grounds for not granting the status of an e-resident, a foreigner is granted the status of an e-resident for three years.
J. Family and personal considerations
Marital property regime. Marital property relations are regulated by the Civil Code of Lithuania.
Under the law, spouses or future spouses may enter into a notarized marital agreement regulating the legal status of the spouses’ property that is registered under an established procedure. If a marital agreement is not entered into, property acquired by spouses during their marriage is considered jointly owned property. Each of the spouses has equal rights to use and dispose of jointly owned property. At any stage of marital life, couples may divide their jointly owned property by a notarized marital agreement.
The jointly owned property regime applies to all officially married couples who have a permanent residence in Lithuania, unless
a marital agreement establishing another governing law is concluded. If the spouses reside in different countries, the jointly owned property regime applies only if both spouses are citizens of Lithuania. In other situations, the jointly owned property regime applies only if the couples solemnize their marriages in Lithuania. The law recognizes a concept of family property that may be used for family requirements only, including matrimonial domicile and right to use a matrimonial domicile.
The law applicable to an agreement between the spouses regarding matrimonial property is determined by the law of the state chosen by the spouses in the agreement. The spouses may choose the law of the state in which they are both domiciled or will be domiciled in the future, or the law of the state in which the marriage was solemnized, or the law of the state of which one of the spouses is a citizen. The agreement of the spouses on the applicable law is valid if it is in compliance with the requirements of the law of the selected state or the law of the state in which the agreement is made. The applicable law chosen in the agreement of the spouses may be used in resolving disputes related to real rights in immovable property only if the requirements of public registration of this property and of the real rights therein, as determined by the law of the state where the property is located, were complied with.
Forced heirship. Under the Civil Code of Lithuania, certain heirs and descendants have a right to a legal share of their relatives’ estate. Children (including adopted children) of the deceased, as well as a spouse and parents requiring care, are entitled to half of their intestate share, regardless of the provisions of any will, unless the bequeathed share is larger.
The form of the will is determined by the laws of the country where the will is concluded. However, a will, as well as its amendment or revocation, is valid if the form of these items is in compliance with the requirements of any of the following:
• The law of the state of the testator’s domicile
• The law of the state of which the testator was a citizen when the relevant acts were performed
• The law of the state of the testator’s residence when the relevant acts were performed or at the time of his or her death
Land, buildings and other immovable property located in Lithuania are inherited in accordance with the laws of Lithuania.
Driver’s permits. A driver’s permit issued to a resident of a foreign country is valid in Lithuania if the person possesses an international driver’s license that meets the requirements of the 1968 Vienna Convention or a driver’s license issued by an EU Member State or a driver’s license that Lithuania must recognize under international agreements. A driver’s license issued by a non-EU country to a foreigner residing in Lithuania may be changed to a Lithuanian driver’s license if certain conditions are met.