Taxes in Lithuania
Lithuania is one of the cheapest countries to live in Europe. It is perfect for expats coming from various countries worldwide, that want an affordable place to live with advanced infrastructures. The government needs your taxes to ensure they have enough funds to complete the state’s projects.
Taxes are compulsory financial charges or levy imposed on a taxpayer by a government to fund various public expenditures. Thankfully, the government has made good use of our taxes and made Lithuania one of the best places to live.
In this article, I’ll be showing you everything you should know about the Lithuanian tax system. By the end of this guide, you should be able to identify this part of your salary is taxable and what part isn’t.
What are the taxes
One of the reasons why Lithuania is a perfect option for both individuals is that you get all the benefits of other European countries at a very low tax rate.
Tax rates
| Tax | Tax Rate |
|---|---|
| VAT | 5% – 21% |
| Corporate income tax | 15% |
| Personal income tax | 15% – 32% |
| Dividend tax | 15% |
| Capital Gains tax | 15% – 20% |
| Property tax | 0.5% – 3% |
| Inheritance tax | 5% – 10% |
| International tax | 0% – 15% |
| Cryptocurrency tax | 5% – 15% |
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Tax system
In Lithuania, taxes are levied by the central and the local governments. The tax year begins on the 1st of January and ends on the 31st of December every year. However, corporations may adopt a substitute year of reporting. All legal residents and entities are required to pay dues taxes in the country.
Lithuanian legislation states that all tax returns must be submitted electronically. Exceptions may apply if it is annual income tax returns, a case where it is not possible to submit tax returns electronically, or electronic submission would cause an unbalanced administrative burden.
Since January 2009, most of the tax exemptions that used to be available were removed. There will no longer be deducted interest for real estate, acquired computers, or tuition fees.
You’ll need a taxable income calculation to determine your non-taxable income amount.
The non-taxable income amount applies to revenue generated from employment agreements. If your income is not more than €290/month your non-taxable amount will be around €165.
Direct tax
Direct tax is one that is assessed on an individual (legal or natural) or property (i.e. real and personal property, livestock, crops, salaries, etc.) as distinct from the transaction tax.
Indirect tax
An indirect tax is a tax imposed by an agent (such as a retail store) on a person who carries the ultimate economic tax burden (such as the consumer). Subsequently, the intermediary issues a tax return and returns the tax proceeds to the nation.
Fees
In any of the aforementioned groups, net income is calculated on all total earnings earned over the fiscal year and decreased by revenue-related expenditures for the same time. Losses from one of the seven types of basic income (except capital investment) should be entirely compensated against positive income from another category of income (exceptions which apply to other income').
Business in Lithuania
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Disclaimer
Tax laws and regulations are frequently evolving and can differ depending on personal circumstances. The information shared here serves as general guidance and may not represent the latest updates. It is strongly advised to seek the assistance of a qualified tax professional for tailored and current advice relevant to your specific situation.