Lithuanian tax system is not changing
The Lithuanian tax system is basically made up of direct and indirect taxes, and they have basically not changed in the past years. Lithuania’s main tax types are personal income tax, corporate tax, value added (VAT), excise tax, property tax, land tax, as well as tax on gambling and lotteries. Overall, Lithuanian taxation policies are among the most favorable of all EU member states.
• General flat rate is 15%.
• 5% corporate tax rate is applied to companies that employ no more than 10 persons and have a turnover of less than EUR 300,000.
• Withholding tax: on dividends (0% for non-residents that own at least 10% of shares for 12 months, in other cases – 15%), interest (0%, not applied to the European Economic Area companies and companies of those countries with whom Lithuania has a tax treaty, in other cases – 10%), royalties (0% if paid to EU residents eligible under the EU Interest and Royalties Directive, in other cases – 10%), capital gains from selling and leasing Lithuanian real estate (15%), income from performances and sports activities (15%), annual bonuses to supervisory council members (15%).
• Standard VAT rate – 21%.
• Reduced VAT rate of 9% applies to books, newspapers and magazines, public transport, and, from July 1, 2015, also to heating and hot water supplied to households. Also, a reduced VAT rate of 5% applies to supplies of government-compensated medications and auxiliary medical equipment.
• On January 1, 2012, the threshold for registering a VAT payer was increased from EUR 29,000 to EUR 45,000.
• Land tax does not apply to public roads, lands owned by other countries’ diplomatic corps, and forest lands
• Real estate tax (on real estate other than land): from 0.3% to 3% of the value of real estate. The exact real estate tax rate is set by the respective municipality after assessing the purpose of the given property.
Personal income tax
General flat rate – 15%. However, a 20% tax rate applies to income from distributed profit. Also, a reduced 5% tax rate applies to specific activities of self-employed persons. The tax must be paid for the entire taxation year.
Social insurance contributions
All persons who are under labor contract in Lithuania have to make social insurance contributions. The standard rate payable by employers is 30.98% (including 3% health insurance tax) and 9% for employees (including compulsory health insurance tax).
In Lithuania, excise tax applies to alcoholic beverages, tobacco, electricity and fuel. The excise tax on beer is EUR 3.36 for each percent of absolute alcohol by volume in 100 liters, liquor – EUR 1,353.69 for ethyl alcohol per hectoliter. Excise tax on cigarettes is not less than EUR 85 per 1,000 cigarettes. Excise tax on fuel is EUR 434.43 per 1,000 liters of petrol. Excise tax on electricity is EUR 1.01 per megawatt hour, and EUR 0.52 per megawatt hour for companies.