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Last partial update , April 2008
- Lthuania individual's entire income is taxable at different rates As of 2008 the tax rates for an individual in Lithuania are 24% for salary income, 15% for self employment income.
- The standard corporate tax rate for 2008 in Lithuania is 15%, 13% for small corporations.
Income Tax for an Individual
- An individual in Lithuania is liable for tax on his income as an employee and on income as a self-employed person. In the case of an individual who answers the test of a "permanent resident" of Lithuania, tax will be calculated on his income earned in Lithuania and overseas.
A foreign resident pays tax only on his income in Lithuania.
- To be considered a Lithuanian resident, an individual must meet the requirement of residence in Lithuania for at least 183 consecutive days in a 12 month period. Occasionally, an individual will be considered a Lithuanian resident even if he is resident in Lithuania for less than 183 days if he/she owns a home in Lithuania that is his/her permanent residence.
- An employer is obligated to deduct, immediately, each month, the amount of tax and national insurance due from a salaried worker.
- A salaried employee's income that is derived mainly from a Lithuanian company is taxable at 24%.
- Other forms of income other than a salary, such as rent, provision of services as a self - employed person, etc.when not demanding tax reductions, are liable to taxation at the rate of 15%.
CORPORATE TAXES
- The 2008 standard rate of corporate tax in Lithuania is 15%.
- Companies with a turnover of less than Euro 144,810 and that employ less than 10 workers, pay corporation tax at the rate of 13%, subject to the regulations in law. In practice, this type of corporation is fairly rare.
- Income from a dividend paid by one company to another in Lithuania is exempt from tax, subject to the terms of the law.
CAPITAL GAINS
- In companies in Lithuania, capital gains are added to the regular income
- Individuals pay 15% tax on capital gains.
DEDUCTION OF TAX AT SOURCE
- As regards salaried employees in Lithuania, the employer is obligated to deduct tax at source from the salaried employee and to make additional contributions to social security.
- The social security percentage paid by the employer is 31% of the salary, and the salaried employee's contribution is 3%.
Other deductions
In Lithuania, tax must be deducted at source from the following payments on the following basis:
- Dividend - the usual deduction is 15%. (exempt for participation of 10% or more).
- Interest - the standard rate of tax deducted at source is 10%. (From 1.7.2009 5% for EU affiliates).
- Royalties on patents - The standard rate of tax deducted is 10%.
Comment: Deduction at source for foreign residents is subject to the Double Taxation Prevention Treaty.
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