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Last partial update , June 2011
- As of 2011 individuals in Lithuania pay a flat tax of 15% on their income, 5% for income from individual activities. The tax rate for dividend income is 20%.
- The standard corporate tax rate for 2011 in Lithuania is 15%. Micro companies pay 5% corporate tax subject to terms.
Income Tax for an Individual in Lithuania
- 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.
Lithuania Corporate Taxes
- The 2011 standard rate of corporate tax in Lithuania is 15%.
- There is a participation exemption for dividend income received by companies having a shareholding of 10% or more.
- Income from a dividend paid by one EEA company to another in Lithuania is exempt from tax, subject to the terms of the law.
Capital Gains in Lithuania
- In companies in Lithuania, capital gains are added to the regular income
- Individuals pay 15% tax on capital gains.
Lithuania 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 30.98%-31.7% of the salary, and the salaried employee's contribution is 9%, including health tax.
Other deductions in Lithuania
In Lithuania, tax must be deducted at source from the following payments on the following basis:
- Dividend - The usual deduction is 15%.
- Interest - The standard rate of tax deducted at source is 10%. Zero for EEA companies .
- 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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