Lithuania Summary Guide

Taxation of Business People in Lithuania

Personal Income Tax is levied at a flat rate of 15%. All individuals are entitled to an annual tax-exempt amount (allowance) of LTL5640, where income is less than LTL9600. The allowance reduces for higher levels of income and there is no tax-exempt allowance for income in excess of LTL37,800. Self-employed individuals may deduct 30% of their income without the need to produce documentary evidence of expenses, to arrive at their taxable base. Deductions of more than 30% in expenses will require documentary proof.

The main rate of Corporation Tax in Lithuania is 15%, effective 1st January, 2010. A reduced rate of 5% is levied where a company employs no more than 10 employees and has revenue of less than LTL500,000 per year. A zero tax rate applies in exceptional circumstances (eg companies doing business in a Free Economic Zone, or where more than half of the workforce are disabled).

Dividends are subject to 15% withholding tax, except between connected EU corporate recipients (subject to a minimum 10% shareholding threshold). Income from royalties and interest is generally subject to a 10% withholding tax.

Assuming continuity of activity, it is possible for a company to carry forward tax losses indefinitely, but losses relating to the sale of securities can only be carried forward for 5 years, and must be offset against income from security sales.

Capital gains are treated as income and are therefore taxed at 15%.

The standard rate of VAT is 21%. A reduced rate of 9% applies to services in the construction industry, notably the construction and renovation of residential houses. A reduced rate of 5% applies to public transport, books and other publications and periodicals, pharmaceutical products, hotel accommodation and certain foodstuffs. The threshold for VAT registration is where revenue exceeding LTL100,000 has occurred in the previous 12-month period.

Employers, employees and self-employed individuals must make contributions to the State Social Insurance Fund. The contributions go towards pensions, sickness & maternity, unemployment and health. All employers pay a combined contribution of 31% (on average) whilst employees pay 9% (which covers pension and healthcare contributions). Self-employed persons pay a total of 37.5%.

The rate of Inheritance Tax is 5% of the value of assets under LTL500,000 and 10% where the value is higher than LTL500,000. The taxable base is calculated on 70% of the value of the assets or estate. The first LTL10,000 of the taxable base is exempt.

Lithuania Summary Guide Contents

Lithuania Summary

Lithuania Summary Chart

Lithuania Residence

Taxation of Business People in Lithuania

Living and Doing Business in Lithuania

Business Forms in Lithuania

Latest Comments

Expat Brit

Hi,

I am facing a dilemma and would like to invite any reader to advise me.

I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.

In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.

However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?

If anyone has pertinent advice on these points, I’d be grateful to hear them.

TJM @ Eindhoven, NL

T. Dog

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Purchasing investment-link insurance for my staff

Would that count as income tax to my staff? And would that count as expense to my company?Michael

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Irish crisis - effects on small business?

Hi all,

Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.

Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...

Thanks,Kate

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Jersey vs. Malta??

Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary

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Living in France contracting to Australian company

I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD.
Do I pay tax in France or Australia or both ?
Any help or guidance would be much appreciated.France move

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