Taxes in Lithuania in 2026: salary, self-employed, companies

Lithuania tax rates in 2026: the short version

Since 1 January 2026, Lithuania adds up almost all of a resident's income into one annual total and only then decides which rate applies: 20, 25 or 32%. Until 2025 salary, sole-trader income and rent were taxed separately, so a high income could be split across buckets. Not any more.

Corporate tax has risen for the second year running, to 17%, and the double tax treaty with Russia has not applied since 1 January 2026.

Most thresholds are tied to two figures. VDU (vidutinis darbo užmokestis, the average wage used for social security calculations) is €2,312.15 a month in 2026. MMA (minimali mėnesinė alga, the minimum monthly wage) is €1,153. All amounts are in euros.

What changed in 2025 and 2026

• Personal income tax became a three-bracket system: 20, 25 and 32% on the sum of all annual income.
• Rent, interest and property sales are taxed at 15% only up to 12 VDU a year, the general scale applies above that.
• The tax-free allowance (NPD, neapmokestinamasis pajamų dydis) is now calculated with a single formula, up to €747 a month.
• Corporate tax rose from 16 to 17%, the small-company rate from 6 to 7%; new small companies pay 0% for their first two years instead of one.
• The 9% VAT rate was abolished: hotels, transport and culture moved to 12%, books to 5%, home heating to 21%.
• A new tax applies to individuals' second and further homes worth more than €50,000.
• The double tax treaties with Russia and Belarus ceased to apply.

In 2025 corporate tax rose from 15 to 16% and an investment account for private investors was introduced.

Compare taxes in 146 countries: relocation taxes 2026

Who is a Lithuanian tax resident and what non-residents pay

Lithuanian tax residency is not just about 183 days. Article 4 of the Law on Personal Income Tax (GPMĮ, Law IX-1007 of 2 July 2002) lists five grounds, and any one of them is enough.

The 280-day rule catches those who stay under 183 days on purpose: 150 days in one year and 130 in the next already mean residency.

A resident pays tax on worldwide income. Salary earned and taxed in an EU or treaty country is exempt in Lithuania with proof of the foreign tax; for foreign dividends, interest and royalties Lithuania credits the foreign tax up to the Lithuanian tax. More on how days are counted and what to do with dual residency: tax residency and the 183-day rule.

What non-residents pay

A non-resident pays tax only on Lithuanian-source income: salary for work in Lithuania, dividends and interest from Lithuanian companies, royalties, rent and sale of real estate in Lithuania, sale of property registered here.

The rates are the same: 20, 25 and 32% on salary, 15% on dividends. A non-resident gets the tax-free allowance only in limited cases, mainly a resident of the EEA (European Economic Area: the EU plus Iceland, Liechtenstein and Norway) earning at least 75% of income in Lithuania, and only at the end of the year through an annual return.

A non-resident paid by a foreign employer with no Lithuanian presence declares the salary and pays tax within 25 days of receipt.

Foreign companies without a permanent establishment pay withholding tax deducted by the Lithuanian payer.

To use a treaty rate, the recipient files form DAS-1 (a residence certificate for applying a treaty) in advance; tax withheld above the treaty rate is refunded using form DAS-2.

Lithuania tax residency: how to become a resident and count the days

Lithuania has five grounds, and any one is enough. By days: 183 days in a calendar year, or 280 days over two years in a row if at least one of them has 90. Without counting: a permanent place of residence or a centre of personal, social and economic interests in Lithuania.

The 280-day rule catches those who spend just under half a year in Vilnius. A resident pays progressive income tax on worldwide income, a non-resident only on Lithuanian income. The status is confirmed by a State Tax Inspectorate certificate.

The law does not stop you from confirming the status on your own. But mistakes cost more: two years of 140 days give residency although neither year reaches 183. Murblz support removes these risks: we count two years of days, check your ties and obtain the certificate. We guarantee professional work and a transparent process, and in most cases a result on the first filing.

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What is the income tax rate in Lithuania in 2026

The basic personal income tax rate in Lithuania is 20%, and for most employees nothing changed in 2026. The increase hits those whose combined income exceeds €83,237.40 a year, roughly €6,936 a month.

Article 6 of the Law on Personal Income Tax (GPMĮ) sets the scale on the annual total. That total includes salary, sole-trader income, board fees, business certificate income above €50,000, plus rent, interest and property sales above 12 VDU, each net of the allowed deductions.

The rates are marginal: 25% applies only to the part above €83,237.40, not to the whole income.

What is taxed at a flat 15%

Some income stays out of the common pool and is taxed at 15% whatever the amount: dividends (including profit drawn by the owner of an individual enterprise, IĮ, individuali įmonė), shares sold after 5 years of ownership, investment account withdrawals above contributions, employer stock option shares sold after 3 years, sickness and maternity benefits.

Rent, interest and property sales

Non-employment income gets a reduced-rate corridor: the first €27,745.80 a year (12 VDU) is taxed at 15%, anything above at 20, 25 or 32%. This covers rent, interest, property sales, fees not paid by an employer, winnings and gifts above the limit.

Tax-free allowance

The tax-free allowance (NPD) in Lithuania applies only to salary and only to residents, and it shrinks as income grows. On a salary up to the MMA (€1,153) it is €747 a month. Above that the formula is 747 - 0.49 × (salary - 1,153). At €2,677.49 a month or more the allowance is zero.

At year end an annual allowance (MNPD) applies: up to €8,964, falling to zero at an annual income of €32,129.88. If the salary changed or there was other income, the allowance is recalculated in the annual return, which is where refunds come from. People with disabilities get a higher fixed allowance of €1,057 or €1,127 a month.

Which expenses reduce the tax

Residents can deduct vocational training and higher education costs, plus pension fund and life insurance contributions under contracts signed before the end of 2024 (up to €1,500 a year). The overall cap is 25% of taxable income. Mortgage interest is deductible only on a housing loan granted before 2009.

How much tax comes off a salary in Lithuania: worked example and Sodra contributions

About 40% of a Lithuanian salary goes to the state: 20% income tax and 19.5% in Sodra contributions (Valstybinio socialinio draudimo fondo valdyba, the State Social Insurance Fund). The tax-free allowance makes a noticeable difference only on small salaries.

Worked example for a resident who is not in the second-pillar pension scheme. The employer adds the minimum 1.77% on top.

How the second row works: allowance = 747 - 0.49 × (2,000 - 1,153) = €331.97. Tax = 20% × (2,000 - 331.97) = €333.61. Contributions = 19.5% × 2,000 = €390. Take-home pay is €1,276.39, or 63.8% of the contract amount.

A high-salary example

Take €10,000 a month, €120,000 a year. The first €83,237.40 is taxed at 20%, which is €16,647.48. The remaining €36,762.60 is taxed at 25%, another €9,190.65. Total income tax: €25,838.13. Contributions at 19.5% come to €23,400 (the €138,729 ceiling is not reached). Annual take-home pay is €70,761.87, 59% of gross.

Under the 2025 rules the tax would have been €24,000, so the reform adds €1,838.13 a year. Anything the employer under-withheld is paid with the annual return by 1 May.

Who pays what to Sodra

Sodra collects two contributions: VSD (valstybinis socialinis draudimas, state social insurance covering pension, sickness and unemployment) and PSD (privalomasis sveikatos draudimas, compulsory health insurance). For employees the rates are as follows.

The second pension pillar is voluntary from 2026: members pay 3% on top, the state adds its own contribution, and until the end of 2027 members can leave and take back their own contributions free of income tax.

An employee posted from an EU or EEA country or Switzerland with an A1 certificate (proof of cover in the sending country) pays contributions at home.

How much sole traders and freelancers pay in Lithuania

A Lithuanian sole trader with taxable income up to €20,000 a year pays just 5% income tax, a quarter of the basic rate on salary. But the rate climbs fast, and Sodra contributions are close to an employee's.

Lithuania offers three forms of self-employment with different tax and paperwork.

How sole-trader tax is calculated

Taxable income is revenue minus expenses: documented actual costs or a flat 30% of revenue with no paperwork, usually better for services.

Then 20% is applied minus a tax credit. Up to €20,000 the credit is 15% of income, so the tax is 5%. Between €20,000 and €42,500 the credit is income × (0.15 - 2/300,000 × (income - 20,000)), and it disappears at €42,500. Above €42,500 there is no credit, and the income joins salary and other income at 20, 25 or 32%.

Worked example: a freelancer's revenue is €40,000, the 30% deduction is €12,000, taxable income €28,000. Tax at 20% is €5,600, the credit €2,706.67, tax payable €2,893.33, an effective 10.3%. Sodra contributions on 90% of taxable income (€25,200): €3,155.04 pension and €1,758.96 health. Total about €7,807, or 19.5% of revenue.

Those who become self-employed for the first time can skip VSD contributions on their income in the first year, though no insurance record builds up during that time. The PSD health contribution is due monthly, at least €80.48, unless the sole trader is insured as an employee.

Business certificate: when it pays off

A business certificate removes bookkeeping: the municipal council sets the amount for each activity, so Vilnius and a small district differ. From 2026 the income limit is €50,000 a year, and income above it is taxed as individual activity. A separate certificate for renting out housing carries no Sodra contributions.

Are there tax breaks for IT, expats and digital nomads

No. Lithuania has no special regime for expats, programmers, remote workers or digital nomads: an IT specialist on a salary pays the same 20% and 19.5%, a freelancer pays as a sole trader.

Lithuania's incentives target companies: 0% and 7% corporate tax for small firms, a triple deduction for research and development (R&D) costs, and 7% on profit from own patents and software. So above €42,500 a company often beats sole-trader status for IT. Murblz specialists handle company registration and bank accounts in Lithuania: company registration in Lithuania and business account in Lithuania.

Corporate tax and dividend tax in Lithuania

Lithuania's corporate income tax is 17% from 1 January 2026, 2 percentage points higher than two years ago. The amendments to the Law on Corporate Income Tax (PMĮ) were adopted by Law XV-285 of 17 June 2025.

A company registered in Lithuania pays tax on its worldwide profit. Profit of a foreign permanent establishment in an EEA or treaty country that has already been taxed there is exempt in Lithuania.

From 2026 equipment, computers and software can be written off in full in the year of purchase if they stay in use in the company for at least three years. R&D costs are deducted three times.

How much tax on dividends

Dividends from a Lithuanian company to an individual are taxed at 15% income tax, with no Sodra contributions. Together with corporate tax that makes 29.45% on every euro of profit.

For comparison, on a €10,000 monthly salary 59% is left after tax, while dividends from a small company leave 79%. But dividends carry no Sodra contributions, so they build no pension rights and give no sick pay.

Dividends between companies

A Lithuanian company pays no tax on dividends from a subsidiary held at 10% or more of voting shares for 12 months, including outside the EU, except blacklisted territories. Structures built for the tax benefit lose the exemption.

The annual return is due by 15 June (the 15th day of the sixth month after year end), with quarterly advance payments during the year. Murblz specialists can register a company in Lithuania: company formation abroad.

What is the VAT rate in Lithuania in 2026

VAT in Lithuania is 21%, the same as in Latvia and noticeably lower than in Estonia (24%) and Poland (23%). The standard rate did not change in 2026, but the reduced 9% rate disappeared and tax went up for some services.

When VAT registration is required

The threshold is €45,000 of sales in Lithuania over the last 12 months. Above it registration is mandatory; voluntary registration earlier helps reclaim input VAT at the start.

A sole trader hits this threshold sooner than expected: €45,000 is €3,750 a month. After registration 21% is added to the price, which makes the service more expensive for private customers.

How VAT is reported

The main return, form FR0600, is filed and paid by the 25th of the month after the period, which is normally a calendar month. VAT-registered sole traders usually report half-yearly, but monthly if they buy from VAT payers in other EU countries. Those who should have registered but did not still pay VAT on form FR0608 by the 25th of the next month.

Invoice data goes to the VMI (Valstybinė mokesčių inspekcija, the State Tax Inspectorate) through the i.SAF system (an electronic register of VAT invoices), so mismatches with returns surface quickly.

Other changes in indirect taxes

From 1 January 2026 sweetened soft drinks carry excise duty based on sugar and sweetener content. Insurers pay a security contribution (saugumo įnašas, Law XV-283): 10% of premiums on non-life insurance, except personal motor liability and insurance of crops and animals. The money goes to the State Defence Fund.

Property tax, capital gains, crypto and inheritance in Lithuania

A flat that is the owner's declared residence is almost never taxed: the threshold starts at €450,000 per owner. From 2026, however, owners of a second flat, country house or rental home worth over €50,000 pay (Law XV-344 of 26 June 2025).

A worked example from VMI guidance: main flat €250,000, second flat €100,000. The main flat is tax-free, the second costs €100 a year (0.2% on the €50,000 above the threshold). If the second flat were worth €300,000, the tax would be €700: €300 on the portion from 50,000 to 200,000 and €400 on the portion from 200,000 to 300,000.

The main home is where the owner has declared residence. The municipality sets its threshold at €450,000 per owner or more and the rate above it at 0.1-1%, 0.1% by default. The base is the taxable value from the state mass valuation, not the price paid.

Commercial and company-owned property is taxed at a municipal 0.5-3% plus an extra 0.2% from 2026, abandoned buildings at 1-5%, land separately at 0.01-4%. There is no transfer tax or stamp duty, only notary and registration fees.

For individuals the VMI prepares the calculation by 1 March of the following year and payment is due by 15 March; the first payment under the new rules falls in 2027.

Tax on selling property

Gains fall into the 15% corridor (up to 12 VDU with other non-employment income) and the general scale above it, but often there is no tax at all.

Investment account

Since 2025 residents can open an investment account (investicinė sąskaita) with a bank or broker in the EEA, an OECD (Organisation for Economic Co-operation and Development) country or a treaty country and report it to the VMI. Trades inside are untaxed; 15% is due only on withdrawals above contributions. The account may hold only the financial products listed in Article 12-1 of the income tax law, and crypto is not among them.

Cryptocurrency

There is no separate crypto tax: crypto is treated as property, and the gain is the sale price minus the purchase price. The first €2,500 of annual gains, together with other property sold, is exempt; above that the 15% corridor and general scale apply. Regular trading or mining may be treated as individual activity. From 2026 the EU's DAC8 rules (Directive (EU) 2023/2226) apply: crypto platforms collect customer data and pass it to tax authorities.

Inheritance, gifts and cars

Inheritance tax is 5% up to €150,000 and 10% above. Spouses, children, parents, grandparents, grandchildren and siblings are exempt, as is property worth under €3,000.

There is no gift tax: gifts from close relatives are tax-free in any amount, from others up to €2,500 a year. There is no wealth tax or luxury tax either. There is no annual tax on a private car; a one-off registration tax based on CO2 emissions is paid when a car is first registered in Lithuania.

Does Lithuania have a double tax treaty with Russia

No. The Lithuania-Russia agreement on the avoidance of double taxation of income and capital, signed in Moscow on 29 June 1999, has not applied since 1 January 2026. The Seimas passed the denunciation law on 1 October 2024, Lithuania sent Russia a termination note on 14 October 2024, and the Russian Ministry of Finance also lists the treaty as terminated from 1 January 2026.

Moscow started the break: in August 2023 a Russian presidential decree suspended key articles of treaties with countries Russia labels unfriendly, Lithuania among them. Lithuania responded by denouncing the treaty, citing Russia's war against Ukraine. The treaty with Belarus has also ceased to apply from the same date.

What this means in practice

For a Lithuanian resident with income from Russia. Russia withholds tax at its domestic non-resident rates: under the Russian Tax Code, 15% on dividends from Russian companies and 30% on most other income. Lithuania still taxes a resident's worldwide income and may credit the foreign tax, but only up to the Lithuanian tax on the same income and only with a payment certificate from the tax authority. Salary from a non-treaty country gets no exemption in Lithuania, only a credit.

For a Russian resident with income from Lithuania. Lithuania withholds tax at domestic rates. For individuals: 15% on dividends and interest. For Russian companies: 17% on dividends, 10% on interest and royalties, 17% on rent and sale of Lithuanian real estate. Reduced treaty rates no longer exist.

For those relocating. If residency arises in both countries in the year of the move, there are no longer any tie-breaker rules, and each country may tax all income. Sales of Russian assets and dividend payouts are best planned before the move.

Which countries Lithuania has treaties with

Lithuania has more than 50 treaties in force: with every EU country, the US, the UK, the UAE, Israel and every former Soviet republic except Russia, Belarus and Tajikistan.

The lower dividend rate usually requires a large corporate stake, and domestic law is often more generous, for example 0% on interest to companies from treaty countries. The lower rate applies.

Lithuania tax deadlines and how to get a tax refund

In 2026 almost 850,000 Lithuanian residents declared an overpayment of income tax for 2025, more than €400 million in total, according to the VMI. A refund is the most common reason to file an annual return.

The key date for individuals is 1 May, the deadline for the annual return GPM311 and any extra tax. It is filed online in Mano VMI (the tax authority's personal account), and the VMI pre-fills most fields from employer and bank data.

How to get a tax refund in Lithuania

An overpayment usually arises when the salary changed or the job lasted only part of the year, when there were education costs or older life insurance contributions, or when the employer withheld tax without the allowance.

Fill in GPM311 in Mano VMI, give a bank account and tick the refund; the VMI pays refunds by 31 July. Those who have left Lithuania can also claim an overpayment for their last year of work.

Penalties and late-payment interest

Late payment triggers interest for each day of delay; the rate is reviewed periodically and in 2026 it is about 0.026-0.027% a day. If an audit finds underpaid tax, a fine calculated as a percentage of the shortfall is added under Article 139 of the Law on Tax Administration. The VMI gives 14 days to pay, then collects the debt from bank accounts; an instalment plan can be requested.

The VMI can reassess income tax for the current and five previous years, three years for registered sole traders. Audits focus on salary disguised as sole-trader income, undeclared foreign income and hidden permanent establishments of foreign companies.

What Lithuanian taxes mean for a move to Lithuania

Lithuania is not a tax haven, and the 2026 reform made that clearer. But for an employee on an average salary, a small sole trader or the owner of a small company, the burden is still moderate by EU standards and lower than in neighbouring countries on many counts.

More on the neighbours: taxes in Estonia and taxes in Poland. Other countries are compared on the taxes by country page.

Who Lithuanian taxes suit

Employees earning up to €83,000 a year. For them the reform changed almost nothing: 20% tax plus 19.5% contributions.

Freelancers and sole traders with taxable income up to €20,000. An effective 5% tax and a 30% expense deduction with no paperwork. Up to €42,500 of taxable income the effective rate stays below 20%.

Owners of small companies. 0% corporate tax for the first two years and 7% after that with revenue up to €300,000; the total burden on dividends is about 21%.

Long-term investors. The investment account defers tax until money is withdrawn, and shares held for more than 5 years are taxed at 15%.

Who should run the numbers twice

Those with income and assets still in Russia. There is no tax treaty, Russian withholding reaches 30%, and Lithuania credits it only up to the Lithuanian tax and only with documents from the Russian tax authority, which are hard to obtain from abroad.

High earners and those combining income sources. Salary, sole-trader income above €42,500, rent and interest above €27,745.80 are now added together, and 25% starts at €83,237.40 a year.

Owners of several flats. Second and further homes worth more than €50,000 are taxed every year; the first bill for 2026 arrives in 2027.

Those counting on an expat regime. There is none: not for IT, not for remote workers, not for new residents.

Tax is only one part of a relocation decision. For grounds to live in the country see Lithuania: citizenship, residence permits, taxes and visas, and if the family has Lithuanian roots, see Lithuanian citizenship by repatriation. Murblz specialists open personal bank accounts in Lithuania: personal accounts in Lithuania. If income and company structure need to be set up before the move, Murblz specialists review it.

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