Taxes and Tax Schemes in Lithuania | What You Need to Know in 2025

Lithuania, a European Union member state known for its thriving fintech sector and startup-friendly environment, operates an efficient tax system that affects both residents and non-residents. Located in Northern Europe along the Baltic Sea, Lithuania combines EU membership benefits with attractive tax policies, making it increasingly popular for international professionals and innovative businesses.

The country's economy, driven by services, technology, and manufacturing sectors, has demonstrated impressive growth and resilience. Lithuania's tax system balances social welfare funding with maintaining international competitiveness. Recent reforms have focused on digitalizing tax administration and creating favorable conditions for startups and fintech companies.

The expat community in Lithuania is expanding rapidly, with many professionals drawn to sectors like fintech, IT, and shared services centers. The tax system, while comprehensive, offers various benefits and exemptions that can significantly impact an expat's financial planning.

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Lithuanian Income Tax

Lithuania employs a progressive income tax system with rates depending on income type and amount. Tax residents face the following income tax brackets (as of 2025):

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Social insurance contributions are significant, with employees contributing 19.5% and employers 1.77% of gross salary, plus additional health insurance contributions.

If you want to have a better understanding of the taxes you should pay on personal income in Lithuania, you can use the personal tax calculator in the Taxation section of the Lithuania page.

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Lithuanian Tax on Overseas Income

Lithuania's treatment of foreign income follows the worldwide income principle:

• Tax Residents: Taxed on worldwide income
• Non-residents: Taxed only on Lithuanian-source income
• EU Income: Special provisions within the European Economic Area

The system includes various exemptions and credits for foreign-source income, particularly within the EU.

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Lithuanian Tax on Investments

Investment income in Lithuania receives specific treatment under tax law:

• Capital Gains: 15% standard rate, 20% on amounts exceeding €180,492
• Dividends: 15% withholding tax
• Interest Income: 15% standard rate
• Rental Income: 15% on net income with option for simplified taxation

The system includes special provisions for investment in innovative startups and technology companies.

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Lithuanian Corporate Taxation

Corporate taxation in Lithuania is competitive:

• Corporate Income Tax: 15% standard rate
• Reduced Rate: 0% for first year and 5% for qualifying small businesses
• Value Added Tax (VAT): 21% standard rate, 9% and 5% reduced rates
• Real Estate Tax: 0.5% to 3% of property value

Special incentives exist for research and development activities and investment in free economic zones.

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Special Tax Regimes

Lithuania offers several special tax arrangements beneficial to international business:

Startup Visa Program: Tax benefits and simplified procedures for innovative startups.

Free Economic Zones: Corporate tax holidays and reduced rates in special zones.

Individual Activity Certificate: Simplified taxation for self-employed professionals.

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Regional Comparison

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Tax Planning for Lithuania

Effective tax planning in Lithuania requires attention to several key areas:

Business Structure: Evaluating standard corporate regime versus small business benefits.

Investment Planning: Utilizing tax-efficient investment vehicles and startup incentives.

Employment Structure: Optimizing between employment and self-employment status.