Home Start Taxes
Updated: 2016-08-04 15:03

Taxes

Enterprises registered in Lithuania must pay taxes in Lithuania on profits and capital gains earned both in Lithuania and abroad.
Withholding taxes paid abroad and not  exceeding the tax payable in Lithuania on foreign income may be credited. Moreover, relieves may be applied according to  applicable international treaties. Enterprises without a residence in Lithuania (nonresidents) are subject only to a few taxes and only in regard to certain income sourced in Lithuania.
An enterprise is considered to be a resident in Lithuania if it was incorporated and registered in Lithuania. An enterprise registered in the legal persons register is automatically registered as a taxpayer and social insurance contributions payer within 2 business days after receiving the information from the legal persons register. After receiving the announcement from the district state tax inspectorate (DSTI) about the entity`s registration into the tax payers register, a special form must be filled in and submitted to DSTI regarding additional information about the entity and its structural subdivisions including information regarding entity`s permanent establishments (if there are any). An entity registered in the tax payers register is provided with a tax payer identification number. Any changes in the data presented upon registration of the enterprise must be reported in 5 business days.

TAXPAYER REGISTRATION PROCEDURE

Legal entities are automatically registered in the Taxpayer Register the next day after their registration in the Register of Legal Entities. In the event the data provided in respective forms change, the taxpayer shall revise these data. More information on the service is available here.

When establishing a sole proprietorship, a private limited liability company, association, public enterprise*, small partnership or a charity or support foundation, documents may be submitted electronically directly to the Registrar through the electronic client self-service system of the Centre of Registers, if: 

  • the founder has a qualified e-signature. At present, he may use:
    • qualified certificates issued by the Centre of Certificates of the State Enterprise Centre of Registers;
    • qualified certificates issued by mobile operators Bitė, Omintel, Tele1 and Teledama;
    • a personal identity card with integrated certificates of identification of person in electronic space and the qualified signature, which is issued by the Personalisation of Identity Documents Centre under the Ministry of the Interior;
  • the founder of a sole proprietorship is a person possessing legal capacity;
  • the documents are drafted in line with the approved sample forms (provisions, articles of association, incorporation act or agreement);
  • the founder of a sole proprietorship, private limited liability company, public enterprise, small partnership or a charity and support foundation has no intentions to use the name of the state "Lithuania" in the name of the above establishments;
  • if the premises for the registration of the office do not belong to the founder, the electronically signed consent of the owners of the premises is required;
  • there is no property seizure registered in the Real Property Register with regard to the premises to be used as the office;
  • the shares of the private limited liability company are paid for in the form of a monetary contribution;
  • the aims and fields of activity of an association, public institution or charity and support foundation correspond to the Classification of goals and fields of activities of public legal entities;
  • a charity and support foundation does not manage a permanent stock;
  • the name has been temporarily included into the Register of Legal Entities.

* You will be able to electronically establish a public enterprise, after the Registrar has installed the information measures providing the possibility for drafting incorporation documents and the incorporation transaction by using the amendments to the sample form of the incorporation act, incorporation agreement and the sample articles of association approved by Order No. 4-1099 of 20 December 2013 of the Minister of Economy (LT).

Foreign legal entities must register in the Taxpayer Register, when they intend to perform or are performing activities and/or have tax liabilities in the Republic of Lithuania. When a foreign legal entity terminates its activities in the territory of the Republic of Lithuania in all the fields of its activities, it will be deregistered from the Taxpayer Register. If the data of a foreign legal entity change, it must be amended in the Taxpayer Register.

Natural persons commencing individual activities or who are due to pay and/or deduct taxes in line with the law regulating these taxes are registered in the Taxpayer Register.

During the period of maternity, paternity leave and/or maternity (paternity) allowances, lawyers, their assistants, notaries, bailiffs may temporarily suspend their individual activities by submitting to the tax administrator an application and the decision of the Lithuanian Bar Association, the Chamber of Notaries or the Chamber of Bailiffs with regard to the temporary suspension of activities.

Suspension of activities performed by other natural persons for the period of maternity, paternity leave, maternity (paternity) allowances may be registered in the Taxpayer Register according to the information submitted by the State Social Insurance Fund Board.

Suspension of activities of lawyers, their assistants, notaries, bailiffs can be registered in the Taxpayer Register based on the received notices about suspension of their activities from the Lithuanian Bar Association and the State Social Insurance Fund Board under the Ministry of Social Security and Labour, if such notices have been received.

Other taxpayers wishing to suspend activities must inform the tax administrator.

Natural persons are deregistered from the Taxpayer Register upon their death.

If the data registered in the Taxpayer Register have changed/been supplemented, natural persons have to revise the data. The data can be revised at the initiative of the tax administrator.

The certificate of individual activities is formed after individual activities of a natural person are registered in My STI.

The certificate can also be collected at the State Tax Inspectorate. More information about the procedure of issue of the business certificate is available here.

VAT PAYER REGISTRATION PROCEDURE

Pursuant to Articles 71 and 71-1 of the Republic of Lithuania Law on Value Added Tax, Lithuanian and foreign taxable persons performing any economic activities in Lithuania must, and pursuant to Article 72, have the right to voluntarily register as VAT payers.

Only those persons registered in the Taxpayer Register can be registered as VAT payers.

In the event of changes in the data, Lithuanian or foreign persons must submit an application with revised data.

More information is available at the website of the State Tax Inspectorate.

 

TAX PAYMENT AND REFUND PROCEDURE

Payment of taxes

  • You are obliged to pay taxes to the accumulative account of the budgetary revenues of the State Tax Inspectorate within the terms specified in the tax regulating law.
  • You must indicate the reference code in the payment document. The codes are announced on the Internet website of the State Tax Inspectorate under the Ministry of Finance. They are also available in banks and on stands of regional divisions of the State Tax Inspectorate.
  • Upon your written request, regional divisions of the State Tax Inspectorate may provide you with the act of contribution harmonisation, which contains information about the taxes declared and paid by you as well as overpayments (underpayments), penalties, fines, etc.;

Recovery and inclusion of overpayments

  • The tax amounts overpaid by a taxpayer are included into the amount intended to cover the taxpayer's underpayments of taxes administered by the State Tax Inspectorate and the customs. The overpaid amounts of taxes left after the tax underpayment is covered are refunded to the taxpayer.
  • If you request to include the tax overpayment into the taxes declared and the calculated undeclared taxes, the payment term for which is still valid, as well as to include into customs taxes, you have to submit a relevant application;
  • The amount of overpaid taxes (difference) is refunded within 30 days from the date your application to refund the overpaid amount is submitted. Personal income tax overpayment according to the annual personal income tax declaration is refunded not later than before July 31 of the respective year, and in the event the revised declaration is submitted after the end of the respective term for submission of the annual declaration, the incurred overpayment is refunded not later than within 90 days from the date the revised declaration is received.
  • In cases when, because of the tax overpayment (difference), verification of a taxpayer is performed, the overpayment is refunded not later than within 20 days after the date on which the act on the decision of the tax administrator with regard to the verification is submitted to the taxpayer. If no violations were identified during the verification, not later than within 20 days from the date on which the certificate is issued to the taxpayer. These terms are specified in the Law on Tax Administration, and in separate cases – the Law on Taxes.
  • Unless a respective tax law specifies otherwise, the tax overpayment (difference) can be refunded (included), if it formed not earlier than within the current calendar year and the preceding five calendar years counting backwards from the date of inclusion, and with the taxpayer's application submitted – from the date on which the application was submitted.
  • In the event the taxpayer, before submitting the application, performs an action that proves he is aware of the tax overpayment (difference), the above term is calculated from the date on which this action is performed. The above term does not include the calendar year, during which the procedure of mutual agreement, specified in double taxation treaties concluded and applied by the Republic of Lithuania, was in force.

TAX RATES APPLIED WITH REGARD TO ECONOMIC AND COMMERCIAL ACTIVITIES

Personal income tax – 15% income tax rate.

  • A 5% income tax rate is specified with regard to income derived from individual activities, except for income derived from liberal professions.
  • A 15% income tax rate is specified with regard to income derived from liberal professions.
  • A 15% income tax rate is specified for all income, except for income, in respect of which the 5% income tax rate is applied.
  • A 15% income tax rate is specified for income from distributed profit, including dividends calculated and declared in 2014 and the succeeding years.
  • A fixed income tax in the amount specified by municipality councils is applied with regard to income derived from activities performed under business certificates.

Tax base:  for the purpose of calculating taxable income, the following shall be deducted from income, except for the income derived from distributed profit, in accordance with the procedure prescribed by this Law:

  • tax-exempt income;
  • income received from activities performed under a business certificate;
  • allowable deductions related to the receipt of income from individual activities;
  • the acquisition price of property other than that related to individual activities that is sold or otherwise transferred into ownership during the tax period, as well as expenses related to the sale or other transfer into ownership of that property;
  • the tax-exempt amount of income (only from income derived from labour relations or relations corresponding to labour relations during the tax period) and additional tax-exempt amount of income;
  •  expenses incurred by a resident of Lithuania (when calculating taxable income in respect of which a 15% income tax rate is applied).

For the purpose of calculating the taxable income of a non-resident of Lithuania from individual activities through his fixed base, the following shall be deducted from gross income derived through his fixed base: taxable income from individual activities carried out through that fixed base, and/or allowable deductions related to the receipt of that income from individual activities through that fixed base.

Income tax – 15%

Further information on the application of corporate income tax in respect of different groups of income: http://www.vmi.lt/cms/en/pelno-mokestis1

The tax base of a Lithuanian entity is:

  • all income earned in the Republic of Lithuania and foreign states which is sourced inside and outside of the Republic of Lithuania. The income of a Lithuanian entity shall also include the positive income of its controlled foreign entity or part of such income;
  • The income of a Lithuanian entity (member of a European Economic Interest Grouping) shall also include the income of the respective European Economic Interest Grouping.

Income from activities carried out through permanent establishments of a Lithuanian entity situated in states of the European Economic Area or in states, which have concluded a treaty for the avoidance of double taxation with the Republic of Lithuania, shall not be attributed to the tax base of a Lithuanian entity, if the income from activities carried out through these permanent establishments is taxable with corporate income tax or an equivalent tax in those states.

The tax base of a foreign entity is:

  • income from activities carried out by a foreign entity through permanent establishments situated in the territory of the Republic of Lithuania;
  • income from international telecommunications earned through permanent establishments in the Republic of Lithuania as well as 50% of income from transportation which begins in the territory of the Republic of Lithuania and ends abroad or begins abroad and ends in the territory of the Republic of Lithuania;
  • income earned in foreign states attributed to the permanent establishments in the Republic of Lithuania where such income is related to the activities of the foreign entity carried out through the permanent establishments situated in the Republic of Lithuania;
  • income sourced in the Republic of Lithuania and received by a foreign entity otherwise than through permanent establishments.

The tax base of an entity also includes:

  • Received sponsorship, which has been applied for the purpose other than that specified in the Law on Charity and Sponsorship.
  • Part of the sponsorship received in cash during the tax period from one sponsor, which exceeds the amount of 250 minimum standards of living.

VAT – 21 %.

VAT is applied with regard to provided and purchased goods and services from their purchase or production cost.

  • Those companies, the total amount of the income of which in the territory of the state has exceeded 45 000 Eur over the last 12 months.
    The VAT amount payable to the budget must be calculated not from the amount of the income exceeding the ceiling, but from the overall amount of the transaction, in the result of which the specified maximum amount has been exceeded.  
  • The output VAT on bad debts is allowed being revised (“refunded”). So far, it has not been allowed to “refund” the output VAT paid to the budget, irrespective of whether the debt is bad or not. The provisions of this amendments are applied with regard to output VAT amounts calculated and declared before January 2012.

Immovable property tax – from 0.3% to 3% (as of 31 January 2012)

 This tax is calculated from the average market value of the immovable property established by the State Enterprise Centre of Registers by applying mass method of immovable property valuation with certain exceptions.

Contributions to the Guarantee Fund – 0.2%

These contributions are calculated from all types of payments to persons working under job agreements, from which state social insurance contributions are calculated. They are paid from the day from which employees' salaries are calculated.

State social insurance contributions are different for different groups of assured persons.

1. The common rate of state pensions, sickness and maternity, unemployment social insurance and health insurance contributions of insured persons (excluding accidents at work and occupational diseases insurance) – 30.8%.
The amounts of this rate for different types of social insurance are the following:
1) for pension social insurance – 23.3%;
2) for sickness and maternity social insurance – 3.4%;
3) for unemployment social insurance – 1.1%;
4) for health insurance – 3%.

The following groups of rates of social insurance contributions with regard to accidents at work and occupational diseases and the rates of these groups have been approved for 2014:

Group I – 1.18%;

Group II – 0.37%;

Group III – 0.9 %;

Group IV – 1.8 %.

Insured persons commencing their activities in 2014 pay a state social insurance contribution specified for the first group of social insurance contribution rates for accidents at work.

The rate of state social insurance contributions of insured persons attributed to Groups I, II and III of rates of social insurance contributions for accidents at work and occupational diseases according to the types of social insurance:

The general rate of state social insurance contributions for insured persons included into Group I – 30.98% or 31.98%, if the insured pays an additional 1% pension contribution from his own funds. Its amounts for different types of social insurance are:

– for pension social insurance: 23.3% (24.3%);

– for sickness and maternity social insurance: 3.4%;

– for unemployment social insurance: 1.1%;

– for health insurance (3.0%);

– for social insurance for accidents at work and occupational diseases: 0.18%.

The general rate of state social insurance contributions for insured persons included into Group II – 31.17% or 32.17%, if the insured pays an additional 1% pension contribution from his own funds. Its amounts for different types of social insurance are:

– for pension social insurance: 23.3% (24.3%);
– for sickness and maternity social insurance: 3.4%;
– for unemployment social insurance: 1.1%;
– for health insurance (3.0%);
– for social insurance for accidents at work and occupational diseases: 0.37%.

The general rate of state social insurance contributions for insured persons included into Group III – 31.70% or 32.70%, if the insured pays an additional 1% pension contribution from his own funds. Its amounts for different types of social insurance are:

– for pension social insurance: 23.3% (24.3%);
– for sickness and maternity social insurance: 3.4%;
– for unemployment social insurance: 1.1%;
– for health insurance (3.0%);
– social insurance for accidents at work and occupational diseases: 0.9%.

2. Rate of the state social insurance contributions of the insured – 9%
The amounts of this rate for different types of social insurance are the following:
1) for pension social insurance – 3%;
2) compulsory health insurance – 6%.

3. The state social insurance contributions rate for the pension and sickness and maternity social insurance when it is insured only for receiving maternity, paternity and maternity (paternity) allowances and compulsory health insurance contributions for self-employed persons (except persons engaged in individual activities under a business certificate, owners of sole proprietorships, members of small partnerships and full partners of general partnerships) – 37.5% or 38.5%, if the insured person pays an additional 1% pension contribution from his own funds.

The amounts of this rate for different types of social insurance are the following:
1) for pension social insurance – 26.3% (27.3%);
2) for sickness and maternity social insurance, when it is insured only for receiving maternity, paternity and maternity (paternity) allowances – 2.2%;
3) for health insurance – 9 %.

4. The state social insurance contributions rate for the pension and sickness and maternity social insurance when it is insured only for receiving maternity, paternity and maternity (paternity) allowances and compulsory health insurance contributions for owners of sole proprietorships, members of small partnerships and full members of general partnerships – 37.5% or 38.5%, if the insured person pays an additional 1% pension contribution from his own funds.

The amounts of this rate for different types of social insurance are the following:
1) for pensions social insurance – 26.3% (37.3%) 

2) for sickness and maternity social insurance, when it is insured only for receiving maternity, paternity and maternity (paternity) allowances – 2.2%;
3) for health insurance – 9 %.

The contributions are paid from:

  • the employee's monthly calculated salary;
  • the base of social insurance contributions of an owner of a sole proprietorship, member of a small partnership and full member of a general partnership consists of an amount of funds necessary for personal needs of the owner of a sole proprietorship, small partnership or general partnership, a member of a small partnership or a full member of a general partnership, which is declared to the State Tax Inspectorate as revenues related to labour relations and corresponding relations (revenue type code 02).
  • the base of social insurance contributions of farmers and their partners, whose income is not subject to personal income tax during the tax period pursuant to the Law on Income Tax consists of 12 minimum monthly wages (i.e. 380 Eur х 12 = 4560 Eur). the base of social insurance of farmers and their partners, whose income is subject to personal income tax during the tax period pursuant to the Law on Income Tax, comprises the total amount of taxable income gained from farm activities (before subtraction of compulsory health insurance and state social insurance contributions) of each person, however, not less than 12 minimum monthly wages and not more than 12 amounts of insured income of the current year approved by the Government of the Republic of Lithuania 

Excise duties

These duties are intended for goods and services. The following goods are subject to duties: ethyl alcohol and alcoholic beverages; processed tobacco; energy products; electricity; coal, coke and lignite, electricity.

Owners of warehouses for storage of taxable goods, registered and unregistered traders, importers, and other persons specified in the laws are obliged to pay these duties.

Further information on application of the tax: http://www.vmi.lt/cms/en/akcizai6