Lithuania taxes residents on worldwide income and non-residents on Lithuania-source income only. Lithuania operates a self-assessment system for corporate tax. Note a significant recent development: Lithuania raised its statutory corporate tax rate from 16% to 17%, effective January 2026.
The Lithuanian tax year is the calendar year. The individual filing deadline is generally 1 May of the following year; corporate filing deadline is generally within 6 months of the fiscal year-end.
Lithuania's headline corporate income tax (CIT) rate is 17%.
The headline personal income tax (PIT) rate is 32%.
The standard VAT/GST (or equivalent consumption tax) rate is 21%.
An individual is a Lithuanian tax resident if any one of the following applies: permanent place of residence in Lithuania; center of personal, social, or economic interests in Lithuania; presence 183 days or more (continuous or intermittent) during the tax period; presence 280 days or more across two consecutive tax periods, with at least 90 days in one of them; or Lithuanian citizenship combined with state-funded overseas employment (e.g., diplomats). A company is resident if incorporated in Lithuania. Residents are taxed on worldwide income; non-residents at the same rates but only on Lithuania-source income.
A non-Lithuanian entity has a Lithuania permanent establishment through a fixed place of business or a dependent agent habitually concluding contracts in Lithuania on the entity's behalf, following the OECD Model Treaty definition as applied under Lithuanian domestic law and any applicable tax treaty.
A foreign company is a CFC where a Lithuanian resident directly or indirectly holds more than 50% of its dividend-bearing shares, or holds at least 10% alone while holding more than 50% together with related parties. CFC income is attributed only where the entity is not in an exempt (EEA/DTT-partner, taxed-there) jurisdiction and faces a corporate tax rate below 75% of the Lithuanian rate (i.e., below roughly 12.75% given the 17% headline CIT rate as of 2026). Only the CFC's passive income is attributed pro rata to the Lithuanian controlling party; normal operating income and (subject to conditions) undistributed dividends are excluded.
Lithuania layers two interest restrictions. A thin capitalization rule applies to related-party debt (including third-party debt guaranteed by a related party) held by a lender owning 50%+ (or 10%+ alone with 50%+ combined with related parties) of the borrower's shares: where the controlled debt-to-fixed-equity ratio exceeds 4:1, the entire interest on the excess (not just the marginal portion) becomes non-deductible with no carryforward - unless the Lithuanian borrower proves an unrelated lender would have granted the same loan on the same terms. Separately, since January 1, 2019, an ATAD-based rule caps deductible interest at 30% of taxable EBITDA or EUR 3 million (tested jointly across all Lithuanian group entities); disallowed interest carries forward without time limit, and a group-ratio escape applies where the entity's equity-to-asset ratio is within 2 percentage points of the wider group's.
Lithuania does not use an elective check-the-box classification system; entity classification generally follows the entity's actual legal characteristics. Lithuania has implemented ATAD2-aligned anti-hybrid rules denying deductions for payments producing a hybrid mismatch outcome.
No foreign bank account or foreign financial asset reporting regime exists requiring residents to separately disclose foreign accounts; foreign income is reported through the standard annual tax return.
Lithuania provides a genuine participation exemption for qualifying dividends between resident companies and EU/EEA subsidiaries, generally requiring at least a 10% shareholding held for a continuous minimum 12-month period.
Lithuania has a real foreign tax credit regime available to both individuals and companies for foreign tax paid on foreign-source income also taxed in Lithuania, capped at the Lithuanian tax otherwise due on that income.
Lithuania has 58 double tax treaties in force.