Briefly About Taxes - Buhalterės.lt

Income tax

Rate: 7% (0% for the first two tax years of operation*) or 17%

If, as of 31 December, all two of the following criteria are met, the rate is 7%:

Sales revenue does not exceed €300,000 per year
The controlling shareholder(s) (member(s)) do not jointly hold more than 50% of the shares (interests) in other companies and do not have an IE**

*For the first two tax years, companies may apply a 0% tax rate if they meet certain conditions. Read more.

**As of 1 January 2019, if a shareholder (member) owns more than 50% of the shares in another company and the first and second criteria are met, the rate is 7% for both companies.

Dividends

One of the ways to distribute profits is to pay dividends. Dividends are taxed at 15% (the PIT rate).

VAT

Rate: 21 %

If revenue during the current or previous calendar year exceeds the €45,000 threshold, registration as a VAT payer is mandatory.
If the sum of your purchases of goods from the EU (VAT payers) in the previous or the current calendar year exceeds €14,000 or is expected to exceed this limit, you shall register as a SVS or VAT payer.
If a shareholder (member) owns 50% or more of the shares (interests/units) in other companies, the EU revenue and purchase thresholds for the current or previous calendar year must be combined for both companies (revenue must also be added together with the shareholder’s revenue as a natural person, if the shareholder carries out activity as an individual).

*The head of the company is responsible for adhering to this limits.

Salary in 2026

For salary employees, the MMS is €1153 taxes excluded
For hourly employees, the MMS is €7,05 taxes excluded
The MMS can only be paid to an unqualified employee.

If an employee works part-time and is paid less than the MMS, the employer must still pay “Sodra” contributions based on the MMS (due to “Sodra’s” “floor”*).

*“Sodra’s” “floor” does not apply if the employee is employed by two (2) or more companies, is under the age of 24 or receives a pension.

Non-monetary gifts to employees are tax-exempt if their total value does not exceed €200 in a calendar year. Once the €200 limit is exceeded, any additional non-monetary gifts are subject to PIT and “Sodra” contributions. All monetary gifts are subject to “Sodra” taxes.

Representation:

50% of the cost of representation is tax-deductible
The tax-deductible amount may not exceed 2% of taxable income during the accounting year

Daily allowances/ business trips:

Are not taxable if the employee’s wage is €1902, 45 or more before taxes (MMS x 1,65). If their wage is less than €1902, 45 before taxes, daily allowances exceeding 50% of the wage specified in their employment contract are subject to “Sodra” contributions and PIT (and are paid as wages)
The rate of daily allowance may be reduced to no less than 50% of their monthly wage. Such a rate reduction must be detailed in the employment contract
It is mandatory to calculate and pay daily allowances
Expenses for the costs incurred during business trips may also be invoiced on behalf of the employee