Bendra informacija

Tax

Corporate income tax

Main legal act

Republic of Lithuania Law on Corporate Income Tax

Taxpayers

  • Lithuanian entity;
  • Foreign entity.

Object of Taxation

The tax base of a Lithuanian entity shall be all income which is sourced inside and outside of the Republic of Lithuania:

  • earned in the Republic of Lithuania;
  • earned in foreign states.

Income from activities carried out through permanent establishments of Lithuanian entities in a state of the European Economic Area (EEA) or states with which the Republic of Lithuania has concluded and brought into effect a treaty for the avoidance of double taxation (TADT) shall not be attributed to the tax base of the Lithuanian entities where, in accordance with the prescribed procedure, income from activities carried out through these permanent establishments is subject to corporate income tax or equivalent tax in those states.

The tax base of a foreign entity shall be:

  • 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 and
  • 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 situated in the territory of the Republic of Lithuania (Article   4 paragraph 4 of the Law on Corporate Income Tax).

The taxable profits shall be calculated by deducting from the income the non-taxable income, allowable deductions and limited allowable deductions. The procedure for making deductions relating to the costs incurred for the purpose of earning income through permanent establishments shall be established by Resolutions No 321 of the Government of the Republic of Lithuania of 5 March 2002.

The base of fixed rate corporate income tax shall be calculated according to the provisions set forth in Article 382 of the Law on Corporate Income Tax fixed daily amount for each 100 units of payload capacity of the sea-going vessel and multiplying the received amount by the number of days of the taxable period of the shipping entity.

Tax rates

  1. per cent tax rate shall be applicable to the following:
  • taxable profits of a Lithuanian entity and permanent establishments;
  • income from distributed profits;
  • profits (or a part thereof) distributed to natural persons proportionately attributed to the tax-exempt profits;
  • sponsorship received which is used for purposes other than specified in the Law of the Republic of Lithuania on Charity and Sponsorship (without any deductions);
  • part of the sponsorship received in cash from a single provider of sponsorship during the tax period, which exceeds the amount of 250 minimum living standards (without any deductions);
  • fixed bases of corporate income tax of shipping entities (without any deductions).

5 per cent tax rate shall be applicable to the taxable profits of the following entities:

1) entities (except for non-profit entities) whose:

average number of employees on the staff list does not exceed 10 and whose income during the tax period does not exceed EUR 300,000.

The above rule shall not apply:

  • where members of individual enterprises or family members thereof are members of other individual enterprises or on the last day of the tax period, control over 50% of shares (interests, member shares) in other entities, as well as entities in which the members of the individual enterprise and/or family members of such members, on the last day of the tax period, control over 50% of the shares (interests, member shares);
  • entities in which the same member, on the last day of the tax period, controls over 50% of the shares (interests, member shares);
  • entities in which the same members, on the last day of the tax period, jointly control over 50% of the shares (interests, member shares).

2) entities more than 50% of whose income during the tax period consists of income from agricultural activities, including income of cooperative societies (cooperatives) from the sold agricultural products acquired from their own members produced by those members.

 

Taxable profits of entities (social enterprises) shall be taxed at 0% where:

  • during the tax period, the number of employees of an entity who are attributed to the target groups listed in Article 4 of the Law of the Republic of Lithuania on Social Enterprises accounts for not less than 40% of the annual average number of the employees on the staff list; and
  • during the tax period, an entity does not carry out the activities included in the list of non-supported activities of social enterprises as approved by the Government of the Republic of Lithuania or the income received from such activities during the tax period accounts for not more than 20% of the total income received by the entity; and
  • on the last day of the tax period, entities have the status of a social enterprise.

The part of the taxable profits of non-profit entities whose income from economic and commercial activity during the tax period does not exceed EUR 300,000, amounting to EUR 7,250, shall be taxed at a rate of 0% and the remaining part of the taxable profits shall be taxed at a rate of 15%.

Income directly allocated for financing of activities carried out when satisfying public interests, shall not be attributed to the income received from economic and commercial activities of non-profit entities. 

Income sourced in the Republic of Lithuania and received by foreign entities otherwise than through permanent establishments situated in the territory of the Republic of Lithuania shall be taxed at source as follows:

  • royalties, including the cases specified in paragraph 5 of Article 4 of the Law on Corporate Income Tax, compensations for violation of copyright or related rights shall be taxed at the rate of 10 per cent (without any deductions) (except for the cases where such income are taxed according to Article 371 of the Law on Corporate Income Tax);
  • income from the sale, other transfer into ownership or lease of property immovable by nature located in the territory of the Republic of Lithuania; income from performing activities and sports activities carried out in the Republic of Lithuania; bonuses to members of the Supervisory Board, income from distributed profits shall be taxed at the rate of 15 per cent (the corporate income tax paid by a foreign entity in respect of income from performing activities or sports activities carried out in the Republic of Lithuania and sale or other transfer into ownership of property immovable by nature located in the territory of the Republic of Lithuania may be recalculated in accordance with the procedure prescribed in Article 54 of the Law on Corporate Income Tax);
  • interest of foreign entities which are registered or otherwise organised in a state of the European Economic Area (EEA) or in a state with which a treaty for the avoidance of double taxation (TADT) has been concluded and brought into effect, shall not be taxed;
  • interest of foreign entities which are not registered or otherwise organised in a state of the European Economic Area (EEA) or in a state with which a treaty for the avoidance of double taxation (TADT), except for interest on Government securities, interest accrued and paid on deposits and interest on subordinated loans which meet the criteria laid down by the legal acts of the Bank of Lithuania shall be taxed at the rate of 10 per cent (without any deduction).

Tax period

The tax period shall be a fiscal year. It shall coincide with a calendar year. At the request of the tax payer and taking into account the characteristics of his activity, a tax period other than specified may be established for the taxpayer provided that this tax period equals 12 months. (Article 6 of the Law on Corporate Income Tax).

Main tax reliefs and exceptions

Until a separate decision is adopted by the Seimas, the taxable profits of the following entities may be subject to a lower corporate income tax rate:  

  • legal persons (except for social enterprises specified in paragraph 5 of Article 5 of this Law) whose income from own production exceeds 50% of the total income received and which employ persons with limited capacity for work shall reduce the calculated corporate income tax in accordance with the procedure prescribed in subparagraph 3 of paragraph 16 of Article 58 of the Law on Corporate Income Tax (taking into account the share of persons with limited work capacity in the total number of persons in employment, the calculated amount of corporate income tax shall be reduced by 25 per cent, 50 per cent, 75 per cent or 100 per cent, respectively);
  • a free economic zone enterprise in which:
    •  Capital investments amount to at least EUR 1 million shall not pay corporate income tax for six tax periods beginning with the tax period in which such amount was reached and shall be subject to a 50% reduction in corporate income tax rate for the ten subsequent tax periods. The above relief may be applied only where the free economic zone enterprise has an auditor's report confirming the required amount of capital investments, i.e. EUR 1 million, and not less than 75% of the income of a free economic zone enterprise for the relevant tax period comprises income from the operations provided for in subparagraph 2 of paragraph 16 of Article 58 of the Law on Corporate Income Tax; The tax relief granted under the regime (subject to capital investment amount of at least EUR 1 million)  may be applied only where not less than 75% of the income of a free economic zone enterprise for the relevant tax period comprises the income from manufacture, treatment, processing and storage of goods, manufacture of aircraft and spacecraft as well as related equipment, repairs and technical maintenance of aircraft and spacecraft, activity related to the technical maintenance and repairs of aircraft (repairs of electronic and optical equipment, technical testing and analysis), computer programming activities, computer consultancy activities, computer hardware management, other information technology and computer services, data processing, hosting and related activities, activities of call centers, wholesale trade in goods stored within the zone, and (or) services provided in the zone and related to the aforementioned activities carried out within the zone (transportation and servicing of the goods manufactured, treated, processed or stored within the zone and of the goods required for manufacturing, treatment or processing within the zone, the territory of the construction zone, as well as other services relating to the aforementioned activities);
    •  The tax relief granted under the regime (subject to capital investments amount of at least EUR 100, 000 and the average number of employees not less than 20)  may be applied only where not less than 75% of the income of a free economic zone enterprise for the relevant tax period comprises income from accounting, bookkeeping and consultative activities (except for audit, evidence of invoice expertise and veracity), office administrative and support services, human resources activities, architectural, engineering and related technical consultancy activities (except for construction work control and aerial photography) carried out in the zone.
  • An entity carrying out an investment project (investment in the fixed assets intended for the production of new, additional products or the provision of services or the increase in the production (service provision) capacity or the introduction of a new process of production (provision of services) or a substantial change in the existing process (part thereof) also the introduction of technologies protected by international invention patents) may reduce the taxable profits by the amount of the actual costs incurred for the acquisition of the assets. The taxable profits calculated for the respective tax period may be reduced by not more than 50%. The taxable profits may be reduced only by the costs incurred during the tax periods of 2009–2018. 

In calculating corporate income tax, the costs of scientific research and experimental development, except for depreciation or amortization costs of fixed assets, shall be deducted three times from income for the tax period during which they are incurred where the scientific research and/or experimental development works carried out are related to the usual or intended activities of the entity which generate or will generate income or economic benefit.

When calculating the corporate income tax the entities that during the period from 1 January 2014 to 31 December 2018 gratuitously allocated funds to a film producer of Lithuania for production of a film of or any part thereof meeting the requirements of the Law on Corporate Income Tax shall entitled to deduct 75 per cent of such gratuitously allocated funds from income. Furthermore, the entities may reduce the corporate income tax by the total amount of funds in accordance with the procedure prescribed in the Law on Corporate Income Tax, but the taxable profit calculated for the tax period may be reduced only by 75 per cent.

A tax relief shall be applicable in case of financing the films meeting the cultural content and production assessment criteria. The entity may apply the corporate income tax relief if he obtains a certificate of investment (certificate of conformity of the use of the funds gratuitously granted to the film producer to the requirements set forth in the Law on Corporate Income Tax).

Declaration and payment

Annual corporate income tax return:

  • PLN204 form (to be submitted by legal entities of limited civil liability);
  • PLN204A form (to be submitted by legal entities of unlimited civil liability);
  • PLN204N form (to be submitted by non-profit entities);
  • PLN204U form (to be submitted by foreign entities pursuing activities in Lithuania through a permanent establishment).

The forms of Annual Corporate Income Returns and the rules for completion thereof were approved by Order No VA-2 of the head of the State Tax Inspectorate under the Ministry of Finance of 15 January 2007 (according to the version of 12 September 2014 Order No VA-76).

Annual fixed corporate income tax return, PLN205 form (to be submitted by shipping entities that have chosen application of the fixed corporate income tax). The declaration and the rules for completion thereof were approved by 9 November 2007 Order No VA-70.

The annual corporate income tax return and/or fixed corporate income tax return must be submitted not later than till the 15th day of the sixth month of next tax period (15 June of net year where the tax period is a fiscal year) and a tax return for the last tax period must be submitted not later than within 30 days from the end of operations.

The corporate income tax and/or fixed corporate income tax must be paid not later than on the day of expiry of the time limit for submission of an annual corporate income tax return and/or annual fixed corporate income tax return.

The advance corporate income tax return, i.e. FR0430 form, the rules for completion of which were approved by Order No 289 of the head of the State Tax Inspectorate of the Ministry of Finance of 8 October 2002 (according to the version of 15 July 2016 Order No VA-103) shall be submitted:

  • For the 1th-6th months of the tax period not later than till the 15th day of the third month of the tax period (15 March of net year where the tax period is a fiscal year) and for the 7th-12th months of the tax period – not later than till the 15th day of the ninth month of the tax period (15 September of net year where the tax period is a fiscal year) if the advance corporate income tax is calculated according to the results of activity for the previous year;
  • not later than till the 15th day of the third month of the tax period (15 March of net year where the tax period is a fiscal year) if the advance corporate income tax is calculated according to the he implicit amount of corporate income tax for the tax period.

Advance corporate income tax must be paid not later than till the 15th day of the last month of each quarter of the tax period.

The tax return of income (amounts) paid to foreign taxable entities and the corporate income tax calculated in respect of such income (amounts), i.e. FR0313 form, the rules for completion of which were approved by 8 February 2002 Order No 40 of the head of the State Tax Inspectorate under the Ministry of Finance (according to version of 15 December 2014 Order No VA-187) shall be submitted not later than within 15 days after the end of the month during which the income (amounts) were paid out.

The tax must be paid not later than on the day of expiry of the time limit for submission of the tax return.

The dividend corporate income tax return, i.e. FR0640 form, the rules for completion of which were approved by 20 May 2004 Order No VA-101 of the head of the State Tax Inspectorate under the Ministry of Finance (according to the version of 26 January 2017 Order No VA-8) shall be submitted till the 15th day of the month following the month during which the dividends were paid out.

The tax must be paid not later than on the day of expiry of the time limit for submission of the tax return.

Details for payments to the State Tax Inspectorate: