Personal Income Tax (hereinafter – PIT)
Main legal act
The Law on Income Tax of Individuals of the Republic of Lithuania (hereinafter – Law)
Residents of Lithuania and non-residents of Lithuania.
An individual is treated as a Lithuanian resident if at least one of the following conditions is satisfied:
1) the individual's permanent place of residence during the tax period is in Lithuania;
2) the individual's personal, social or economic interests during the tax period are in Lithuania rather than abroad;
3) the individual is present in Lithuania for at least 183 days during the tax period; 4) the individual is present in Lithuania for at least 280 days during two consecutive tax periods and has stayed in Lithuania for at least 90 days in either of the tax periods;
5) the individual is a citizen of Lithuania who does not meet the criteria mentioned above and who receives employment income or whose costs of living in another state are covered by the state budget or municipal budgets of Lithuania (e.g. diplomats, consuls, etc.).
Residents of Lithuania are subject to tax on their worldwide income.
Non-residents of Lithuania are subject to tax on their income sourced in Lithuania:
1) on income derived from individual activity carried on via fixed base in Lithuania;
2) on income sourced in Lithuania and derived not via fixed base:
All income is subject to a standard tax rate of 15 per cent, except income received from the sale of waste which is taxed at 5 per cent.
Different taxation system applicable to income from independent activities (business and professional activities): 5 per cent rate applies where annual profit does not exceed EUR 20 000 and the tax rate increases to a maximum of 15 per cent (in case of income from agricultural activity – 10 per cent) where annual profit is at least EUR 35 000.
The income (not exceeding EUR 45 000 per tax period) derived from activity performed with business certificate is subject to the fixed amount of tax that is determined by municipalities. The fixed amount of tax is applicable to income from the rent of immovable property which does not exceed EUR 45 000.
The tax period is a calendar year.
The first tax period of the tax on the income derived by a non-resident of Lithuania through the fixed base in Lithuania is the calendar year during which the fixed base was registered.
Deductions and allowances
1. Tax-exempt income enlisted in the Article 17 of the Law
(compensations, scholarships, income as charity, certain life insurance payments, income from the sale of immovable property located in a Member State of the European Economic Area (hereinafter – EEA) if such immovable property was acquired more than 10 years prior to its sale or other transfer of ownership,
lottery winnings from entities registered in the EEA that are subject to tax from the turnover of the lottery, gains from the disposal of financial instruments not exceeding EUR 500, income received as a gift from spouse, children, parents and etc.).
2. The annual tax-exempt amount (hereinafter – annual TEA) of EUR 4 560 is applicable if annual income does not exceed EUR 4 800. No TEA is applicable if annual income exceeds EUR 13 920.
The annual TEA is calculated by the following formula:
Annual TEA = 4 560 – 0,5 x (resident's annual income – 12 minimum monthly salary that was valid on 1 January of the current calendar year).
The basic monthly TEA (hereinafter – TEA) of EUR 380 applicable to residents employment income not exceeding EUR 400 per month (one minimum monthly salary that was valid on 1 January 2018).
The basic monthly TEA is calculated by the following formula:
TEA = 380 – 0,5 x (resident's monthly employment income – one minimum monthly salary that was valid on 1 January of the current calendar year).
Individual monthly TEA:
Residents who have 0 to 25 per cent capacity for work or have achieved the retirement age and have a high level of special needs as determined in accordance with legislation, or residents who have severe disability determined in accordance with legislation, are subject to the monthly TEA of EUR 450.
Residents who have 30 to 55 per cent capacity for work or have achieved the retirement age and have a high level of special needs as determined in accordance with legislation, or residents who have severe disability determined in accordance with legislation, are subject to the monthly TEA of EUR 390.
3. Additional TEA (for parents with children) is not applicable from 2018.
4. Deductible expenses are specified in the Article 21 of the Law: life insurance contributions, pension contributions paid to pension funds established in Member State of the EEA, payments for studies and professional training, interest paid in respect of loans taken before 1 January 2009 for the acquisition of the dwelling. The total amount of expenses deductible during the tax year cannot exceed 25 per cent of the calculated taxable income. The total deductible amount of life insurance and pension contributions amount should not exceed EUR 2 000.
5. A resident carrying out individual activities can deduct 30 per cent of his/her annual income from individual activities without providing documentation for expenses.
Elimination of double taxation
Income (except interest, dividends and royalties), received by the Lithuanian resident from foreign country which is an EU Member State or with which Lithuania has a valid Tax treaty, is tax exempt in Lithuania if income tax was paid in such country (the documentary evidence must be submitted).
Lithuanian residents could deduct income tax paid on interest, dividends and royalties in the above-mentioned countries (the documentary evidence must be submitted).
The income tax paid on income sourced in third countries also is deductible (the documentary, confirmed by the foreign tax administrator, evidence must be submitted).
Returns and payments
Lithuanian residents having an obligation to file annual income tax returns and pay PIT or wishing to apply tax-exempt amounts/deductions and receive a refund, have to submit annual income tax returns and pay the related PIT before the 1st of May of the following calendar year.
Lithuanian non-resident, who during the tax period received income attributed to class B (other than income from individual activities carried on from a fixed base in Lithuania), must calculated PIT in respect of such income and pay it to the budget as well as file the income tax return (form FR0459) not later than within 25 days of receipt of the income.
Lithuanian non-resident who received income from individual activities carried on from a fixed base in Lithuania must, after the end of the tax period and before the 1st of May of the calendar year following that tax period, submit annual income tax return (form FR0531) and pay PIT.
Lithuanian non-resident, who received employment income sourced in Lithuania which under the provisions of Article 20 of the Law may be subject to annual TEA, must provide the annual income tax return (form GPM309). This return must be provided also in case of application of tax relief for interest received from Lithuanian entities.
Lithuanian companies (with some exceptions) making payments attributed to class A income to individuals must withhold and pay PIT to the state budget as well as declare it on a monthly basis (form GPM313) and on the annual basis (form GPM312).
PIT with respect to income of class A paid by the 15th of a respective month must be paid into the budget by the 15th of the same month, and with respect to amounts paid after the 15th of a respective month – by the last day of the same month.