Personal Income Tax

Basic act: The Law of the Republic of Lithuania on Personal Income Tax (hereinafter referred to as “the LPIT”).

Taxpayers:

Income tax must be paid by those who receive income:

• residents of Lithuania,
• non-residents of Lithuania, which must pay income tax on income sourced in Lithuania

Taxable period:

• The taxable period coincides with the calendar year.
• For non-residents engaged in economic activities on a fixed base in Lithuania, the first taxable income period coincides with the calendar year in which the fixed base was or must have been registered.

Subject to tax:

1. All income of a resident of Lithuania sourced in Lithuania and outside Lithuania.
2. Income of a non-resident of Lithuania sourced in Lithuania:

- income received from self-employment on a fixed base (including income received in foreign countries while attributed to that fixed base in Lithuania and linked to the self-employment economic activities) and

           -  income received not on a fixed base, when such income is sourced in Lithuania:

natural or legal person

                    • interest other than on non-equity government securities;

                    • income from distributions and payments to the members of the Management Board and Supervisory Board;

                    • rental income from immovable property located in Lithuania;

                    • royalties, including the cases set out in Article 5(6) of the LPIT;

                    • income from employment relations or the equivalent thereto;

                    • income from sporting activity, including income directly or indirectly linked to this activity, whether paid directly to the athlete or to a third party acting on behalf of the athlete;

                    • income from the activities of performers, including income directly or indirectly linked to those activities, whether paid directly to the performer or to a third party acting on behalf of the performer;

                    • income from the sale or other transfer of movable property ownership, if such property is subject to legal registration under the legislation of the Republic of Lithuania, and is (or must be) registered in Lithuania, as well as income from the sale or other transfer of immovable property located in Lithuania;

                    • compensation for infringements of copyright or related rights.

Income tax rates:

20 %	Share of annual income sourced from employment relations or the equivalent thereto  (excluding income calculated in 2018 and earlier) that does not exceed**: 60 AW* (2023, 2022, 2021), 84 AW* (2020), 120 AW* (2019).
32% - in 2020 and later; 27 % - in 2019	Share of annual income sourced from employment relations or the equivalent thereto (excluding income calculated in 2018 or earlier) that exceeds**: 60 AW* (2023, 2022, 2021), 84 AW* (2020), 120 AW* (2019).
15 %	Income sourced from employment relations or the equivalent thereto, calculated in 2018 and earlier, received in 2019 and later (regardless of the amount of annual income).
15 %	Sickness benefits (including those paid by the employer), maternity and paternity leave, child-care leave, long-term employment benefits (regardless of the amount of annual income).
15 %	Income from distributions (dividends) (regardless of the amount of annual income).
15 % (net of tax credit)	Income from self-employment
5 %	Share of non-self-employment income from waste sold or otherwise disposed of per year that does not exceed: 120 AW* (2019 and later).
20 %	Share of non-self-employment income from waste sold or otherwise disposed of per year that exceeds: 120 AW* (2019 and later).
20 %	Share of the following annual income not linked to employment relations or the equivalent thereto, not exceeding** 120 AW* (2019), 84 AW* (2020), 60 AW* (2021): remuneration paid in lieu of or in addition to profit shares for service on the supervisory board or management board, loan committee; royalties sourced from the use of copyrighted works, received from persons linked to residents through employment relations or the equivalent thereto; income received by small partnership managers who are not members thereto and operate under a civil (service) contract in respect of management activities.
32% - in 2020 and later or 27% - in 2019	Share of the following annual income not linked to employment relations or the equivalent thereto, exceeding ** 60 AW* (2023, 2022, 2021), 84 AW* (2020) or 120 AW* (2019): remuneration paid in lieu of or in addition to profit shares for service on the supervisory board or management board, loan committee; royalties sourced from the use of copyrighted works, received from persons linked to residents through employment relations or the equivalent thereto; income received by small partnership managers who are not members thereof and operate under a civil (service) contract in respect of management activities.
15 %	Share of other taxable income not linked to employment relations (excluding income from self-employment; income from distributions; income from profit shares and remuneration for service on the supervisory board or management board, loan committee; income from employers under copyright contracts; income from civil (service) contracts of small partnership managers), not exceeding 120 AW* (2019 and later): interest, royalties other than from the employer, sale of property (or other transfer of ownership), rent of property, royalties, gambling winnings, gifts, prizes not from the employer, etc.
20 %	Share of other taxable income not linked to employment relations (excluding income from self-employment; income from distributions; income from profit shares and remuneration for service on the supervisory board or management board, loan committee; income from employers under copyright contracts; income from civil (service) contracts of small partnership managers), exceeding 120 AW* (2019 and later): interest, royalties other than from the employer, sale of property (or other transfer of ownership), rent of property, royalties, gambling winnings, gifts, prizes not from the employer, etc.
Fixed rate	Applies to income on which income tax is paid on the acquisition of a business license.

* AW – average wage used to calculate the base of state social insurance contributions for insured persons:

In 2023: 1 AW – EUR 1,684.90; 60 AW – EUR 101,094; 120 AW – EUR 202,188.

In 2022: 1 AW – EUR 1,504.10; 60 AW – EUR 90,246; 120 AW – EUR 180,492.

In 2021: 1 AW – EUR 1,352.70; 60 AW – EUR 81,162; 120 AW – EUR 162,324.

In 2020: 1 AW – EUR 1,241.40; 84 AW – EUR 104,277.60; 120 AW – EUR 148,968.

In 2019: 1 AW – EUR 1,136.20; 120 AW – EUR 136,344.

** Share of income exceeding/not exceeding 120, 84, 60 AW is calculated on the total amount of the following annual income:

• linked to employment relations or the equivalent thereto  (income calculated in 2018 or earlier is not included),
• profit shares and remuneration for service on the supervisory board or management board, loan committee,
• income received from employers under copyright contracts,
• income received by small partnership managers who are not members thereof and operate under a civil (service) contract in respect of management activities.

Tax exemption:

Income tax exemptions:

• Income not subject to income tax (Article 17 of the LPIT);
• Tax-exempt amount of income (hereinafter referred to as “TEAI”) that applies to employment-related income (Article 20 of the LPIT);
• Deductible expenses (Article 21 of the LPIT).

TEAI that applies during the tax period of 2023:

1. Monthly TEAI of EUR 625 applies for all residents whose income sourced from employment relations or the equivalent thereto (hereinafter referred to as “income sourced from employment”) per month does not exceed one amount of the minimum monthly wage (hereinafter referred to as “the MMW”) put in force on 1 January of the tax period in 2023, i.e. EUR 840.

2. For residents whose income sourced from employment exceeds 1 MMW, but does not exceed the amount of EUR 1,926, monthly TEAI is calculated using the formula:

• Monthly TEAI = 625 – 0.42 x (monthly income a resident sourced from employment — EUR 840 (one amount of the MMW that was in force on 1 January 2023)).

3. For residents whose monthly income sourced from employment is greater than EUR 1,926, monthly TEAI is calculated using the formula:

• Monthly TEAI = 400 – 0.18 x (monthly income a resident sourced from employment — EUR 642).

4. Monthly TEAI of EUR 1,005 applies for residents with work capacity of 0-25%, or for residents who have reached retirement age and have severe special needs or severe disabilities.

5. Monthly TEAI of EUR 935 applies for residents with work capacity of 30-55%, or for residents who have reached retirement age and have been diagnosed as having moderate or low level of special needs or disability in accordance with the procedure laid down by law.

6. Annual TEAI of EUR 7,500 applies for residents whose annual income does not exceed 12 amounts of MMW i.e. EUR 10,080.

7. For residents whose annual income sourced from employment is greater than 12 MMW (EUR 10 080), but does not exceed EUR 23,112, annual TEAI is calculated using the formula:

• Annual TEAI = 7,500 – 0.42 (annual income amount – 12 amounts of the MMW (EUR 10,080)).

8. For residents whose annual income sourced from employment is greater than EUR 23,112, annual TEAI is calculated using the formula:

• Annual TEAI = 4,800 – 0.18 (annual income amount – EUR 7,704 (12 x 642)).

 

 TEAI that applies during the tax period of 2022, 2021, 2020, 2019:

1. Monthly TEAI of EUR 520 in 2022, EUR 400 in 2021, EUR 350 in 2020, EUR 300 in 2019 applies for all residents whose income sourced from employment relations or the equivalent thereto (hereinafter referred to as “income sourced from employment”) per month does not exceed one amount of the minimum monthly wage (hereinafter referred to as “the MMW”) put in force on 1 January of the tax period in: EUR 730 in 2022, EUR 642 in 2021, EUR 607 in 2020,  EUR 555 in 2019.
2. For residents whose income sourced from employment exceeds 1 MMW, monthly TEAI is calculated using the formula:

• Monthly TEAI in 2022 = 540 – 0.34 x (monthly income a resident sourced from employment — EUR 730 (one amount of the MMW that was in force on 1 January 2022)), this formula applies when income sourced from employment exceeds 1 MMW, but does not exceed EUR 1,704,
• Monthly TEAI in 2022 = 400 – 0.18 x (monthly income a resident sourced from employment — EUR 642), this formula applies when income sourced from employment exceeds EUR 1,704.
• Monthly TEAI in 2021 = 400 – 0.18 x (monthly income a resident sourced from employment — EUR 642 (one amount of the MMW that was in force on 1 January 2021)).
• Monthly TEAI in 2020 = 400 – 0.19 x (monthly income a resident sourced from employment — EUR 607 (one amount of the MMW that was in force on 1 January 2020)).
• Monthly TEAI in 2019 = 300 – 0.15 x (monthly income a resident sourced from employment — EUR 555 (one amount of the MMW that was in force on 1 January 2019)). 

3. Monthly TEAI of EUR 870 applies in 2022, EUR 645 in 2021 and 2020, EUR 353 in 2019 for residents with work capacity of 0-25%, or for residents who have reached retirement age and have severe special needs or severe disabilities.
4. Monthly TEAI of EUR  810 applies in 2022, EUR 600 in 2021 and 2020, EUR 308 in 2019 for residents with work capacity of 30-55%, or for residents who have reached retirement age and have been diagnosed as having moderate or low level of special needs or disability in accordance with the procedure laid down by law.
5. Maximum annual TEAI of EUR 6,480 in 2022 applies for all residents whose annual income does not exceed 12 MMW;

• Annual TEAI in 2022 = 6,800 – 0.34 (annual income amount – 12 amounts of the MMW that was in force on 1 January 2020 (EUR 8,760)), when annual income exceeds 12 amount of the MMW, but does not exceed EUR 20,448,
• Annual TEAI in 2022 = 4,800 – 0.18 x (annual income amount – EUR 7,704), when annual income exceeds EUR 20,448.

6. Maximum annual TEAI of EUR 4,800 in 2021 applies for all residents whose annual income does not exceed 12 amounts of the MMW that was in force on 1 January of the taxable period, i.e. EUR 7,704;

• Annual TEAI in 2021 = 4,800 – 0.18 (annual income amount – 12 amounts of the MMW that was in force on 1 January 2020 (EUR 7,704)), when annual income exceeds 12 amounts of the MMW that was in force on 1 January of the taxable period, i.e. EUR 7,704.

7. Maximum annual TEAI of EUR 4,800 in 2020 applies for all residents whose annual income does not exceed 12 amounts of the MMW that was in force on 1 January of the taxable period, i.e. EUR 7,284.

• Annual TEAI in 2020 = 4,800 – 0.19 (annual income amount – 12 amounts of the MMW that was in force on 1 January 2020 (EUR 7,284)), when annual income exceeds 12 amounts of the MMW that was in force on 1 January of the taxable period, i.e. EUR 7,284.

8. Maximum annual TEAI of EUR 3,600 in 2019 applies for all residents whose annual income does not exceed 12 amounts of the MMW that was in force on 1 January of the taxable period, i.e. EUR 6,660;

• Annual TEAI in 2019 = 3,600 – 0.15 x (annual income amount – 12 amounts of the MMW that was in force on 1 January 2019 (EUR 6,660)), when annual income exceeds 12 amounts of the MMW that was in force on 1 January of the taxable period, i.e. EUR 6,660.

Deductible expenses:

1. Life insurance premiums under life insurance contracts which provide that the insurance claim is to be paid not only upon the occurrence of the insured event, but also after the expiry of the insurance contract. And specifically, the premiums that were paid for oneself, one’s spouse, or one’s minor children (adopted children, fostered children who are placed in permanent custody (guardianship) in the family), for children with disabilities up to 18 years of age and older (adopted children, fostered children who are placed in permanent custody (guardianship) in the family, adult persons who, before they reached adulthood, were placed in permanent custody (guardianship) in the family) for whom the special need for permanent care was determined, and for children up to 18 years of age and older (adopted children, fostered children who are placed in permanent custody (guardianship) in the family, adult persons who, before they reached adulthood, were placed in permanent custody (guardianship) in the family) who were identified as totally disabled by 30 June 2005;
2. Contributions to pension funds, and to pension funds held by occupational pension funds member associations and/or analogous entities established in a Member State of the European Economic Area. Specifically, contributions paid for oneself, one’s spouse or children with disabilities up to 18 years of age and older (adopted children, fostered children who are placed in permanent custody (guardianship) in the family) for whom a special need for permanent care was determined, and for children up to 18 years of age and older (adopted children, fostered children who are placed in permanent custody (guardianship) in the family, adult persons who until adulthood were placed in permanent custody (guardianship) in the family) who were identified as totally disabled by 30 June 2005;
3. Contributions paid by a resident of Lithuania to pension funds, and to pension funds held by occupational pension funds member associations and/or analogous entities established in a Member State of the European Economic Area or in a Member State of the Organization for Economic Co-operation and Development, which are paid by the resident as additional accumulative pension contributions in accordance with the provisions of Article 8(4) of the Law on the Accumulation of Pensions and which exceed 3% of the resident’s income, on which the state social insurance contributions are calculated;
4. Payments made by residents of Lithuania who are receiving training or studying for vocational training and/or studies leading to the acquisition of the first higher education degree and/or first relevant qualification, as well as for the first doctoral degree and post-graduate art studies. If the cost of vocational training or studies was paid for with borrowed funds (a loan taken out from a credit institution for this purpose), the part of the loan repaid during the tax period may be deducted from income;
5. Interest on a single loan taken out before 1 January 2009 for the construction or purchase of residential property, if the written agreement for the purchase or finance lease contract was concluded before 1 January 2009.

Deductible expenses in taxable periods of 2019, 2020 and 2021:

6. Real estate improvement and any repairs (except for renovation of multi-apartment residential buildings);
7. Car repairs;
8. Childcare services for minors (adopted children, fostered children) under 18 years of age.

Limitations on deductible expenses.

The following expenses are deducted at a limit of:

• EUR 1,500 for:
  • additional contributions paid by residents to a Tier II pension fund exceeding 3 percent of the resident's income on which the state social insurance contributions are calculated;
  • contributions to a Tier III pension fund;
  • life insurance premiums.
     
• EUR 2,000 for:
  • real estate improvement and any repairs (except for  renovation of multi-apartment residential buildings);
  • car repairs;
  • childcare services for minors (adopted children, fostered children) under 18 years of age.
• Regardless of any specific limitations, the total amount of all deductible expenses must not exceed 25 percent of total taxable income.

Expenses are deducted from the income declared in the Annual Income Tax Return of a resident of Lithuania, which is subject to a 15%, 20% or 32% (27% in 2019) income tax rate. Refundable tax credits depend both on the amount of expenses incurred, and on the amount of the income tax paid by a resident of Lithuania, and the income tax rate at which the income of the resident was taxed.

Procedure for tax return and tax payment for residents of Lithuania:

A resident of Lithuania who received income during the taxable period must submit Annual Income Tax Return for the previous tax period to the tax authority either by himself/herself or through a person authorized by him/her, and declare therein all income for the previous tax period and the income tax calculated on it by 1 May of the calendar year following that tax period. A resident who during the taxable period received only Class A income from employment relations is not required to submit Income Tax Return, if the resident is not obliged to recalculate income tax in accordance with provisions of Article 6(1¹) and (1²) of the LPIT (i.e. applying progressive tax) and annual NTI in accordance with the procedure laid down in Article 20 of the LPIT.

Income Tax Return Form GPM311 is intended for declaring income received in 2019 and subsequent years and the income tax calculated on it. Income Tax Return Form GPM311 has been approved by order No VA-93 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania on 12 December 2019 as stated in Approval of Income Tax Return Form GPM311 and Annexes thereto with rules for its completion, submission and revision.

Income tax must be paid by 1 May of the next tax period, unless:

• a resident of Lithuania who permanently leaves Lithuania declares received income before the day of leaving Lithuania. In this case, income tax must be paid until the day when the resident permanently leaves Lithuania;
• income tax is declared by a natural person who became a resident of Lithuania due to the fact that he/she stayed in Lithuania continuously or intermittently for 280 or more days in consecutive tax periods, and during one of these periods stayed in Lithuania for 90 or more days. In this case, income tax must be paid by 31 December of the calendar year following the arrival to Lithuania.

Procedure for tax return and tax payment for non-residents of Lithuania:

1. A non-resident of Lithuania who received Class B income during a tax period (except for income sourced from self-employment on a fixed base) must submit Tax Return Form FR0459 for income tax of a non-resident of Lithuania paid on Class B income (hereinafter referred to as “Form FR0459”) no later than within 25 days of receiving income, and must calculate and pay tax on this income.

Tax Return Form FR0459 for income tax of a non-resident of Lithuania paid on Class B income with rules for its completion and submission was approved by order No V-46 of the Head of the STI under the Ministry of Finance on 7 February 2003 as stated in Approval of Tax Return Form FR0459 for income tax of a non-resident of Lithuania paid on Class B income with rules for its completion and submission.

2. A non-resident of Lithuania who received income from self-employment on a fixed base during a tax period must submit the Annual Income Tax Return for self-employment of a non-resident of Lithuania on a fixed base in Lithuania (Form FR0531 and Annex FR0513V thereto, referred to as “Form FR0531”) to the tax authority at the end of the tax period, by 1 May of the calendar year following that tax period, and must calculate and pay tax on this income. Annual Income Tax Return Form FR0531 for self-employment of a non-resident of Lithuania on a fixed base in Lithuania and Annex FR0513V thereto with rules for its completion and submission were approved by order No VA-37 of the Head of the State Tax Inspectorate under the Ministry of Finance on 22 March 2004 as stated in Approval of Annual Income Tax Return Form FR0531 and Annex FR0513V thereto for self-employment of a non-resident of Lithuania on a fixed base in Lithuania.

3. A non-resident of Lithuania who received income sourced from employment relations in Lithuania and who wishes to avail the annual NTI calculated in accordance with the procedure laid down in Article 20 of the LPIT, and/or the tax exemption on interest that is laid down in Point 20¹ and/or Point 20² of Article 17 of the LPIT, at the end of the tax period must submit to the tax authority Annual Income Tax Return for non-residents of Lithuania (GPM314; hereinafter referred to as “Form GPM314”). Form GMP314 and Annexes thereto with rules for its completion and submission were approved by order No VA-112 of the Head of the State Tax Inspectorate under the Ministry of Finance on 20 December 2019 as stated in Approval of Annual Income Tax Return Form GPM314 for non-residents of Lithuania with rules for its completion and submission, Annexes GPM314A, GPM314B thereto.

4. After the end of 2019 and the subsequent tax period, a non-resident of Lithuania must submit Annual Income Tax Return Form GPM314 for non-residents of Lithuania to the tax authority for the tax period if:

• a resident received income in Lithuania classified as Class A and/or class B income during the tax period (excluding income from self-employment); and
• a resident must recalculate the tax payable in accordance with provisions of Article 6(1¹) and (1²) of the LPIT.

Procedure for tax return and income tax payment for withholding agents:

1. A resident of Lithuania, a Lithuanian unit, a foreign unit under permanent establishment in Lithuania, a non-resident of Lithuania self-employed on a fixed base(hereinafter referred to as “withholding agents”) must declare total monthly payments made to residents during the relevant month of the tax period using Monthly Income Tax Return Form GPM313 according to the tax payment procedure, and specify whether the income on which the resident must return and/or pay income tax at his/her own expense is classified as Class A and/or Class B.
   Monthly Income Tax Return Form GPM313 (hereinafter referred to as “Form GPM313”) and rules for its completion and submission were approved by order No VA-121 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania on 20 December 2017 as stated in Approval of Monthly Income Tax Return Form GPM313 with rules for its completion and submission. Payments made for residents on which income tax is withheld and/or paid and the income tax return and payment declared in Form GPM313 are to be specified in total amounts. Form GPM313 must be submitted to the tax authority at the end of the month, by the 15th day of the following month. 
2. Withholding agents who made Class A and/or Class B taxable and non-taxable payments for residents and non-residents of Lithuania during a tax period must submit to the tax authority Annual Tax Return Form GPM312 for payments classified as Class A and Class B income with Annex GPM312L for payments made for residents of Lithuania, Annex GPM312U for payments made for non-residents of Lithuania (hereinafter both referred to as “Form GPM312”). Form GPM312 and rules for its completion and submission were approved by order No VA-9 of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania on 6 February 2018 as stated in Approval of Annual Tax Return Form GPM312 for payments made for residents classified as Class A and Class B income with rules for its completion and submission, Annexes GPM312L, GPM312U thereto. Form GPM312 must be submitted to the tax authority at the end of the tax period, until 15 February of the next tax period.

Procedure for paying income tax on payments linked to employment relations:

1. If employment-linked payments are made once a month (no advance payment), withholding agents must pay income tax on payments made before the 15^th day of the month of the relevant tax period by the 15^th day of the same month, and in case income tax is paid on payments made after the 15^th day of the month of the relevant tax period, income tax must be paid by the last day of the same month.
2. IIf employment-linked payments for the relevant month of the tax period are made in instalments (advance payment) and the total payment is made during that month of the relevant tax period, then withholding agents must pay income tax withheld by the 15^th day of that month (if the last instalment was paid by the 15th day of that month) or by the last day of that month (if the last instalment was paid after the 15^th day of that month).
3. If employment-linked payments for the relevant month of the tax period are made in instalments and the last instalment is paid within 10 working days of the month following the month for which it is paid, then withholding agents must pay income tax withheld by the 15th day of the month in which the last instalment was paid (except for payments made for December of the relevant tax period when income tax on the amount of instalments paid during that month must be paid to the budget by the last day of December of the relevant tax period, if the last instalment was paid later than the last day of that month).
4. If employment-linked payments for the relevant month of the tax period are made in instalments and the last instalment has not been paid within 10 working days of the month following the month for which it is paid, then it is considered that withholding agents must pay income tax withheld by the 15^th day of the month for which it must be paid (if the last payment was made by the 15^th  day of that month) or by the last day of that month (if the last payment was made after the 15^th day of that month).

Procedure for paying income tax on payments not linked to employment relations:

Income tax withheld on payments not linked to employment relations classified as Class A taxable income and made by the 15^th day of the month of the relevant tax period must be paid by the 15^th day of the same month, while income tax withheld on payments made after the 15^th day of the month of the relevant tax period must be paid by the last day of the same month.

Income tax share for beneficiaries and/or political parties:

The LPIT provides for the right of a resident of Lithuania to support an entity of his/her choice by withholding (paying) part of income tax withheld (payable) from income earned during the tax period:

• up to 1.2 percent of income tax for legal persons (except for trade unions and trade union federations) and art creators which under the Law on Charity and Sponsorship are eligible for such support;
• up to 0.6 percent for political parties which are registered in the Registry of Legal Entities in accordance with the procedure established by law and which meet the legal requirements regarding the number of members of a political party and are not in the process of reorganization or liquidation;

From 2023 up to 0.6 percent for political organizations (political parties and / or political committees) which are registered in the Registry of Legal Entities in accordance with the procedure established by law and which meet the legal requirements regarding the number of members of a political organization and are not in the process of reorganization or liquidation (this provision applies for 2023 and subsequent tax periods);

• up to 0.6 percent for trade unions and trade union federations which under the Law on Charity and Sponsorship are eligible for such support.

If a resident decides to support the beneficiary (or several beneficiaries) and/or political party (or several political parties) of his/her choice, he/she must complete the Form FR0512 of the Application for Transfer of Income Tax to Beneficiaries and/or Political Parties and submit it to the tax authority by 1 May of the current calendar year.

From 2022 January 1 Form FR0512 of the Application for Transfer of Income Tax to Beneficiaries and/or Political Parties must be completed and submitted electronically, directly on the portal (in real time), via the State Tax Inspectorates Electronic Declaration Information System (EDS).