How royalties are taxed

Royalties refer to remuneration for the right to use a work under a copyright license agreement; remuneration for related rights granted; income received as remuneration for the right to use an item of industrial property or franchise under a license agreement; remuneration for information provided on industrial, commercial experience or practical knowledge (know-how).

When foreign units receive royalties other than through a permanent establishment, they are taxed at a corporate income tax rate of 10%.

When international treaties for the avoidance of double taxation (hereinafter referred to as “TADT”) provide for lower corporate income tax rates or specify types of income not subject to corporate income tax, then the rates provided for in such treaties or a more favorable tax treatment may be applied.

For more information on different corporate income tax rates set for interest under the respective international TADTs, please see here (only in Lithuanian).