Taxation of income from residential property rental

Persons letting residential property in Lithuania may choose either of the following tax treatments of their rental income:

• either to acquire a business license for the lease of residential premises, without accommodation services (rural tourism services or bed and breakfast services), subject to a flat-rate income tax set by the municipal councils (this business license is only valid when letting residential property to natural persons); or
• pay 15% income tax on the rental income.

Important: After 1 July 2020, separate business licenses are required for each residential property let out.

Rental income is taxed at a 15% income tax rate. However, if the annual amount of this and other non-employment taxable income exceeds 120 average national wages (hereinafter referred to as “ANW”) (120 ANWs in 2024 amounted to EUR 228,324; 120 ANWs in 2023 amounted to EUR 202,188; 120 ANWs in 2022 amounted to EUR 180,492; 120 ANWs in 2021 amounted to EUR 162,324; 120 ANWs in 2020 amounted to EUR 148,968; 120 ANWs in 2019 amounted to EUR 136,344), then the part in excess is taxed at an income tax rate of 20%.

The annual amount of income comprised of 120 ANWs does not include income from self-employment, income from distributed profits, royalties received from the employer, profit shares and remuneration for membership in the Supervisory or Management Board, loan committee, income received under civil (service) agreements by small partnership directors in respect of management activities who, according to Republic of Lithuania Law on Small Partnerships, are not members of those small partnerships themselves.

For more detailed information, please see here (only in Lithuanian).