How interest received is taxed and who has to pay income tax
How interest received is taxed and who has to pay income tax
Interest that is not classified as non-taxable income is taxed at an income tax rate of 15%*.
When paying interest, Lithuanian companies, foreign companies through their permanent establishment, non-residents of Lithuania on their fixed base, residents of Lithuania must calculate, withhold and pay 15% income tax on the amount of interest paid.
For example, if you received interest on funds granted through a Lithuanian crowdfunding platform, then the platform which acts as an intermediary in the legal crowdfunding relationship must withhold and pay income tax on the amount of interest paid.
To properly meet their tax obligations, companies which pay interest must be informed about your status being a non-resident of Lithuania for the purposes of paying income tax.
Please note that the income tax credit of EUR 500 may only be applied to interest after the end of the calendar year, by submitting Annual Income Tax Return. Lithuanian companies withhold and pay income tax on interest payments (i.e. they do not apply income tax relief).
Important: If interest is paid to residents of foreign countries with which Lithuania has concluded a treaty for the avoidance of double taxation, then a lower income tax rate under the respective treaty may apply. The treaty tax rate may be applied by the interest payer on the basis of your application for withholding tax relief (Form FR0021).
* Income received in Lithuania which is subject to tax: interest, royalties, rental income from immovable property located in Lithuania, income from sporting and performing arts activities, income from the sale/other transfer of ownership of immovable property located in Lithuania and movable property subject to legal registration in Lithuania. If the amount of such income does not exceed 120 average national wages per year (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), then it is taxed at an income tax rate of 15%; and if it exceeds 120 ANWs, then it taxed at an income tax rate of 20%.