Paying Taxes in Lithuania

 1. What is the corporate tax in Lithuania?

The standard corporate tax rate that a company registered in Lithuania has to pay in 2011 is 15%. Companies with less than 10 employees and less than 500,000 LTL (144,800 EUR) as an yearly income may pay only a 5% corporate tax rate.

2. What is the VAT in Lithuania?

In Lithuania, the standard VAT rate is 21%, but there are certain goods and services that are only subject to a 9%, 5% or 0% VAT rate. For instance, books, the supply of heat and hot water or accommodation are subject to a 9% VAT rate, while drugs only have a 5% VAT rate.

3. How can the VAT be refunded in Lithuania?

VAT refund may be requested electronically. The applications have to be submitted via the official website of the Tax Authorities. The entire procedure in order to get the VAT refund is carried on by the Tax Authorities.

4. What is the dividend tax in Lithuania?

The Lithuanian tax on dividends is 15%, unless there is a tax treaty that mentions a reduced dividend tax rate.

5. Are there any incentives for foreign investors in Lithuania?

Foreign investors are usually attracted to Lithuania because of its strategic location and infrastructure. In addition to that, the Lithuanian authorities also offer several incentives as far as the taxes are regarded. This way, if a foreign company that is set up in Lithuania invests more than 1,000,000 EUR and 75% of the company’s activity is in a Free Economic Zone, there is an exempt on corporation tax for the first five years and a reduced corporate tax rate to half for the next ten years. Even though a foreign company invests less than 1,000,000 EUR, but it performs its entire activity in a Free Economic Zone, it will not have to pay VAT rate and real estate tax.

6. Why do I need a local accountant for my business in Lithuania?

Any business that is established in Lithuania has to deal with local accounting legislation, which is best known by a local accountant that has worked within the system before. Therefore, it is advisable to have a specialist from Lithuania in order to keep an updated accounting service that meets the local standards.