Business Environment

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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on 1 January and ends on 31 December of the same year.
Accounting Standards
Commercial undertakings shall perform accounting and prepare financial statements in accordance with Lithuanian Business Accounting Standards (LBAS), which are applicable as of 1 January 2004. Undertakings whose securities are traded in the regulated markets, as of 1 January 2005 shall follow IFRS as adopted by the EU when preparing financial statements.
LBASs can be regarded as simplified and summarised translations of the corresponding IASs or IFRSs.
Accounting Regulation Bodies
LAAA
Accounting Reports
Accounting in a company can be performed by an internal accounting department or by a third-party company providing accounting services. Accounting registers can be maintained either as hard copies or in electronic form, but print outs are still required.
Accounting shall be made in EUR and in Lithuanian language.
Financial statements must include: balance sheet, profit and loss account, cash flow statement, statement of changes in equity.
Publication Requirements
Investment companies are required to file their annual statement with the Companies Registration Office.
Professional Accountancy Bodies
LAR , Lithuanian Chamber of Auditors
Certification and Auditing
The Lithuanian Chamber of Auditors is a public legal entity unifying all certified auditors of Lithuania. The Company Law describes conditions under which a company must have its financial accounts audited by a certified auditor: KPMG, Deloitte, Ernst & Young and PricewaterhouseCoopers.
Accounting News
IAS Plus
Business and Accounting News

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Pridetines vertes mokestis (PVM)
Tax Rate
21%
Reduced Tax Rate
Reduced rates of 9% apply to public transport, heating and water for residential use, books and publications, firewood for household energy users and accommodation services supplied to tourists (until 31 December 2022).
A further reduced rate of 5% applies to the sale and repair of equipment for the disabled, pharmaceutical goods, medical devices and periodical publications.
A 0% rate applies to exports of goods from the EU and related services, international transport and related services, supplies related to ships and aircraft, intra-Community supplies of goods, certain works on movable tangible property. Until 31 December 2022, vaccines against COVID-19 and in-vitro diagnostic medical devices of COVID-19 are also zero-rated.

VAT-exempt goods and services include: health care services and goods; real estate rent and disposals; insurance and reinsurance services; certain financial services; cultural and sporting activities; educational services; betting and gaming services; universal postal services; social and related services; radio and television services.

Other Consumption Taxes
Excise duty is imposed on ethyl alcohol and alcoholic drinks, processed tobacco, energy products, electric energy, energy-related products, coal, coke, and lignite. More detailed information on excise duties is available concerning alcoholic beverages, tobacco products, energy products on the European Commission website.

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Corporate Taxes

Company Tax
15%
Tax Rate For Foreign Companies
Lithuanian entities are subject to tax on their worldwide income, non-resident companies are subject to corporate income tax on Lithuania-source income and on income received by a permanent establishment in the country.
Capital Gains Taxation
Capital gains of resident and non-resident companies are taxed as general taxable income at a rate of 15%. Capital gains from the sale of shares of a company that is resident in Lithuania or in another EU/European Economic Area member state may be exempted if the investor (Lithuanian firm or permanent establishment of a foreign company) maintains uninterrupted participation of more than 10% for at least two years (three years in the case of a reorganization).
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible assets is tax-deductible at rates ranging from 5% (residential buildings) to 33.3% (computer, software). Goodwill is also deductible over 15 years.
Start-up expenses, interest charges and bad debts are generally deductible whereas provisions for doubtful debts are not deductible.
Donations to charitable organisations give rise to a 200% tax deduction, capped at 40% of taxable income (before the deduction of donations and the carryforward of tax losses).
Fines and penalties are not deductible. Taxes are deductible except for VAT and corporation tax.
Entertainment fees are deductible up to 50% and their deduction is capped at 2% of the company's income. Travel expenses related to the business are generally deductible, the same as contributions and expenses for the benefit of employees.
Tax losses can be carried forward indefinitely, yet for each year, they can only be offset by 70% of taxable income. The rest of the losses can be offset against income from previous years. Losses from the sale of shares may be carried forward for up to five years and may only be offset against income from the sale of shares. The carryback of losses is not permitted.
Other Corporate Taxes
The land tax varies between 0.01% and 4% (the rate is determined by the municipalities), the same as for the tax on land lease. The property tax varies between 0.5% and 3% (the rate is determined by municipal councils - properties with a value of up to EUR 150,000 are exempt).
There are no stamp duties in Lithuania. On the other hand, a small fee is payable for the issuance of certain documents by public services.
Social security contributions payable by the employer vary between 1.45% and 2.71% for income up to EUR 81,162 per year (employees' contributions are lower for incomes above this threshold). Employers withhold 0.16% of the gross salary for the Guarantee Fund (which provides financial assistance to employees in case their employers go bankrupt). They also pay a contribution equal to 0.16% of the gross salary for the Long-Term Employment Fund.
An environmental tax is levied on pollutants released into the environment, and a separate tax is payable on the value of extracted natural resources.
Other Domestic Resources
Consult the Doing Business Website, to obtain a summary of taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Lithuania Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 10.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 95.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 42.6 36.5 36.6 48.8

Source: Doing Business - Latest available data.

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Individual Taxes

Tax Rate

Income tax (employment income up to EUR 81,162 in 2021 - 60 average salaries) 20%
Income above EUR 81,162 32%
Income from royalties, interest, sale of property 15% (20% if the amount exceeds EUR 162,324 for 2021 - 120 average salaries)
Allowable Deductions and Tax Credits
The following items among others are allowed for income tax deductions (cumulatively capped at 25% of the taxable income):
- Repair (except for building renovation), car repair, childcare (up to EUR 2,000 per year)
- Pension contributions, life insurance premiums
- Expenses for vocational studies and training.

A monthly tax-exempt amount (TEA) applies to employment-related income of Lithuanian tax residents, equal to EUR 400/month for incomes up to EUR 642 (minimum monthly salary for 2021) or reduced progressively for incomes above that amount, up to an income limit of EUR 2,864.22.
Allowances are given for each child (EUR 70, EUR 111 for children with disabilities, large or low-income families).
Business expenses of self-employed individuals are deductible (taxpayers can opt for a lump-sum deduction of 30% or for itemized deductions supported by the relevant documentation).

Special Expatriate Tax Regime
Residents are taxed on their worldwide income whereas non-residents are only taxed on Lithuania-source income and on income derived from activities through a fixed base in the country.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the tax conventions signed by Lithuania.
Withholding Taxes
Dividends: 15%, Interest: 0 (paid to residents, EEA-resident companies and companies resident in countries that have concluded a tax treaty with Lithuania)/10% (non-resident companies)/15% (non-resident individuals), Royalties: 0 (paid to resident companies)/10% (non-resident companies)/15% (individuals).
The rates can be reduced under a tax treaty.

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Intellectual Property

National Organisations
The State Patent Bureau is in charge of regulations around intellectual property in Lithuania.
Regional Organisations
EPO (European Patent's Office), EUIPO (European Union Intellectual Property Office).
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Law, 1994, last amended in 2001
20 years Patent Cooperation Treaty (PCT)
Trademark
 
Law on Trademark, 2000, last amended in 2004
Ten years from the date of application, renewable. Trademark Law Treaty
Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Industrial Designs Law, 2002, last amended in 2004
Five years, renewable four times, for five-year periods up to 25 years  
Copyright
 
Law on Copyright and Related Rights, 1999, last amended in 2003
During the life of the author and 70 years after his or her death. Recognition of a copyright and its legal protection in Lithuania is not subject to any local registration requirement. Berne convention For the Protection of Literary and Artistic Works
Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms
Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
WIPO Copyright Treaty
WIPO Performances and Phonograms Treaty
Industrial Models
 
Industrial Designs Law, 2002, last amended in 2004
Five years, renewable four times, for five-year periods up to 25 years  

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Legal Framework

Independence of Justice
The judiciary in Lithuania is largely independent, though a lack of qualified judges and lawyers often undermines the right to a fair trial.
Equal Treatment of Nationals and Foreigners
Foreign nationals can expect an impartial trial from the country's judicial system.
The Language of Justice
Lithuanian is the judicial language used in the country.
Recourse to an Interpreter
Having an interpreter is possible.
Sources of the Law and Legal Similarities
The main source of the law in the country is the Constitution of 1992; with its legal system based on a civil law system. Lithuania being a member of the European Union, the national law in the country needs to comply with the conditions of the Community legislation.
Checking National Laws Online
Main Lithuanian laws online

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Standards

National Standards Organisations
Lithuanian Standards Board
Integration in the International Standards Network
LST as a national standards body follows international and European standardisation principles in its activities and represents the Republic of Lithuania within International Organisation for Standardisation (ISO), International Electrotechnical Commission (IEC), European Committee for Standardisation (CEN), European Committee for Electrotechnical Standardisation (CENELEC) and European Telecommunications Standards Institute (ETSI). Additional national requirements can be added to EU standards.
Classification of Standards
Information about standardisation in Lithuania can be obtained at the Lithuanian Standards Board website. Lithuanian standards are those which exist in all European Union member countries, one of the most known being the 'CE' marking.
Online Consultation of Standards
More information about national standards can be obtained at: Lsd.
Certification Organisations
Lithuanian Standards Board

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Business Practices

General Information
Commisceo Global, Guide on Lithuania
Passport to trade, Corporate culture in Lithuania
Opening Hours and Days
Stores open from 10 a.m. to 9 p.m. during the week and from 10 a.m. to 5 p.m. on Saturday; some grocery stores open earlier and close later (8 a.m.-10 p.m. or midnight), they open on Sunday and on days-off but close earlier (5 or 6 p.m.).
 

Public Holidays

New Year's Day 1 January
Independence Day (1918) 16 February
Restoration of Independence (1990) 11 March
Easter Sunday and the following Monday
Labor Day 1 May
Mother's Day First Sunday in May
Midsummer Festival 24 June
Coronation of Mindaugas, King of Lithuania 6 July
Assumption Day 15 August
All Saints' Day 1 November
Christmas 25 and 26 December
 
Holiday Compensation
No
 

Periods When Companies Usually Close

Christmas break One week between Christmas and New Year (not compulsory)
Midsummer break Three days to one week around midsummer (in June)
 

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Latest Update: April 2022