Last updated: 6 September 2026
Lithuania substantially changed personal taxation from 1 January 2026. Employment and a wider group of annual income are now aggregated under 20%, 25% and 32% progressive bands. Dividends remain separately taxed at 15%, while the treatment of securities gains depends on their amount, holding period and whether the investor uses Lithuania’s investment-account regime.
The investment account, introduced from 2025, is the most important planning tool for ordinary investors. Eligible gains can generally be reinvested without immediate tax, and tax is charged when withdrawals exceed tracked contributions. From 2026, taxable investment-account income is charged at a flat 15% regardless of its size.
Lithuanian residents generally report worldwide income. Foreign brokers do not remove Lithuanian filing obligations, and the account must be designated correctly to obtain investment-account treatment.
Tax Overview — Key Numbers at a Glance
| Tax Type | 2026 Rate or Threshold | Notes |
|---|---|---|
| Main personal income tax | 20% / 25% / 32% | Broader annual-income aggregation from 2026 |
| Main thresholds | €83,237.40 / €138,729 | 36 and 60 average wages (VDU) |
| Dividends | 15% | Excluded from the 20%–32% aggregation |
| Investment-account income | 15% | From 2026, regardless of amount; tax generally arises on excess withdrawals |
| Securities gains outside account | 15%–32% | Holding period and annual income determine treatment |
| Basic securities-gain exemption | €500 | Conditions and exclusions apply; unavailable to investment-account withdrawals |
| Interest | 15%–32% | €500 exemption applies to qualifying interest; excess-income rules can apply |
| Employee social and health contributions | 19.5% | Additional 3% second-pillar pension contribution may apply |
| Employer contributions | Usually at least 1.77% | Accident category and funds can increase the rate |
| Social contribution ceiling | €138,729 | 60 VDU; health contribution treatment differs |
| Maximum monthly employment allowance | €747 | Phases out as income rises |
| Standard VAT | 21% | Reduced rates are 12% and 5% from 2026 |
| Corporate income tax | 17% | Standard rate from 2026 |
| Small-company corporate rate | 0% / 7% | Eligibility conditions apply; 0% can cover first two periods |
| Residential property tax | 0%–1% | New 2026 structure; property use and value matter |
| Inheritance tax | 5% / 10% | Close-family exemption and taxable-value reduction apply |
| Net wealth tax | None | Real-estate tax applies separately |
| Tax year | Calendar year | Individuals |
| 2025 annual return | 4 May 2026 | 1 June for taxpayers declaring an investment account |
| Tax authority | State Tax Inspectorate (VMI) | Electronic Declaration System (EDS) |
Tax Residency in Lithuania
Lithuanian tax residence is not determined solely by citizenship or one day-count rule. The governing rules appear in Lithuania’s official 2026 Law on Personal Income Tax. An individual can be resident where:
- their permanent place of residence is in Lithuania;
- their personal, social or economic interests are centred mainly in Lithuania;
- they spend at least 183 days in Lithuania during the tax year; or
- they spend at least 280 days across consecutive tax years and at least 90 days in one of those years.
Special rules apply to Lithuanian citizens working abroad for the state and to final departure. Where two countries claim residence, the relevant double-tax treaty usually uses permanent home, centre of vital interests, habitual abode and nationality tie-breakers.
Residents generally declare worldwide income, including foreign employment, dividends, interest, rental income and taxable gains. Non-residents are generally taxed only on specified Lithuanian-source income.
Personal Income Tax
From 2026, a broader set of income is combined to determine the progressive rate, as illustrated in VMI’s official 2026 guidance. The principal bands are based on the national average wage (vidutinis darbo užmokestis, VDU), fixed for 2026 tax calculations at €2,312.15 monthly.
| Aggregated annual taxable income | 2026 marginal rate |
|---|---|
| Up to 36 VDU—€83,237.40 | 20% |
| 36–60 VDU—€83,237.40 to €138,729 | 25% |
| Above 60 VDU—€138,729 | 32% |
The bands are progressive. However, ordering rules allocate different income types within the bands, so the tax on one category cannot always be calculated correctly in isolation.
The aggregate generally includes employment, many individual-activity profits, rent and taxable asset-sale income. Important separately taxed items include dividends, qualifying long-held share gains and investment-account income.
VMI’s official 2026 rate examples explain how employment and non-employment income interact.
Employment Allowance and Payroll Contributions
The non-taxable employment amount (neapmokestinamasis pajamų dydis, NPD) applies only to employment-type income; VMI’s employment-income guidance should be used for the current payroll calculation.
For 2026:
- the maximum monthly NPD is €747 where monthly employment income does not exceed the €1,153 minimum monthly wage;
- above €1,153, monthly NPD is
€747 − 0.49 × (monthly employment income − €1,153); and - the maximum annual NPD is €8,964 where total annual income does not exceed €13,836, after which a corresponding annual formula reduces it.
Other income received during the year can reduce the final annual NPD and create tax payable even if payroll applied the monthly amount correctly. Higher allowances apply to individuals with qualifying reduced participation capacity.
Social insurance
| Contribution | Standard employee | Standard employer |
|---|---|---|
| State social insurance and compulsory health insurance | 19.5% | About 1.77% minimum standard package |
| Optional/participating second-pillar accumulation | Additional 3% | — |
The employee’s 19.5% generally comprises 12.52% social insurance and 6.98% compulsory health insurance. Employer rates vary with the workplace-accident category, guarantee fund and long-term employment fund.
The 2026 social-insurance earnings ceiling is 60 VDU, or €138,729. The ceiling does not remove compulsory health-insurance contributions in the same way, so it should not be treated as a universal payroll-charge cap. Sodra publishes the 2026 contribution parameters.
Salary example
An employee earning €60,000 annually, with no NPD because income is above the phase-out point, generally pays €12,000 PIT and €11,700 employee social and health contributions. Indicative take-home pay is therefore about €36,300, or €3,025 monthly.
If the person contributes an additional 3% to the second-pillar pension, cash take-home is about €1,800 lower for the year. Benefits, disability-related NPD and other payroll facts can change the result. Use the Finorum Lithuania net salary calculator for an estimate.
Investment Gains Outside an Investment Account
The simple statement that all capital gains are taxed at either 15% or 20% is outdated from 2026. The current hierarchy follows the official 2026 PIT law and VMI’s worked examples.
For shares and other eligible non-employment assets held for less than five years, the first 12 VDU of the relevant combined annual non-employment taxable income—€27,745.80 in 2026—is generally taxed at 15%. Amounts above that allowance enter the broader annual calculation and can be taxed at 20%, 25% or 32% as the taxpayer crosses the 36-VDU and 60-VDU bands.
The full amount of the relevant income, including the portion taxed at 15%, is considered when determining the progressive thresholds. It is therefore incorrect to apply 15% to the first €27,745.80 and then restart the 20% band from zero.
Five-year share rule
From 2026, gains from shares or interests held continuously for at least five years generally qualify for a separate 15% rate and are excluded from progressive aggregation. Anti-abuse and related-party exceptions apply, particularly for interests transferred to the issuing entity, reorganisations and certain closely connected transactions.
€500 exemption
An annual €500 exemption can apply to qualifying gains from selling financial instruments outside an investment account. It does not apply to every transaction—for example, related-party and substantial ownership situations can be excluded—and it does not shelter taxable withdrawals from an investment account.
Eligible acquisition cost and mandatory transaction expenses reduce the gain. Keep purchase confirmations, commissions and reorganisation records.
Estimate a transaction with the Finorum Lithuania capital gains tax calculator, then apply the holding-period and aggregation rules.
The Lithuanian Investment Account
Lithuania introduced the investicinė sąskaita regime from 1 January 2025. VMI maintains an extensive official investment-account FAQ. It is not a special bank product: an eligible cash account is designated as an investment account in the annual tax return and used only for permitted investments and related cash flows.
Taxable investment-account income generally arises when cumulative withdrawals exceed the account’s tracked contribution balance. Eligible sale proceeds and investment returns can therefore be reinvested without tax on each disposal. From 1 January 2026, taxable income withdrawn under the regime is charged at a flat 15% regardless of amount.
Example: an investor contributes €30,000 and later withdraws €36,000 after the portfolio grows. Assuming no previous withdrawals or adjustments, €30,000 is a return of tracked contributions and €6,000 is taxable investment-account income at 15%.
Eligible providers and instruments
The cash account must be with an eligible financial institution in Lithuania, another EEA state or a qualifying OECD treaty jurisdiction. Permitted investments generally include publicly traded securities, money-market instruments, fund units, derivatives linked to eligible instruments, crowdfunding and peer-to-peer loans through regulated providers, and government savings notes.
Direct cryptoassets, unlisted instruments and investments in the account provider or connected entities may not qualify. The regime follows cash in and out of the designated account, so routing private spending or unrelated payments through it creates problems.
Dividends and interest are not magically exempt
Tax withheld from dividends or taxable interest is not refunded merely because the payment reaches an investment account. Such income is generally taxed under its normal rules when received, and the net credited amount is treated as an additional contribution so it is not taxed again on withdrawal.
Declaring the account
Accounts used from 2025 were first designated in the 2025 annual return filed in 2026. Certain pre-2025 financial instruments could enter the regime at acquisition value if properly declared. Each account belongs to one taxpayer, and transfers between the taxpayer’s designated investment accounts must be documented.
VMI’s investment-account guidance explains eligible accounts, contributions and withdrawals.
ETFs and Investment Funds
Outside the investment-account regime, gains on ETF or fund units generally follow the financial-instrument rules: the €500 exemption can apply, the first 12 VDU of relevant short-held non-employment income is generally taxed at 15%, and excess income can reach the progressive rates.
An accumulating ETF normally does not create individual tax merely because income is reinvested within the fund. Tax generally arises when units are sold or redeemed. Distributing ETFs can generate dividend or other fund income when paid.
UCITS status does not provide a separate Lithuanian tax exemption. The investment-account regime can defer eligible ETF disposal gains, but distributions retain their own tax character.
Dividends and Interest
Dividends are taxed separately at 15%, regardless of amount, and do not enter the 20%–32% annual aggregation under the official 2026 PIT rules. Lithuanian companies normally withhold the tax. Residents must report foreign dividends and may claim treaty or domestic credit for qualifying foreign withholding, limited to the Lithuanian tax on the same income.
Most taxable interest falls within the non-employment framework. A €500 annual exemption can apply to qualifying interest on non-equity debt instruments and deposits, subject to exclusions and acquisition-date rules. Above available exemption, up to 12 VDU of relevant annual income is generally taxed at 15%, while excess amounts can be taxed at 20%, 25% or 32% under the new aggregation rules.
Foreign interest and dividends must be converted to euros using the prescribed exchange rate and supported by withholding certificates.
Cryptocurrency Tax
Cryptoassets are generally outside the investment-account regime. Occasional private disposals are normally treated as other asset-sale income, while continuous, independent commercial activity can be individual activity.
For non-business crypto gains, the annual €2,500 general exemption for sales of other property may apply where statutory conditions are met. Taxable income then enters the 2026 non-employment framework: 15% applies within the first 12 VDU of relevant income, with excess potentially taxed at 20%, 25% or 32%.
Mining, staking, systematic trading and services paid in crypto require separate analysis. Crypto-to-crypto exchanges can be disposals because value is received in another asset; the absence of a euro withdrawal does not establish exemption.
Keep exchange exports, wallet records, acquisition costs, fees and euro valuations for every taxable event.
Reporting Foreign Investments
Residents generally report worldwide investment income through VMI’s Electronic Declaration System, commonly using the GPM311 annual income return. Foreign brokers may transmit information under CRS, but they do not calculate the Lithuanian result.
Investors should retain:
- account statements and contract notes;
- acquisition dates needed for the five-year share rule;
- investment-account designations and cash-flow ledgers;
- dividend and interest vouchers;
- foreign withholding-tax documents;
- euro conversion calculations; and
- evidence of eligible costs and carried losses.
Ordinary capital losses can generally offset compatible gains under the same income category and year. They do not automatically offset dividends, salary or investment-account withdrawals. The regime and classification should be established before netting figures.
Rental Income and Property Sales
Residential rental income can generally be taxed under the ordinary annual system or, for qualifying residential letting, through a fixed-price business certificate issued by the municipality.
Under the ordinary system, the first 12 VDU of relevant combined non-employment income is generally taxed at 15%. Excess income enters the 20%, 25% and 32% aggregation bands. The business-certificate option is subject to activity, tenant and €50,000 annual-income restrictions; excess income is taxed normally.
Property disposals
From 2026, a gain on real estate is generally exempt where:
- the property has been owned for at least five years;
- the seller declared residence there for at least two years before sale; or
- the seller declared residence there for a shorter period but uses the proceeds to acquire another declared residence within one year.
Otherwise, eligible costs reduce the gain, and the 15%–32% non-employment income rules can apply.
Use the Finorum rental property calculator to test cash flow.
Real Estate Tax from 2026
Lithuania introduced a new individual real-estate tax structure from 2026.
For a declared primary residence, the municipality sets a tax-free threshold of at least €450,000 and a rate from 0.1% to 1% on excess taxable value. A municipality may choose a higher exemption.
For specified non-primary residential, garden, garage and similar property, aggregate taxable value is charged progressively:
| Value band | Rate |
|---|---|
| Up to €50,000 | 0% |
| €50,000.01–€200,000 | 0.2% |
| €200,000.01–€400,000 | 0.4% |
| €400,000.01–€600,000 | 0.6% |
| €600,000.01–€1 million | 0.8% |
| Above €1 million | 1% |
Commercial, abandoned and other property can use municipality-set rates on the full value. VMI provides official examples of the 2026 property tax.
Inheritance and Gifts
Lithuanian inheritance tax is generally 5% where taxable inherited value does not exceed €150,000 and 10% above that amount. The taxable base is generally 70% of assessed inherited value.
Inheritance from a spouse, children, adopted children, parents, adoptive parents, guardians, grandparents, grandchildren and siblings is generally exempt. An exemption also applies where taxable inherited value does not exceed €3,000.
Gifts from a spouse, parents, children, grandparents, grandchildren and siblings are generally exempt from PIT. Gifts from other individuals are exempt up to €2,500 annually; excess value generally enters taxable non-employment income and can be affected by the 2026 progressive aggregation.
Lithuania has no general annual net wealth tax, but the broader real-estate tax applies independently.
Self-Employed Individuals
Individual-activity taxable profit is revenue less actual eligible expenses or, where permitted, a 30% deemed-expense deduction.
From 2026, a tax credit produces an effective 5% PIT rate where annual taxable individual-activity profit does not exceed €20,000. The effective rate then rises gradually, reaching 20% at €42,500. Above €42,500, the credit disappears and the whole individual-activity profit joins other annual income under the 20%, 25% and 32% rates.
Social insurance and compulsory health contributions also apply, generally on 90% of taxable profit within contribution ceilings. VAT registration and invoicing duties depend on turnover, cross-border services and activity.
Corporate Tax
The standard corporate income tax rate increased from 16% to 17% for 2026. A reduced 7% rate can apply to qualifying small companies with annual revenue not exceeding €300,000 and no more than ten employees, subject to related-entity and other restrictions.
Qualifying newly established small companies can receive a 0% rate for their first and second tax periods from 2026, followed by 7%, if all conditions are met.
| Corporate item | 2026 general rate |
|---|---|
| Corporate income tax | 17% |
| Qualifying small company | 7% |
| Qualifying new small company | 0% first two tax periods |
| Dividend withholding to individuals | 15% |
| Standard VAT | 21% |
Participation exemptions can apply to qualifying corporate dividends and share gains. Anti-abuse, ownership and holding-period conditions must be satisfied. The Ministry of Finance summarises the 2026 corporate rates.
VAT
The standard VAT rate remains 21%. From 1 January 2026, the previous 9% reduced rate was generally replaced by 12% for specified passenger transport, accommodation and cultural admissions. A 5% rate applies to qualifying medicines, medical aids, disability equipment and specified publications. Zero-rating and exemptions apply in defined cases.
The ordinary domestic VAT registration threshold is generally €45,000, but intra-EU acquisitions and cross-border services can trigger duties under separate thresholds and rules.
Foreign Income and Double-Tax Treaties
Lithuanian residents generally report foreign income even if it remains abroad. A treaty may reduce source-country withholding or provide a Lithuanian credit/exemption method. Credits are limited to qualifying foreign tax and require official evidence.
Foreign social-security coverage is coordinated separately from income tax. EU/EEA workers temporarily posted to Lithuania may remain in another system with a valid A1 certificate.
Remote work performed from Lithuania can create Lithuanian payroll or permanent-establishment questions for a foreign employer.
Filing and Payment
The tax year is the calendar year. The ordinary statutory deadline is the first working day after 1 May.
For 2025 income, the filing and payment deadline was 4 May 2026. Taxpayers declaring an investment account had a special first-year deadline of 1 June 2026 to file and pay. VMI confirms these dates on its 2026 declaration page and dedicated investment-account deadline page.
The extension was specific to the first investment-account filing season and should not be assumed for future returns. Departing residents can have an earlier return obligation before final departure.
Tax Advantages and Disadvantages
Advantages
- Investment-account gains can be reinvested tax-deferred and withdrawn profit is taxed at 15% from 2026.
- Dividends remain separately taxed at 15%.
- Qualifying shares held for at least five years receive a separate 15% rate.
- No general net wealth tax.
- Close-family inheritances and gifts are broadly exempt.
- New small companies can qualify for two 0% corporate tax periods.
Disadvantages
- Short-held investment gains above the 12-VDU category can reach 20%, 25% or 32%.
- The investment account requires precise designation and cash-flow tracking.
- Dividends and interest are not automatically deferred by routing them to the account.
- Employees pay 19.5% social and health contributions in addition to PIT.
- New property tax applies broadly to non-primary residential assets above €50,000.
- Foreign-broker and crypto records remain the taxpayer’s responsibility.
Who May Find Lithuania Suitable?
Lithuania can suit long-term investors using a designated investment account, dividend investors, founders of qualifying small companies and investors able to satisfy the five-year share rule.
It is less straightforward for high-income investors realising large short-held gains outside the account or for anyone mixing personal cash flows with a designated investment account. The effective result depends on income aggregation, holding period and account compliance.
Related Finorum Guides and Calculators
- Investing in Lithuania
- Lithuania net salary calculator
- Lithuania capital gains tax calculator
- ETF tax calculator
- Dividend tax calculator
- EU tax comparison map
- Cost of living comparison
Disclaimer
This guide is for general informational and educational purposes only. It is not tax, legal, accounting or investment advice. Lithuanian taxation depends on residence, total annual income, holding period, account designation, product eligibility and individual circumstances. Rules and administrative practice can change. Verify the current position with VMI or a qualified Lithuanian tax adviser before filing or making an investment, relocation or business decision.
Matias Buće has a formal background in administrative law and more than ten years of experience studying global markets, forex trading, and personal finance. His legal training shapes his approach to investing — with a focus on regulation, structure, and risk management. At Finorum, he writes about a broad range of financial topics, from European ETFs to practical personal finance strategies for everyday investors.
Sources & References
EU regulations & taxation
- Finmin.lrv.lt — 2026 corporate rates
- Vmi.lt — 2026 Law on Personal Income Tax
- Individual-activity taxable profit
- Lithuanian inheritance tax
- official examples of the 2026 property tax
- State Tax Inspectorate (VMI)
- Taxable investment-account income