Corporate tax
Corporate income tax (CIT) is charged at the standard rate of 15% and is payable by resident entities and non-residents acting through a Lithuanian permanent establishment. Certain small companies (with less than 10 employees and an annual turnover below LTL 1,000,000) can opt to exempt the first LTL 25,000 of taxable profits. Small companies (with less than ten employees and an annual turnover below LTL 500,000) are subject to corporate income tax at a reduced rate of 13%.
CIT is generally reportable on a calendar year basis. However, permission may be sought to use a different tax year.
A temporary social tax has been introduced for 2006 and 2007 at 4% for 2006 and 3% for 2007, increasing the effective standard rate of CIT from 15% to 19% for 2006 and 18% for 2007.
Withholding tax of 10% is imposed on interest and rental payments to non-residents, subject to the terms of any relevant double tax treaties.
Capital gains
Withholding tax of 10% is imposed on capital gains realised by non-residents on disposal of Lithuanian real estate.
Capital gains realised by Lithuanian resident entities are subject to CIT at the standard rate.
Property tax
All legal entities owning Lithuanian real estate excluding land or leasing it from a Lithuanian individual for more than 1 month are subject to property tax at 1% on the taxable value of the real estate as determined by the State Enterprise of Registers.
Exemptions may apply, e.g. for property owned by charity funds and organisations, or real estate located in free economic zones.
Property transfer tax
There is no tax on the transfer of assets in Lithuania. In certain cases (e.g. sale of real estate) a notary fee may be applicable.
VAT
VAT registration is compulsory if on the commencement of business in Lithuania by a taxable entity. EU entities may register for VAT directly, whereas non-EU entities are obliged to appoint a fiscal agent for the purposes of VAT in Lithuania.
Supplies of goods and services are generally subject to VAT at the standard rate of 18%. A reduced rate of 9% is applicable to supplies of services relating to the construction, renovation or insulation of residential houses financed by the state and municipal governments.
VAT should be “reverse charged” on certain services rendered by non-residents.
The leasing of real estate is generally VAT exempt.
The sale or transfer of real estate is exempt from VAT, except for the supply of new buildings and structures, sections thereof, the connected land and land for development. A building or structure is defined as new before its completion or within 24 months of its completion.
VAT exemptions can be waived in certain circumstances.
The above is for general information purposes only. It is not intended to be comprehensive or to provide any specific tax advice.