There are several possibilities how to become tax resident in Lithuania.
Criteria for individuals to be considered a tax resident in Lithuania
An individual (natural person) is treated as a tax resident if at least one of the following conditions is satisfied:
- Natural person’s permanent place of residence is in Lithuania during the tax period;
- Natural person’s place of personal, social or economic interests is in Lithuania rather than in a foreign country during the tax period;
- Natural person is present in Lithuania for a period or periods in the aggregate of 183 days or more during the tax period;
- Natural person is present in Lithuania for a period or periods in the aggregate of 280 days or more during two tax periods and who stayed in Lithuania for a period or periods in the aggregate of 90 days or more in any of such tax periods;
- Natural person who is a citizen of Lithuania but does not meet the above mentioned criteria, and who receives remuneration under an employment contract or a contract in its essence corresponding to an employment contract or whose costs of living in another country are covered from the state budget or municipal budgets of Lithuania.
Exceptions when a natural person complies with the above mentioned provisions, shall not be deemed to be a tax resident of Lithuania if he is:
- A diplomatic agent of a foreign state, member of the administrative and technical staff or service staff of the diplomatic mission, consular post or international organization, who is not a citizen of Lithuania (except for stateless persons whose permanent place of residence or place of personal, social or economic interests is in Lithuania during the tax period;
- Not a citizen of Lithuania who receives only such income which is incidental to employment relations or relations in their essence corresponding to employment relations for performing work in Lithuania from a foreign country, its political or territorial administrative unit or its local authorities;
- Not a citizen of Lithuania who only carries on individual activities in Lithuania from a fixed base, which is the sole purpose of his arrival in Lithuania.
Personal taxation basis in Lithuania
Lithuanian tax residents are subject to tax on their worldwide income. Non-residents are subject to tax only on income sourced in Lithuania and on income derived from activities through a fixed base in Lithuania, including foreign-source income attributed to that fixed base.
To find out more about Tax residency in Lithuania, please contact our English speaking lawyers at email@example.com
T: +370 52 61 1000
F: +370 52 61 1100
August 29th, 2017 The thin capitalization rules in the Baltics vary between Estonia, Latvia and Lithuania. For instanc... Read more
Transfer pricing in the Baltics (Estonia, Latvia, Lithuania) and implications of the OECD treaty on BEPS
April 15th, 2016 Base erosion and profit shifting (BEPS) is a term which refers to the negative effects of internatio... Read more
Low corporate income tax in the Baltics (Estonia, Latvia, Lithuania) and implications of the OECD treaty on BEPS
April 11th, 2016 Base erosion and profit shifting (BEPS) is a term which refers to the negative effects of internatio... Read more
The social tax rate will increase by 1% (0.5% for each - employee and employer) totaling 35.09%. Therefore an employer will have to pay 24.09%, but employee - 11%.
Value added tax
The reform includes changes to aspects of the VAT regime including a reduction in the VAT registration threshold of EUR 50 000 to EUR 40 000.
The list of sectors with the reverse VAT payment procedure will be expanded. The VAT reverse charge will be applied to a broader range of supplies, including game consoles, household appliances, construction materials and metal products.
Amendments to the micro-enterprise tax payment regime is provided for maintaining a unified tax rate of 15% for turnover for all micro-enterprises.
Maximum turnover is planned to be reduced from the current EUR 100,000 to EUR 40,000. Changes also state that from January 1, 2019 onward, the employees of micro company will be allowed to work in only one such company.
With the amendments to the Excise Tax Law is intended to compensate losses from the tax reform’s realization.
The reform will affect fuel, cigarettes and alcohol excise tax rates. Fuel excise tax rates will be from 7.8% to 24% (depending on fuel type). The alcohol excise tax rates will be from 15% to 24%, and for the cigarettes excise tax rate will be 5.5%.
On taxes and duties
The amendments to the Law on Taxes and Duties state that credit institutions will have to provide Tax authority of Latvia with information about their clients, namely individual tax payers, on an annual basis where debit or credit turnover exceeds EUR 15,000 in the previous year.
Also amendments provide an obligation to perform mandatory payments from royalties. Recipients of royalties will have to perform 5% payments from royalties to insure their pension.
Minimum wage in Latvia will be increased to EUR 430 instead of EUR 380.
Taking into account all the above mentioned, there is important work to do in future when implementing the changes into the system.