Lithuania corporate tax - guide for international expansion

Are you planning to do business in Lithuania? Then it's essential to understand how corporate income tax works and what it means for your company.

In this guide, we'll break down everything you need to know about corporate taxes in Lithuania, from current rates to payment procedures and compliance requirements. Whether you're launching a new venture or expanding your business to this Baltic nation, understanding your tax obligations is key to running a successful operation. And if you're looking for smart ways to manage international payments, we'll also show you how Wise Business can help simplify cross-border transactions and keep your finances running smoothly.

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This publication is provided for general information purposes and does not constitute legal, tax, or other professional advice from Wise Payments Limited, its subsidiaries or affiliates, and it is not intended as a substitute for obtaining business advice from a tax advisor or any other professional.

Lithuania Corporate Tax Rate in 2025

The standard corporate income tax (CIT) rate in Lithuania is 16% for the 2025 tax period. Lithuania's tax system remains competitive compared to the EU average corporate tax rate, which stands at approximately 21.27%.¹

For small businesses that meet specific criteria, Lithuania offers a significantly reduced rate. Entities with fewer than 10 employees and annual gross revenues not exceeding €300,000 can benefit from a preferential CIT rate of 6% on their entire taxable income. Furthermore, qualifying newly registered small companies are subject to a 0% tax rate for their first tax period, encouraging new entrepreneurship.¹

Additionally, Lithuania maintains special tax regimes and incentives. Companies engaged in research and development (R&D) activities may benefit from accelerated depreciation and a generous triple deduction for qualifying R&D expenses, significantly reducing their effective tax burden under specific conditions.²

Companies resident in Lithuania are taxed on their worldwide income, while non-resident companies are only taxed on Lithuanian-source income. A company is considered a tax resident if it is incorporated in Lithuania or if its place of effective management is in Lithuania.^{1 3}

How to Pay Corporate Tax in Lithuania

Corporate tax in Lithuania is administered by the State Tax Inspectorate (Valstybinė mokesčių inspekcija - VMI), and companies must use the electronic declaration system (EDS) for filing returns and making payments. The system operates 24/7 and allows businesses to submit tax returns, make payments, and communicate with tax authorities online.⁴

The corporate income tax return must be filed by the 15th day of the sixth month following the end of the tax period. For companies following the calendar year, this means the deadline is 15 June. Companies must pay any outstanding tax liability by the same deadline.⁵

Companies must also make advance CIT payments during the year, calculated using one of two methods: either based on the results from the previous one or two tax periods, with returns due on the 15th day of the third and ninth months (March 15th and September 15th); or based on an estimate for the current year, for which a return is due by March 15th. If the estimate method is used, the paid advance tax must cover at least 80% of the final annual liability to avoid late payment interest.⁵

Non-compliance, such as late payment or underestimation, results in financial penalties and the application of default interest charges.⁵

Let's consider a practical example: if your company has an annual turnover of €1.5 million and operates with a profit margin of 10%, giving it a taxable profit of €150,000, the tax calculation would be straightforward:

€150,000 × 16% = €24,000

When expanding your business to Lithuania, the right financial tools will make the process smoother. Using a platform like Wise Business makes it easy to expand internationally with local EUR account details. A multi-currency account allows businesses to pay for incorporation costs, registration fees, and government taxes in local currency without paying high exchange rate fees.

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Tax Compliance in Lithuania^{5 6}

• Tax year: Generally follows the calendar year, though companies may request a different accounting period with approval.
• Corporate Income Tax (CIT): Returns filed electronically by 15 June (if using the calendar year); final payments due the same day. Advance CIT must be paid quarterly.
• Withholding Tax (WHT): Payments to foreign entities must be reported and remitted within 15 days after the month-end.
• VAT: Returns are usually filed monthly and due by the 25th of the following month. Smaller companies may apply for six-month periods.
• Tax audits: Authorities use a risk-based approach, targeting higher-risk or material cases.

International Expansion to Lithuania

Lithuania can be a good starting point if you’re eyeing international expansion for your business. It stands out as a competitive hub in Northern Europe with its supportive government initiatives and favourable tax structure. The country’s position at the crossroads of Europe and Eurasia gives investors access to the EU and regional markets.⁷

At the same time, its diversified economy, stable democratic government, and advanced IT infrastructure make it a reliable business hub. Lithuania joined the Eurozone in 2015 and became a member of the OECD in 2018. The country aligned its policies with international standards and strengthened its role in the global economy.⁷

Reports reveal how the Lithuanian economy has shown resilience over the past decade. After a strong recovery from the 2009 financial crisis, it limited the effects of the COVID-19 slowdown. It achieved a 5.1% GDP growth in 2021.⁷ Current projections indicate continued expansion, with GDP expected to rise by 1.6% in 2024 and 3.1% in 2025. Credit rating agencies, including Moody’s, Fitch, and DBRS Morningstar, have all reaffirmed Lithuania’s “A” level ratings with a stable outlook, reflecting investor confidence.⁸

Foreign direct investment also highlights the country’s appeal. At the end of 2023, FDI inflows totalled USD 1.86 billion, raising the total stock of FDI to more than USD 31 billion.⁹ The United States remains the largest investor, contributing USD 6.3 billion, which shows strong economic ties with the world’s largest economy.⁷ Under Lithuanian law, investors benefit from equal treatment and the right to repatriate or reinvest profits without restrictions. Business incentives are also available through seven Special Economic Zones, while the recently launched “Investment Highway” reform is streamlining approvals and permits to speed up major projects.¹⁰

A highly skilled, multilingual workforce, relatively low wage costs, and strong performance in international indexes add to Lithuania’s competitiveness. The country ranks 16th globally in the Index of Economic Freedom and 35th in the Global Innovation Index.⁹ Such strengths, combined with its competitive corporate tax rate and alignment with global minimum corporate tax standards, position it as a sound base for international companies.

To get started, companies should follow these steps:¹¹

1. Conduct thorough market research to understand the Lithuanian business environment and target audience.
2. Develop a business plan that aligns with market needs and growth potential.
3. Choose a business name and secure a suitable location for operations.
4. Select the appropriate business entity type based on company’s goals.
5. Register the company with the Centre of Registers.
6. Complete registration for corporate tax with the State Tax Inspectorate before beginning operations.
7. Open a business bank account to manage finances.
8. Establish a reliable system for maintaining accurate business records.

Expanding here is smart due to its investor-friendly policies and competitive Lithuanian corporate tax rate. Opening a bank account is also simple, andtop names in the banking sector are ready to support international businesses.

Incorporation of Business in Lithuania

To incorporate a business in Lithuania, you’ll need to go through several formal steps before registration is complete. This is what the process looks like:¹²

• Notary verification: A notary checks the application, statutes, and whether the company is eligible for incorporation before registration.
• Submission of documents: Once verified, the application and supporting paperwork are filed with the State Enterprise Centre of Registers.
• Articles of Association/Act of Establishment: Founders prepare the articles of association. If there is only one founder, an act of establishment is required instead.
• Company name reservation: Founders may reserve a company name temporarily by filing form JAR-5 with the Register of Legal Entities.
• Bank account and share capital: An accumulation account is opened to deposit the initial share capital. For a Private Limited Liability Company (UAB), the minimum is EUR 2,500, with at least 25% paid up before registration.
• Valuation of contributions in kind: If contributions are made in assets rather than cash, they must be valued by an independent property valuer.
• Constituent meeting: Shareholders approve the founder’s report, adopt resolutions, and elect company management bodies (board, supervisory council, or manager).
• Signing of statutes: The company’s statutes are signed to finalize its internal governance framework.
• Formal registration: The company is officially established in the Register of Legal Entities.

Types of Businesses in Lithuania^{13 14}

• Private Limited Liability Company (UAB): The most common choice for small and medium businesses. It requires a minimum share capital of EUR 2,500 and can have up to 250 shareholders. Shares cannot be traded publicly. An audit is needed if turnover exceeds EUR 1.4 million.
• Public Limited Liability Company (AB): Suitable for medium and large businesses planning public share offerings. Minimum share capital is EUR 40,000, with at least 25% paid before incorporation. Management includes a supervisory council or board.
• Partnerships (TUB and KUB): Partnerships can be general, with unlimited liability, or limited, where some partners’ liability is restricted to their contributions.
• Branches and Representative Offices: Foreign companies may establish these units. While not separate legal entities, branches can conduct trade, whereas representative offices are limited to non-commercial activities such as promotion.

Companies must register with the authorities, and sometimes may benefit from tax refunds. These investor-friendly measures make setting up in Lithuania both practical and efficient.

International Corporate Tax Best Practices

Here are essential strategies to ensure compliance with local tax laws, optimise tax efficiency, and reduce administrative burdens for international businesses.

Stay compliant with local and international tax laws by completing proper legal registration in every jurisdiction where your business operates. File all required tax returns on time to avoid penalties, and maintain up-to-date knowledge of local tax regulations to ensure full compliance.

Companies should also understand and adhere to global standards set by organisations like the OECD. With frameworks such as Base Erosion and Profit Shifting (BEPS) and the Pillar Two Global Minimum Tax, businesses can ensure transparency, prevent tax avoidance, and mitigate legal risks.

Leverage double taxation treaties (DTTs) effectively, as these agreements prevent the same income from being taxed twice in different countries. Lithuania has signed double taxation agreements with over 50 countries, which can significantly reduce your overall tax burden when structured properly.

Maintain comprehensive and transparent financial records, as this helps companies prepare accurate tax returns and reduces the risk of errors that could lead to penalties. Well-organised financial documentation also simplifies the audit process and demonstrates good corporate governance to tax authorities.

Take the complexity out of international expansion with Wise Business

Researching corporate tax is a crucial step when expanding your business into a new country. The next step is setting up the financial infrastructure to handle the complexities of operating across borders, from managing multi-currency cash flow to mitigating FX risk.

The Wise Business account provides the financial tools to make your international expansion to Lithuania efficient and simple. It's the one account for managing your money globally.

With a Wise Business account, you can:

• Pay suppliers and initial fees: Pay suppliers, global payroll, and one-off incorporation costs in the local currency.

• Get paid like a local: Use local account details for 8+ major currencies to easily receive payments from customers or investors.

• Manage your money across borders: Hold and exchange 40+ currencies in one account, always with the mid-market exchange rate and low, transparent fees.

• Streamline your accounting: Integrate with tools like Xero or QuickBooks to simplify tracking your company's international finances.

• Empower your team: Provide multi-user access for your finance team and issue expense cards for international spending.

Wise is designed to support every step of your journey, from paying your first registration fee to receiving international payments and managing your global treasury.

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*Disclaimer: The UK Wise Business pricing structure is changing with effect from 26/11/2025 date. Receiving money, direct debits and getting paid features are not available with the Essential Plan which you can open for free. Pay a one-time set up fee of £50 to unlock Advanced features including account details to receive payments in 22+ currencies or 8+ currencies for non-swift payments. You’ll also get access to our invoice generating tool, payment links, QuickPay QR codes and the ability to set up direct debits all within one account. Please check our website for the latest pricing information.

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FAQs - Corporate Tax in Lithuania

Who is liable for corporate tax in Lithuania?

All companies incorporated in Lithuania are liable for corporate income tax on their worldwide income. Non-resident companies are only liable for tax on Lithuanian-source income, such as income from a permanent establishment or certain types of passive income. Partnerships and sole proprietorships are generally not subject to corporate income tax, as their income is taxed at the personal level.

Are there any tax incentives for businesses in Lithuania?

Yes, Lithuania offers several tax incentives. Small businesses with annual revenue up to €300,000 benefit from a reduced corporate tax rate. Companies investing in research and development may qualify for enhanced deductions or reduced rates. Additionally, businesses investing in priority economic activities or disadvantaged regions may be eligible for various tax holidays or reduced rates under specific government programmes.

What is the tax treatment of dividends in Lithuania?

Dividends paid by Lithuanian companies to residents are generally subject to a 16% withholding tax. However, dividends paid to EU resident companies may be exempt from withholding tax under the EU Parent-Subsidiary Directive, provided certain conditions are met. The specific rate may vary depending on applicable double taxation treaties.

What is the process for registering for corporate tax in Lithuania?

Companies must register with the State Tax Inspectorate (VMI) within 15 days of incorporation or commencing business activities in Lithuania. Registration can be completed online through the VMI electronic services portal. You'll need to provide company incorporation documents, details of business activities, and information about directors and shareholders.

What are the common pitfalls to avoid regarding corporate tax in Lithuania?

Common mistakes include failing to make quarterly advance payments, which can result in interest charges and penalties. Another frequent error is incorrect currency conversion when preparing tax returns for companies with non-EUR functional currencies. Additionally, many businesses underestimate the importance of maintaining proper documentation for transfer pricing, especially when dealing with related party transactions. Finally, failing to register for tax purposes within the required 15-day period can result in significant penalties.

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Sources used in this article:

1. PwC Tax Summaries: Lithuania Taxes on Corporate Income
2. PwC Tax Summaries: Lithuania Tax Credits and Incentives
3. PwC Tax Summaries: Lithuania Corporate Residence
4. State Tax Inspectorate (VMI): E-Declaration System Login
5. PwC Tax Summaries: Lithuania Tax Administration
6. Moore Global: International Corporate Tax in Lithuania
7. U.S. Department of State: 2024 Investment Climate Statements - Lithuania
8. Rödl & Partner: Investing in Lithuania
9. Lloyds Bank Trade: Investment in Lithuania
10. Invest Lithuania: Launches Investment Highway
11. Multiplier: Lithuania Company Registration
12. Centre of Registers (Registrų Centras): E-Guide for UAB (LLC) Formation
13. Company Formation Lithuania: Types of Companies
14. Baltic Legal: Lithuania Company Formation and Registration

Sources last checked 24/10/2025