Taxes in Lithuania for foreigners: the main rates in 2026

In Lithuania, taxes are administered by VMI, the State Tax Inspectorate, and social and health insurance contributions are collected by Sodra, the State Social Insurance Fund. The table below summarises the main 2026 rates before each topic is explained in detail.

Personal income tax (GPM)

GPM is Lithuania’s personal income tax. In 2026, annual income is taxed in three bands tied to VDU, the average monthly wage:

• 20% up to 36 times VDU (€83,237.40);
• 25% above 36 times VDU and up to 60 times VDU (€138,729.00);
• 32% above 60 times VDU (€138,729.00).

Employers withhold 20% monthly from your salary minus NPD, the tax-free amount. Any 25% or 32% tax is settled in the annual tax return. To check monthly pay, use the salary calculator.

Dividends

Dividends are taxed at 15% GPM. When a Lithuanian company pays dividends, it withholds the tax.

Dividends do not count toward the 20%, 25% and 32% annual GPM bands. For non-residents, a tax treaty may lower the rate.

Employee Sodra contributions

Employee Sodra contributions are 19.5% of gross pay. That consists of 12.52% for VSD, state social insurance, and 6.98% for PSD, compulsory health insurance.

With the optional extra 3% pension accumulation, the employee rate is 22.5% of gross pay. Separately, the employer pays 1.77% on an open-ended contract.

Self-employed (individual activity)

For self-employed individual activity, annual profit up to €42,500.00 gets an income tax credit. That gives an effective GPM rate of 5% on profit up to €20,000.00, rising to 20% at €42,500.00. Above €42,500.00, there is no credit and the 20%, 25% and 32% bands apply.

You also pay Sodra contributions of 12.52% VSD and 6.98% PSD on 90% of profit. See the individual activity tax guide, the Sodra and PSD guide and the individual activity tax calculator.

Company profit tax (MB and UAB)

Companies such as an MB, a small partnership, or a UAB, a private limited company, pay profit tax at these rates from 2026:

• 17% standard rate;
• 7% if income for the tax period does not exceed €300,000.00 and VMI’s other conditions are met;
• 0% for the first two tax periods only under VMI’s conditions: income up to €300,000.00 in each period, only natural persons own it, and over three consecutive periods, including the first two, its activity is not suspended, it is not liquidated or reorganised, and no shares pass to new owners. Some other conditions also apply.

Compare working as self-employed with running a company in individual activity vs MB vs UAB.

VAT (PVM)

PVM is Lithuania’s value-added tax (VAT). The 2026 rates are:

• 21% standard rate;
• 12% reduced rate from 2026⁠-⁠01⁠-⁠01 for tourist accommodation, regular passenger transport, and arts and culture events;
• 5% reduced rate for items such as medicines, periodicals and, from 2026, books.

VAT registration becomes mandatory once VAT-taxable supplies in Lithuania exceed €45,000.00 in the current or previous calendar year. Other rules exist for EU distance sales.

Tax residency

Your tax residency decides whether worldwide income is taxed in Lithuania; see tax residency in the individual activity guide and the annual tax return guide.

Help in English

• VMI phone line: call +370 5 260 5060 and press 9 for consultations in English.
• International House: VMI specialists also consult at International House in Vilnius and Klaipėda.