Company formation in Lithuania (PART II)

The First part were about the Company formation in Lithuania. At this part we will discuss the taxation of micro company in Lithuania.

Taxation of micro company in Lithuania

Generally 15% CIT rate is applied. However, MB can enjoy 0% and 5% CIT rates.

If a legal entity has less than 10 employees and its turnover during the financial year does not exceed EUR 300 000, then 0% CIT rate is applied during the first taxable period. The 0% CIT rate is applied only to a legal entity, the main shareholder(s) of which is/are a natural person(s) and only if for three consecutive tax periods, including the first tax period the legal entity is not suspended, liquidated or reorganized and the shares, interests of the legal entity are not transferred to new members. In this case all MB members do not have more than 50 percent of shares in other companies (worldwide). Also, it should be noted that

Preferential 5% the rate is applied for the second and constative years of business, if above conditions are met (except three year rule), otherwise 15% is applicable.

Value Added Tax (VAT) - 21%.

MB members must register as VAT payers if their income in the last 12 months exceeds €45,000 (distant sales over internet – €35,000) or if the value of goods purchased from other Member States in the previous calendar year exceeded € 14,000.

Real estate tax - 0.3 - 3%.

Dividend tax - 15%.

Taxes on payments for personal needs received by MB members (as payroll):

PIT - 20%.

State Social Insurance (VSD) - 13.83 % (if MB member contributes 1.8% or 3% to the supplementary pension scheme) from 50 % of payments for personal needs.

Compulsory Health Insurance (PSD) - 6.98 % from 50 % of payments for personal needs.

Taxes on payments for personal needs received by MB manager, who is a MB member, performing management services under the civil service contract:

PIT - 15 %.

No VSD and PSD contributions.

Taxes on payments for personal needs received by a MB manager, who is not a MB member, performing management services under the civil service contract:

PIT - 20 %.

State Social Insurance (VSD): 15.70%, 17.50% or 18.70%

If you are interested in establishing a micro company in Lithuania, please contact our lawyers at info@gencs.eu.