Lithuanian Income Tax
Our tax guide for freelance contractors working in Lithuania
Residents for tax purposes in Lithuania are taxed on their worldwide income. Non-residents are taxed on income from Lithuanian sources and on income from foreign sources which are derived through a fixed base in Lithuania. An individual is considered to be tax resident if he has his permanent place of residence or his habitual abode in Lithuania; or if he is present in Lithuania continuously, or with interruptions, for 183 days or more in a calendar year; or if he stays in Lithuania for 280 or more days in two consecutive calendar years and he stays 90 days or more during one of these years. Taxable employment income includes all payments received as salary or bonuses and all benefits in kind such as housing or company cars. Resident taxpayers may deduct the following items from their taxable income: mortgage interest; interest paid for the leasing of accommodation; pension fund premiums; certain life insurance premiums; payments for higher educational studies and interests on study loans; expenses of up to LTL 4’000 for a personal computer, software and internet connectivity, during the period from 2004 to 2009. The total amount of these deductions may not exceed 25% of the taxable income in the tax year. Residents and non-residents can apply a basic personal allowance of LTL 320 per month for their Lithuanian source income. Special increased allowances are applicable for families with 3 children or more and for single parents. Employment income is taxed at a flat rate of 24 % as from 1 January 2008. Lithuanian registered employers have to withhold tax at source on gross salaries minus personal allowances. Residents and non-residents are subject to an annual land tax at a rate of 1.5% which is collected by the Municipal budgets in respect of the land that they own in Lithuania. A tax on inherited property is collected by the municipal budgets as well, but with some exemptions. Residents are subject to the tax on a worldwide basis, whereas non-residents are taxable on certain types of Lithuanian-situs property only. The tax year is the calendar year. The deadline for an annual tax return is the 1st of May of the following year. There is no special tax regime for inward expatriates.