Tax burden in Lithuania | True Lithuania
True Lithuania

Taxes in Lithuania

29% of GNP are redistributed in Lithuania through taxes (European Union average is 38%). While there are many different taxes in Lithuania only a few behemoth taxes brings in the state the most income.

Some 2/5 of Lithuania's state budget is collected as Value Added Tax. The rate is 21% and whenever you buy something in Lithuania this is added to the price (there is a mechanism of VAT return if the same thing is resold several times so that VAT is typically paid only once).

1/5 of the national budget is collected in personal income tax. This is deceiving however as much of income taxation goes to other budgets (municipal and social), some of it even formally considered to be other taxes. The true burden is big: every employer has to pay the state almost as much money as it pays the employees (i.e. 40%-50% actual income tax). While nominally a flat rate the income tax is actually progressive as the untaxed portion gradually decreases as the salary increases.

Company income tax (known as Profit tax) is 15%, with additional 20% on most dividends paid to natural persons (meaning 33% effective tax rate on dividends).

Excise duties make the third largest income for the state (1/5). Fuels, electricity, tobacco, and alcohol are additionally taxed this way. The European Union typically requires high excise duties so Lithuania was forced to increase them. For this reason, car fuel in Lithuania is nearly double as expensive as in the USA where there is no excise.

The Real Estate tax is paid only by companies and owners of real estate deemed expensive (0,3% to 3% of value annually). Land tax is paid by every owner(0,01%-4%). Municipalities decide the actual percentage but the "value" here is the official value which may be lower than the market value. There are no other property taxes.

There is no inheritance tax for the close-of-kin.

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