Shipping taxation in Lithuania

Lithuania has one of the most attractive shipping taxation regimes in the EU. If the usual company has income it must pay corporate income tax 15 %, shipping companies registered under the Lithuanian flag have possibility to obtain Tonnage Tax payer status within the Tax authority and to pay flat fate tax based on the net tonnage – Tonnage Tax. Therefore the amount of the paid tax will be smaller.

So if this ship is working all the year the tax will be calculated as follows:

Net tonnage * coefficients * exploitation days * tax 15%

Income coefficient expressed in LTL per net tonnage and shall be applied as follows:

Crew taxation in Lithuania

The social taxes of 39,98 % (mandatory state social insurance contributions) shall be paid in Lithuania.

Regarding the crew’s income, two different options might be distinguished:

1. Income received during the voyage period. Such income is not subject to personal income tax.
2. Income received not during the voyage period. Such income is taxed by 15 % personal income tax.

Registration of the vessel under the Lithuanian Flag

There are following possibilities how to register the ship under the Lithuanian flag:

1) The vessel might be registered under the Lithuanian flag if the owner of the vessel is the company registered in Lithuania or the individual with Lithuanian citizenship. Therefore the Lithuania limited liability company shall be registered in Lithuania and then it is possible to register Lithuanian company as owner of the vessel.

2) a bare boat charter contract shall be signed between the ship-owner and the bare boat charterer regarding the transferring of the actual possession of the ship to the bare boat charterer for the time period specified in the contract, during which the ship has a parallel registration in Lithuania. The bare boat charterer shall be a Lithuanian operator of the ship. Registration of the ship in the Ship Register on the basis of the bare boat contract gives the ship the right to sail under the flag of the State of Lithuania only, but it will be also registered in the previous and you will pay fees in both countries maritime administrations.