Corporate income tax in Lithuania
Requirements for company
In order to benefit from reduced corporate income tax, a company shall have not more than 10 employees and its turnover shall not exceed 300 000 EUR during a fiscal year. For tax purposes any form of legal entity in Lithuania may be considered as small company, if it complies with all of the requirements indicated below.
Requirements for shareholders
Additionally, there are requirements for the shareholders or owners of the company set in the Law on Corporate Income Tax. The reduced corporate income tax rate is only applied to the companies where the owners do not manage multiple businesses, for that reason there are restrictions on owning shares of other companies:
- Shareholder (owner) of a Lithuanian company shall not have than 50% of shares or parts of any other companies in EU (including Lithuania) and EEA;
- Shareholder (owner) of a Lithuanian company shall not own any individual (personal) companies in EU (including Lithuania) and EEA;
- Family members of the shareholder (owner) of a Lithuanian company shall not have than 50% of shares or parts of any other companies in EU (including Lithuania) and EEA;
- Family members of the shareholder (owner) of a Lithuanian company shall not own any individual (personal) companies in EU (including Lithuania) and EEA;
In order to prevent Tax system from Tax evasion or Tax avoidance in Lithuania, there are strict rules to the group of shareholders. For example if each of the shareholders A and B owns 30% of Company X and each of them owns 40% of Company Y, 5% of corporate income tax will not be applied. In this case, shareholders A and B together own 60% of Company X and 80% of Company Y. Even though separately they own less than 50% of Company X and Company Y, together they own more than 50% of shares. For this reason, 5% of corporate tax will not be applied.
For more questions about corporate income tax in Lithuania, please contact our attorneys at law at info@gencs.eu.
T: +370 52 61 1000
F: +370 52 61 1100