Lawyer
An expert in corporate and international corporate law. He has many years of experience in establishing and reorganizing companies, supporting M&A transactions, as well as providing legal support for opening and running a business in the EU, Asia, and North America.
Tax structuring in Lithuania
In 2025, Lithuania introduced key changes aimed at stimulating investment, supporting innovation and strengthening regulatory control. Below, we will consider in detail the updates, their impact on business and the nuances important for entrepreneurs.
Corporate income tax (Uždaroji akcinė bendrovė, UAB)
- Main changes. The standard rate remains 15% for distributed profits (dividends, expenses). That is, if a company with an income of 100,000 EUR pays 15,000 EUR in tax. The tax on undistributed profits remains 0% for reinvestment in business development. This encourages companies to invest in technology, hiring personnel and new projects.
- Special benefits. “Green” business – companies investing in renewable energy receive 0% KIN for 5 years. Free Zones – in Vilnius, Kaunas and Klaipeda, 0% KIN is in effect for new residents until 2030.
Value Added Tax (VAT)
- From 2025 for micro-enterprises (income up to 40,000 EUR/year): Simplified registration – an online form has been introduced on the REGFOX portal. The processing time is 3 working days (previously 5).
- PVM rates. Standard rate: 21% (unchanged). Reduced rates: 5% for food, books, medicines and 9% for hotel services, home renovation.
Personal Income Tax (PIT)
- Main changes. Progressive scale: Up to 20,000 EUR/year – 20%. Over 20,000 EUR – 23%.
- Benefits for IT specialists. Salaries of programmers registered in TechHub Lithuania are not taxed until 2030. At the same time, the tax burden on companies increases significantly in cases where the income of management exceeds EUR 20,000 per year, which leads to an additional 3% tax gap, but in parallel with this there is a significant compensating factor in the form of a preferential regime for IT specialists, as the exemption from IIN makes Lithuania competitive for hiring qualified IT specialists from the EU, forming a balance between personnel costs and the ability to attract specialists.
- Simplification of the rate for micro-enterprises. Administrative reliefs introduced from 2025 for business entities with annual income up to EUR 40,000 provide not only for simplified reporting (filing a declaration once a year instead of quarterly), but also flexibility in choosing a taxation regime – companies have the right to voluntarily exit the micro-enterprise system if their income exceeds the established limit; At the same time, the tax rate remains unchanged (15%), and for newly created businesses registered in Startup Lithuania (analogous to the Latvian Startup Hub), a full tax exemption is provided for the first three years, which significantly reduces risks at the initial stage.
Administrative reforms
In 2025, Lithuania has stepped up the digital transformation of its tax and business infrastructure, aimed at increasing transparency and convenience for businesses, namely:
- e-Company – Instant business registration. The launch of the REGFOX online platform, integrated with the Registrų centras (Register of Legal Entities), allows you to create a UAB (closed joint-stock company) in 1-3 days. The procedure consists of: Data entry via a web interface (name, address, composition of managers); Automatic verification of the uniqueness of the name through the Registrų centras database; Obtaining an electronic certificate of registration and articles of association. Advantages: No need to physically visit the office; Integration with the e-MĮN system for automatic assignment of a tax number;
- e-Tax Portal – Digital reporting. Submission of corporate tax (KIN), VAT (PVM) and income tax (IIN) declarations through a single portal. Automatic data synchronization with banks (e.g., transaction verification, expense confirmation). Electronic receipt of tax statements and decisions.
What services does our company offer?
Law Firm “Prikhodko & Partners” offers comprehensive legal and tax services to optimize your business in Lithuania:
- Tax structuring – development of the optimal jurisdictional model taking into account benefits for IT specialists (0% IIN) and “green” business.
- Business registration – assistance in creating a company through e-Company, including selection of a suitable legal address.
- Compliance with substance requirements – consultations on hiring personnel and office space.
- Tax optimization – use of Free Zones (0% KIN until 2030) and other preferential regimes.
- Digital transformation – integration with the e-Tax Portal and reporting support.
Our company has many years of experience working with Lithuanian legislation and the tax system, which allows us to offer clients the most effective solutions in the conditions of the updated regulatory environment.
Contact us for detailed advice on your business in Lithuania – we will help you reduce your tax burden and adapt to the new requirements of 2025.
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