Taxation for Expatriates in Lithuania: Income and Property Taxes

Published on November 10, 2025 and written by Cyril Jarnias

Navigating the complexities of Lithuanian taxation can be challenging for expatriates looking to settle in this thriving Baltic country.

A crucial point to understand is the income tax, which varies based on residency status and different income structures.

Meanwhile, property tax, often less discussed, plays a significant role in long-term financial planning for foreigners seeking to invest in local real estate.

Understanding these two aspects is essential to avoid tax pitfalls and optimize the economic benefits of your stay in Lithuania.

Tax System in Lithuania: A Guide to Understanding Income Tax and Property Tax

Income Tax for Expatriates in Lithuania

Tax Residency Categories and Scope

• Tax residents: taxed on their worldwide income.
• Non-residents: taxed only on Lithuanian-source income.

Taxable Income Categories for Non-Residents

• Income related to employment or similar activities performed in Lithuania.
• Income from rental or sale of real estate located in Lithuania.
• Interest (excluding certain government securities), dividends, royalties, income from sports or artistic activities performed in Lithuania.
• Professional income through a fixed base in Lithuania.

Tax Rates

Income Type	Standard Rate
Wages up to €90,246	20%
Wages above €90,246	32%
Professional/self-employed income up to €20,000	5%
Professional income > €35,000	up to 15%
Royalty income, interest, real estate sales	15% (20% above €180,492)
Dividends	15%

Deductions and Tax Credits

Cumulative deductions capped at 25% of taxable income:

• Repairs (excluding renovations), vehicle repairs, childcare (up to €2,000/year)
• Pension contributions and life insurance (up to €1,500)
• Education and training expenses

Tax-Exempt Amount (TEA): for residents, €460/month on small incomes, progressively reduced above; applicable to non-residents only in annual declaration if income exists.

How to File Your Tax Return as an Expatriate in Lithuania

Filing Requirements for Expatriates in Lithuania

• Tax residency: An expatriate is considered a Lithuanian tax resident if they stay more than 183 days per year in Lithuania or if their center of economic interests is located there.
• Income thresholds: Anyone with taxable income (wages, investment income, etc.) exceeding €15,000 per year in a foreign-held account must notify the Lithuanian tax authorities.
• General obligation: All foreign bank accounts (non-“LT” IBAN) must be declared, regardless of amount, as soon as they are opened, used, or closed during the year.

Lithuanian Tax Calendar

Event	Deadline for 2025
Tax campaign opening	April 2025
Online filing	May 22, 2025 (non-residents)
Paper filing	May 20, 2025
Foreign account notification	Before May 1, 2026 (for year 2025)

Documents Needed Before Filing Your Tax Return

• Income proof (wages, dividends, interest, capital gains, etc.)
• Tax residency certificates
• Bank statements from foreign accounts
• Evidence of possible deductions (donations, professional expenses, loan interest, etc.)
• Required forms:
  • Income declaration (form 2042 for non-residents)
  • Foreign account opening/closing notification
  • Investment-related documents (if applicable)

Platforms and Tools for Online Filing

• Official VMI (Valstybinė mokesčių inspekcija) website: Lithuanian tax portal, available in English and Lithuanian
• Personal account on the VMI website for entering and submitting declarations
• Interactive guides and FAQ accessible on the site to assist expatriates
• Downloadable PDF forms for paper filing if necessary

Main Steps in the Filing Process

1. Register on the VMI tax portal
   • Create an account with secure identification
2. Gather documents
   • Collect all necessary supporting documents before starting
3. Complete the online form
   • Enter personal and tax information
   • Declare all income received, including foreign-source income
   • Indicate opening, use, or closing of foreign accounts
4. Review sections
   • Check each section to avoid input errors
   • Ensure all supporting documents are attached if required
5. Submit the declaration
   • Submit the form online before the deadline
   • Keep the electronic receipt

Recommendations to Avoid Errors and Comply with Specific Rules

• Verify tax residency to avoid double taxation
• Declare all foreign accounts even if used only once
• Respect declaration thresholds (notably €15,000 for investment accounts)
• Use official guides to correctly complete each section of the form
• Plan document collection in advance to not miss the deadline
• Carefully review the declaration before submission to avoid omissions

Professional Assistance

Engaging a local tax advisor offers several advantages:

• Tax optimization and compliance with latest legal developments
• Personalized support for complex situations (multiple residencies, diversified income, international investments)
• Assistance with document management and regulatory compliance
• Reduced risk of errors and penalties

Practical advice: A local expert can also help interpret new tax developments, such as the exemption for investment accounts starting in 2025.

Relevant Legal Updates

• Tax exemption for investment accounts: Starting in 2025, income reinvested in a declared investment account is not taxed; only the withdrawn (non-reinvested) portion is subject to income tax (15%).
• Tax rates: The standard corporate tax rate in Lithuania is 16% starting in 2025.

Practical Tips for Expatriates Facing Complex Tax Situations

• Analyze bilateral tax treaties to avoid double taxation
• Clearly distinguish income sources (local and foreign)
• Keep copies of all submitted declarations and notifications
• Regularly consult legislative updates on the VMI website
• Do not hesitate to seek professional help for special cases (income from multiple countries, specific investments, etc.)

Practical Tips to Optimize Your Taxation in Lithuania

Advantageous Tax Regimes for Expatriates

• Since 2025, Lithuania offers a tax exemption for investment accounts: income generated and reinvested in a declared account is taxable only upon withdrawal, and only if the withdrawal exceeds invested amounts. Only the withdrawn amount exceeding contributions is subject to 15% income tax.
• For small businesses, a reduced corporate tax rate of 6% is available under certain conditions, with possible total exemption in the first year of operation.
• Income from abroad, particularly through a permanent establishment in a country with a double taxation treaty, may be exempt from corporate tax.

Opportunities for Exemptions or Tax Deductions on Foreign Income

• Double taxation treaties signed by Lithuania (over 50 countries) protect against double taxation. It is essential to verify specific conditions applicable to your home country.
• Certain free economic zones offer partial or total exemptions from corporate tax, VAT, and property tax for investments made in these zones.
• For expatriates, the tax-exempt portion of income increased from 30% to 35% in 2025, with no ceiling, allowing for additional optimization.

Legal Strategies to Reduce Income Tax

• Use the investment account regime to defer capital gains taxation until actual withdrawal.
• Prioritize investments in free economic zones or sectors benefiting from reduced rates.
• Ensure foreign income is properly declared and benefits from bilateral treaties to avoid double taxation.

Property Tax System in Lithuania: Tips for Expatriate Property Owners

• Lithuania does not levy local taxes, simplifying real estate tax management.
• For properties located in special economic zones, property tax exemptions may apply.
• It is imperative to correctly declare property ownership and verify any changes in rates or allowances each year.

Tax Regime	Key Advantage	Conditions to Meet
Investment account	Exemption on reinvested capital gains	Account declaration, taxable withdrawal
Small business	Reduced rate to 6%	Size and activity criteria
Free economic zone	Corporate tax, VAT, property tax exemptions	Investment in an FEZ
Foreign income	Exemption or reduced rate	Double taxation treaty

Using Tax Advisory Services

• Engage a local tax advisor specialized in international taxation for personalized analysis.
• Verify the firm’s competence in managing investment accounts and declaring foreign income.
• Use official online resources, such as the Lithuanian tax portal or embassies, to obtain updated forms and instructions.

Special Conditions to Qualify for Reduced Rates or Allowances

• Meet eligibility criteria (expatriate status, activity in a specific zone, correct declaration).
• Keep all investment and tax residency documentation.

Legal Aspects to Avoid Double Taxation

• Verify the existence and content of the tax treaty between Lithuania and your home country.
• Declare all income, including that received abroad, while complying with obligations in both countries.
• Use tax credit or exemption mechanisms provided by the treaty.

Useful Resources and Contacts

• Official portal of the Lithuanian tax administration for expatriates.
• French consular services and embassies in Lithuania for administrative support.
• Certified tax advisors, firms specialized in international taxation.

Key takeaways
To optimize your taxation in Lithuania as an expatriate, it is essential to combine knowledge of specific regimes, rigorous declaration of foreign income, and support from local experts, while leveraging double taxation treaties and exemption or reduced-rate mechanisms.