United States-Lithuania Tax Treaty
Lithuania International Tax Compliance Rules
Quick Summary. A Baltic state located in Eastern Europe along the Baltic Sea, the Republic of Lithuania borders Latvia, Belarus, Poland, and Russian. Its capital and largest city is Vilnius.
Lithuania declared independence in 1990. Its constitution provides for a semi-presidential system of government with a president serving as head of state and a unicameral parliament known as the Seimas. The judicial branch is headed by the Constitutional Court (Konstitucinis Teismas)
U.S.-Lithuania Tax Treaty
Lithuania is a member of the World Trade Organization (WTO), the North Atlantic Treaty Organization (NATO), and the European Union (EU). Lithuania is also a member of the Organisation for Economic Co-operation and Development (OECD).
Lituania Tax Treaty.
- Convention Between the Government of the United States of America and the Government of the Republic of Lithuania for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at Washington on January 15, 1998
- Technical Explanation of the Convention between the United States and the Republic of Lithuania signed on January 15, 1998
Currency. Euro (EUR)
Common Legal Entities. Public/private limited liability company, general/limited partnership, small partnership, subsidiary of a foreign enterprise and branch or representative office.
Tax Treaties. Lithuania is a signatory to 55 tax treaties and the OECD multilateral instrument (MLI).
Corporate Income Tax Rate. The general rate is 15%. Special rates may apply to micro companies. The corporate tax rate has been increased to 20% as of January 1, 2020 for certain profits of banks and credit unions.
Individual Tax Rate. 20%. A rate of 27% may apply under certain circumstances.
Corporate Capital Gains Tax Rate. 15%, generally. Capital gains are taxed as general taxable income, at a rate of 15%.
Individual Capital Gains Tax Rate. Generally 15% – 20%.
Residence. Individuals are deemed tax residents under the following circumstances: (i) a permanent place of residence during the tax period is in Lithuania; (ii) personal, social or economic interests during the tax period are in Lithuania, rather than abroad; (iii) presence in Lithuania for at least 183 days during the tax period; (iv) presence in Lithuania for at least 280 days during two consecutive tax periods and has stayed in Lithuania for at least 90 days in either of the tax periods; or (v) citizenship of Lithuania and do not meet the criteria in (iii) and (iv) above but receive employment-related remuneration or whose costs of living in another country are covered by the state budget or municipal budgets of Lithuania (e.g. diplomats, consuls, etc.).
A corporation is resident if it is incorporated in Lithuania.
Transfer Pricing. The transfer pricing rules are based on OECD transfer pricing guidelines.
Lithuania has adopted country-by-country reporting rules in accordance with action 13 of the OECD BEPS project.
CFC Rules. CFC rules apply where the controlling person on the last day of the tax period holds, directly or indirectly, more than 50% of the shares (or the controlling person, together with related persons, holds more than 50% of the shares and the portion-controlled by the controlling person accounts for at least 50% of the shares) in the controlled entity or in other rights to a portion of distributable profits or preemptive rights to the acquisition thereof.
Hybrid Treatment. Effective 2020, Lithuania implemented regulations essentially implementing the EU Anti-Tax Avoidance Directive regarding hybrid mismatches.
Inheritance/estate tax. 5% of inheritable assets valued at EUR 150,000 or less, and 10% of inheritable assets valued at more than EUR 150,000. The taxable base is only 70% of the inherited assets. Exemptions may apply and apply to certain assets inherited by family members.
Tax Treaty Network – International Tax Attorneys
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