Lithuania Cross-Border Tax Guide 2026

Overview — Cross-Border Taxation

Lithuania's cross-border tax framework is designed to facilitate international trade and investment while complying with EU law and OECD standards. The framework covers withholding taxes, double tax treaties, transfer pricing, permanent establishment rules, and anti-avoidance measures including the EU Anti-Tax Avoidance Directive (ATAD) implementation. Lithuania has been an EU member since 2004 and adopted the euro in 2015.

Withholding Tax (WHT) Rates

Outbound payments from Lithuania to non-residents are subject to the following standard WHT rates:

• Dividends: 15% standard. 0% for qualifying EU parent companies (≥10% shareholding, ≥12 months) under the EU Parent-Subsidiary Directive. Reduced rates (typically 5–15%) under DTTs
• Interest: 15% standard. 0% for qualifying EU associated companies under the EU Interest and Royalties Directive. Reduced rates (typically 0–10%) under DTTs
• Royalties: 10% standard. 0% for qualifying EU associated companies under the EU Interest and Royalties Directive. Reduced rates (typically 5–10%) under DTTs
• Management fees: Generally subject to CIT at 15% if the service provider has a PE in Lithuania; otherwise may be subject to WHT in certain cases

Beneficial ownership requirements apply for all WHT reductions. Anti-treaty shopping provisions (principal purpose test) must be satisfied.

Double Tax Treaty Network — 60+ Treaties

Lithuania has concluded DTTs with over 60 countries. Key features:

• EU/EEA: All EU member states plus Norway, Iceland, Liechtenstein, Switzerland, UK
• North America: United States and Canada. The US treaty provides for 5% WHT on dividends (≥10% holding), 0% on interest, 5% on royalties
• Asia: China (5% dividends), India (5% dividends for ≥10% holding), Japan, South Korea, UAE, Kazakhstan, Uzbekistan
• Other: Australia, South Africa, Israel, Turkey, Ukraine, Moldova, Georgia

Most treaties follow the OECD Model. Treaty relief is generally available on a claim basis (taxpayer must apply for reduced WHT). The VMI operates an online system for treaty relief applications.

Transfer Pricing Rules

Lithuania's transfer pricing rules follow OECD Transfer Pricing Guidelines and apply to related-party transactions. Key requirements:

• Arm's length principle: All transactions between related parties must be conducted at arm's length
• Documentation: Companies with related-party transactions exceeding EUR 300,000 (goods) or EUR 100,000 (services/other) must maintain transfer pricing documentation
• Master and local file: Multinational groups meeting thresholds must prepare master file (EUR 50M group revenue) and local file
• Country-by-Country Reporting (CbCR): Groups with consolidated revenue ≥EUR 750M must file CbCR
• Advance Pricing Agreements (APAs): Available from VMI to obtain certainty on TP methodology

Permanent Establishment (PE) Rules

Non-resident companies carrying on business in Lithuania may create a permanent establishment. PE definitions follow the OECD Model Tax Convention and include:

• Fixed place PE: Office, branch, factory, workshop, construction site lasting >12 months
• Agency PE: Dependent agent with authority to contract in Lithuania
• Service PE: Provision of services for >183 days in any 12-month period

Income attributable to a PE is subject to Lithuanian CIT at 15%. Branch profit remittance is generally not subject to additional withholding tax.

EU Directives and ATAD

Lithuania has fully implemented:

• EU Parent-Subsidiary Directive (2011/96/EU): 0% WHT on dividends between qualifying EU companies
• EU Interest and Royalties Directive (2003/49/EC): 0% WHT on interest and royalties between associated EU companies
• EU Anti-Tax Avoidance Directive (ATAD): Implemented including interest limitation rules (30% EBITDA), exit taxation, controlled foreign company (CFC) rules, and general anti-abuse rule (GAAR)
• DAC6: Mandatory disclosure rules for reportable cross-border arrangements

FAQs

How do I claim treaty relief on Lithuanian WHT?

Apply to VMI using the LEK (Lengvatinio apmokestinimo prašymas) form available on the EDS portal. Reduced rates may be applied at source if the application is submitted before the payment.

What are the penalties for incorrect transfer pricing?

Penalties can include adjustments to taxable income, interest on underpaid tax, and fines. In cases of intentional underreporting, penalties can reach 50% of the underpaid tax.

Is Lithuania subject to EU state aid rules?

Yes, as an EU member state, Lithuania must comply with EU state aid rules. Tax incentives (SEZ regimes, R&D relief, etc.) are structured to comply with EU state aid regulations.

Disclaimer

This guide provides general information about Lithuanian cross-border taxation for the 2026 tax year. Tax laws and treaties may change. Always consult with a qualified international tax advisor for advice specific to your situation. InvestmentKit does not provide tax advice.