Lithuania Investment Income Guide 2026

Overview — Investment Income Taxation

Investment income in Lithuania is taxed differently depending on the type of income (dividends, interest, capital gains) and the taxpayer (individual or corporate). Lithuania has fully implemented the EU Parent-Subsidiary Directive and Interest and Royalties Directive, resulting in zero withholding tax on qualifying cross-border payments within the EU. The tax treatment is designed to attract investment while remaining compliant with EU state aid rules.

Dividend Taxation

Individuals: Dividends received by Lithuanian resident individuals are subject to a flat 15% withholding tax. The tax is withheld at source by the paying company. Individuals do not need to include dividends in their annual IIT return if the tax has been properly withheld. Dividends from Lithuanian companies and foreign dividends are generally treated the same way.

Companies: Dividends received by Lithuanian resident companies from qualifying subsidiaries (at least 10% shareholding, held for 12+ months) are exempt under the EU participation exemption (0% WHT). Non-qualifying dividends are subject to 15% CIT.

Non-residents: Dividends paid to non-resident individuals or companies are subject to 15% WHT, unless reduced under a double tax treaty or exempt under the EU Parent-Subsidiary Directive (0% for qualifying EU parent companies).

Interest Taxation

Individuals: Interest income received by Lithuanian resident individuals is taxed at a flat 15%. This applies to interest from bank deposits, bonds, loans, and other debt instruments. The tax is generally withheld at source by the paying institution. Interest from government bonds may be subject to different treatment.

Companies: Interest received by Lithuanian companies is included in taxable profit and taxed at the CIT rate (15% or applicable reduced rate). Interest paid to qualifying EU companies is exempt from withholding tax under the EU Interest and Royalties Directive (0% WHT).

Non-residents: Interest paid to non-residents is subject to 15% WHT, reduced under DTTs (typically 0–10%) or exempt under the EU Interest Directive (0% for EU companies).

Capital Gains on Investments

Individuals: Capital gains from the disposal of investments are taxed at a flat 15%. However, gains from the disposal of shares, securities, and financial instruments held for more than 3 years are entirely exempt from tax. This makes Lithuania particularly attractive for long-term investors.

Companies: Capital gains are included in taxable profit and subject to CIT. The participation exemption applies to gains from the disposal of qualifying subsidiary shares (held for 3+ years).

Capital losses can be offset against capital gains, with a 5-year carry-forward period.

EU Directives and Treaty Benefits

Lithuania's EU membership provides significant benefits for cross-border investment income:

• EU Parent-Subsidiary Directive: 0% WHT on dividends between qualifying EU companies
• EU Interest and Royalties Directive: 0% WHT on interest and royalties between associated EU companies
• Double Tax Treaties: Over 60 DTTs providing reduced WHT rates on dividends, interest, and royalties with countries including the US, Canada, China, India, UAE, Ukraine, and all EU member states

Reporting Obligations

Investment income is generally reported through the following channels:

• Dividends and interest: Withholding agents (companies, banks) report and remit the tax to VMI. Individuals may need to include foreign investment income in their annual return
• Capital gains: Individuals must report capital gains on their annual IIT return (by 1 July). Brokers and financial institutions provide transaction statements to assist with reporting
• Foreign accounts: Lithuanian residents must report foreign financial accounts and investments in their annual tax return

FAQs

Are foreign dividends taxable in Lithuania?

Yes, resident individuals are taxed on worldwide dividend income at 15%. Foreign tax credits may be available under DTTs.

Is interest from government bonds tax-free?

Interest from Lithuanian government bonds may be subject to specific tax treatment. Generally, interest is taxed at 15%, but certain government securities may qualify for preferential treatment.

Do non-residents pay tax on Lithuanian investment income?

Yes, non-residents are subject to withholding tax on Lithuanian-source dividends (15%), interest (15%), and royalties (10%), subject to treaty reductions.

Disclaimer

This guide provides general information about Lithuanian investment income taxation for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Lithuanian tax advisor or VMI directly for advice specific to your situation. InvestmentKit does not provide tax advice.