Lithuania Tax Guide
Everything you need to know about taxes as an expat in Lithuania.
Disclaimer
This guide is for informational purposes only and does not constitute tax advice. Always consult with a qualified tax professional for your specific situation.
Overview
Lithuania applies a progressive income tax system with rates from 20-32%. Tax residency is determined by the 183-day rule or 280 days over two consecutive years. The most significant issue for Americans is the ABSENCE of a US-Lithuania totalization agreement, creating potential dual Social Security taxation.
Tax Residency Rules
Lithuania applies a 183-day rule: presence for 183+ days in a calendar year triggers tax residency. Alternatively, presence for 280 days over two consecutive years (minimum 90 days each year) also establishes residency. Tax residents are subject to worldwide income taxation; non-residents pay only on Lithuanian-source income. Important exception: Non-Lithuanian nationals who become tax residents solely due to the days test are taxed only on Lithuanian-source income. Tax year: Calendar year (January 1 - December 31).
Capital Gains Tax
Capital gains are taxed at 15% (up to €253,065) and 20% (above €253,065).
Property Tax
Property tax is tiered based on value: Up to €150,000: 0%; €150,001-€300,000: 0.5% on excess; €300,001-€500,000: 1% on excess; Over €500,000: 2% on excess.
VAT / Sales Tax
VAT: 21% standard rate; 9% reduced rate; 5% for medicines.
Special Tax Regimes
Individual Activity Certificate (Individuali veikla)
Self-employment regime with favorable rates
For US Expats
⚠️ NO TOTALIZATION AGREEMENT exists between US and Lithuania. This is the most significant tax issue for Americans. Without a totalization agreement: Risk of dual Social Security taxation—US FICA/SECA (15.3%) plus Lithuanian Sodra (19.5%); Cannot combine work credits for benefit eligibility; Self-employed Americans particularly affected. US-Lithuania Tax Treaty (1998) provides reduced withholding: Dividends (10%+ ownership): 5%; Dividends (portfolio): 15%; Interest: 10%; Royalties: 5-10%. Compliance requirements: FBAR (FinCEN 114) required if aggregate foreign accounts exceed $10,000; FATCA Form 8938 thresholds for expats—$200,000 at year-end OR $300,000 at any point (single); doubled for married filing jointly. Lithuanian banks report US account holders to IRS.
Foreign Earned Income Exclusion (FEIE)
FEIE: $130,000 exclusion (2025) available if physical presence (330 days) or bona fide residence met. However, Lithuania's 20-32% rates often make Foreign Tax Credit more beneficial than FEIE. Recommendation: Calculate both methods to determine optimal approach.
Tax Treaty Benefits
US-Lithuania Tax Treaty (1998) provides reduced withholding rates: Dividends (10%+ ownership): 5%; Dividends (portfolio): 15%; Interest: 10%; Royalties: 5-10%.
Filing Deadlines
Filing deadline: May 1 of the following year.
Recommended Approach
STRONG RECOMMENDATION: USE AN EXPAT TAX SPECIALIST. Estimated costs: Basic US filing $530-900; Moderate complexity $800-1,200; Complex situations $1,200-3,000+; Lithuanian local accountant €100-500. Common mistakes: (1) Not filing US returns (mandatory regardless of residence); (2) Missing FBAR deadline (severe penalties); (3) Using FEIE when FTC is better; (4) Ignoring state taxes (CA, NY, VA are "sticky" states); (5) Not planning for dual Social Security.
Need Help with Your Taxes?
Use our tax calculator or find recommended expat tax preparers.