Seimas to consider amendments to tax laws proposed by the Ministry of Finance

This week, the Seimas approved amendments to tax laws proposed by the Ministry of Finance and approved by the Government, which will be further discussed in the Seimas committees and voted on in the Parliament. 

“Our country is facing challenges, the main one being security. It is multifaceted, it is not only military security, but also social security. We must respond to these challenges equitably”, Minister of Finance Rimantas Šadžius said at the presentation of the proposed amendments to tax laws in the plenary chamber of the Seimas this week.

“The Government has prepared a package of draft laws that, once adopted by the Seimas, should ensure sustainable long-term revenue to our budget and thus allow us to properly finance these needs,” the Minister added. 

It is estimated that the adoption of all draft tax laws would generate an additional EUR 346 million in defence funding in 2026 and more than EUR 509 million in 2027 and beyond.

Amendments to the PIT accepted for consideration

On Tuesday, the Seimas accepted amendments to the Law on Personal Income Tax (PIT) for consideration. 

In order to achieve a fairer distribution of the tax burden and reduce income inequality, it is proposed to introduce greater progressivity in higher income taxation and to apply the same personal income tax (PIT) rates to all types of income, except dividends, capital gains income and some benefits.

It is proposed to apply a 20 % rate to annual income below the amount of 36 average wages (AW) (estimated at EUR 6.9 thousand per month in 2026), and 25 % to income from 36 AW to 60 AW (estimated at EUR 6.9 to 11.5 thousand per month). It is proposed to tax all income exceeding 60 AW at a rate of 32 % (i.e. an additional 36 % tax rate for the highest income exceeding 120 AW has been waived) and thus maintain the preconditions for attracting highly qualified specialists. 

It is estimated that the amendments to the Law on PIT, if approved by the Seimas, will allow to raise more than EUR 217 million annually to the budget in 2027 and subsequent years.

Also, taking into account the comments received during the coordination process with more than 200 associations, individuals, lobbyists and institutions, the draft law to be considered by the Seimas proposes to continue to tax certain income – shares held for 10 years, life insurance and pension benefits, sickness, maternity, childcare and long-term employment benefits – as well as dividends, at the current income tax rate of 15%.

Following discussions with the public, it was also decided to maintain the benefit of voluntary health insurance paid by the employer, but to narrow the scope of the benefit and to allocate an amount of insurance not exceeding EUR 350 to non-taxable income. If the employee's benefit in excess of this amount per year is considered to be part of the wages, the employer will continue to be able to reduce taxable profits by the full amount of such costs.

Proposed amendments to the Corporate Income Tax Law

This week the Seimas also approved the submission of and is starting to consider amendments to the Law on Corporate Income Tax.

It is proposed to increase the current standard corporate income tax rates of 16% and 6% by 1 percentage point. These changes would allow the State budget to generate more than EUR 45 million in additional revenue per year.

In order to create additional preconditions for increasing productivity, technological renewal and innovation, thus contributing to business sustainability and development potential and further strengthening Lithuania's economic growth and competitiveness, it is proposed to introduce a relief for instant depreciation of fixed assets, e.g. for equipment, computer equipment and software. This relief would allow companies to deduct the acquisition price of fixed assets in the tax period in which the assets were put into use.

Allowable deductions of limited amounts are to include scholarships that will allow companies to deduct from their income scholarships of up to EUR 2,500 per tax period paid under tripartite agreements for students studying Science, Technology, Engineering or Mathematics, as well as scholarships for researchers carrying out a R&D project. 

For small businesses, it is envisaged to extend from 1 to 2 years the period during which the profits earned by newly registered companies would be subject to a 0% corporate income tax rate, thus facilitating the growth and development of companies.

Amendments to the Law on VAT, review of reliefs

This week the Seimas approved the submission of and is to consider amendments to the Law on Value Added Tax (VAT).

It is proposed to reduce the current preferential 9% value added tax (VAT) rate for books and non-periodical publications to 5%. A 12% preferential VAT rate is proposed to be applied to other goods and services that were subject to a preferential 9% VAT rate.

It is also proposed to abolish the VAT relief for heating, but at the same time, the aim will be to increase the number of persons eligible for compensation for heating. 

These amendments, approved by the Seimas, would generate more than EUR 80 million in additional revenue for the State budget every year.

Excise duty on sweetened beverages

The Seimas also started considering the proposed amendments to the Law on Excise Duties.

Taking into account the objectives of public health policy, it is proposed to tax sweetened beverages containing only added sugars, the amount of which exceeds 2.5 gr. per 100 ml of the beverage, or containing sweeteners, by setting excise duty rates based on the amount of sugars in them, without distinguishing between individual beverage categories. In this way, beverages containing natural sugars, e.g. from fruit or milk, would not be classified as an object of excise duty.  

The excise duty on sweetened beverages is expected to raise EUR 25 million in additional revenue to the budget each year.

Security contribution

This week, the Seimas approved the submission of the draft Law on the Security Contribution, which is to be also considered.

In order to ensure sustainable revenue for defence financing, it was proposed to supplement the State Defence Fund with a security contribution. The 10% rate of the security contribution would be paid by insurers operating in Lithuania in respect of the total amounts of insurance premiums specified in non-life insurance contracts concluded – extended or amended, if the insurance premium also changes – with the exception of compulsory insurance premiums for natural persons against civil liability in respect of the use of motor vehicles, which would not be subject to taxation. 

As a result of this proposal, the Defence Fund would receive about EUR 110 million in revenue annually.

Amendments to the Immovable Property Tax

After the submission, the Seimas has approved and is considering the draft Law on Immovable Property Tax, which proposes to tax a resident’s non-commercial immovable property differently from 2026, distinguishing between the main residential property and the rest of the person’s non-commercial immovable property.

The draft law proposes that municipal councils set a specific tax rate (rates) for the part of the tax value of the main residential property exceeding the tax-exempt amount of EUR 1, 000 from 0.1 to 1% of the tax value of the main residential property. 

In addition, it was decided to maintain the 50% tax credit per person for the part of the value of the main property not exceeding EUR 450,000 (and the 75% tax credit for large families or families with a disabled child).

The draft Law on Immovable Property Tax also proposes to tax the value of the remaining non-commercial immovable property of the person until 2030 according to the following procedure:

•               0 % rate applies to the value of the property not exceeding EUR 50,000;

•               0.1 % rate applies to the value of the property above EUR 50,000, but not exceeding EUR 200,000;

•               0.2 % rate applies to the value of the property above EUR 200,000, but not exceeding EUR 400,000;

•               0.5 % rate applies to the value of the property above EUR 400,000, but not exceeding EUR 600,000;

•               1 % rate applies to the value of the property exceeding EUR 600,000..

Also, commercial immovable property would be subject to an additional rate of 0.2%, in addition to the rate set annually by individual municipalities for commercial immovable property owners.

The immovable property tax paid for the main residential property is proposed to be included in the municipal budget and for the other immovable property to be included in the Defence Fund. 

It is estimated that after the adoption of the proposed amendments to the Law on Immovable Property Tax by the Seimas, an additional EUR 70 million would be raised each year to finance defence.

Once the relevant laws on tax proposals are adopted by the Seimas, they would enter into force on 1 January 2026.

Budgetary revenue is expected to increase by around 0.3% of the country’s GDP in 2026 and 0.6% in 2027, following the entry into force of the tax changes. By comparison, in 2023, the redistribution of tax revenue in Lithuania amounted to 32.3%, compared to the EU average of 39.8% of GDP: 

Following the adoption of the draft laws and the increase in the respective tax rates, the additional revenue earmarked for defence funding could, in the years 2026-2027, consist of:

You can learn more about the tax law amendments proposed by the Ministry of Finance here.

Last updated: 17-06-2025

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