While much attention has been focused on the new Corporate Income Tax (CIT) rates – as detailed in our previous post, “Corporate Income Tax in Lithuania 2026” – the most impactful changes for large-scale investors and company executives are found in the system’s strategic incentives and shifts in Personal Income Tax (PIT).

The 2026 tax overhaul is not simply a revenue measure; it’s a strategic framework designed to transform Lithuania into a major financial hub for global enterprises and top talent.

Extended Tax Relief: Securing Long-Term FDI

For companies planning substantial Foreign Direct Investment (FDI), the Lithuanian government has dramatically enhanced its commitment to long-term fiscal certainty.

Under the amended CIT Law, qualifying large-scale investment projects now have the opportunity to receive a full CIT exemption for up to 20 tax years.

This provision goes beyond the simple tax rate increases (such as the standard CIT rate moving from 16% to 17%, as mentioned in a previous post) by providing unparalleled stability and significant financial advantages over two decades. This certainty is a crucial factor for major international players making multi-million euro decisions.

Innovation and R&D Commercialization

Lithuania remains focused on attracting and retaining technology and innovation-driven companies. While the generous triple-deduction for R&D expenses continues, a strategic incentive targets the commercialization phase:

• Reduced 5% CIT Rate: Profits derived from the use or transfer of assets created through Research and Development (R&D) activities qualify for a significantly reduced 5% CIT rate. This is a powerful, ongoing incentive designed to maximize the financial returns on successful innovation.

Major Changes for Individuals and Real Estate

The 2026 reform also introduces significant changes that directly affect executives, high-earning employees, and businesses holding commercial property.

Progressive Personal Income Tax (PIT)

The current dual-rate PIT system will be replaced by a Progressive PIT structure. This change will have a substantial impact on top-tier salaries and bonuses:

Company leadership and HR teams need to recalibrate compensation and net salary calculations to account for these tiered rates, ensuring full compliance and transparency for employees.

PIT for Stock Options

To boost the Lithuanian startup and tech ecosystem, a new preferential rule is being introduced for key employees receiving equity, a topic explored in more detail in our article, “Leveraging the 15% Stock Option PIT Rate for Talent Retention”:

Fixed 15% PIT Rate: Gains from qualifying stock options will be taxed at a fixed 15% PIT rate—a significant advantage over standard capital gains rules—provided the shares are held for more than three years and granted by the employer. This measure works in synergy with the extended 0% CIT rate for startups (as referenced in our corporate tax guide, “Corporate Income Tax in Lithuania 2026”), making Lithuania highly competitive for attracting and retaining tech talent.

New Levy on Commercial Real Estate

For businesses that own commercial property (offices, warehouses, retail spaces), an adjustment to the property tax regime is coming:

Additional 0.2% Levy: An extra 0.2% levy will be applied to commercial real estate tax (RET). This slight increase must be factored into the annual operating costs and long-term financial modeling for property-intensive businesses.

Proactive Planning is Essential

The comprehensive nature of the 2026 Lithuanian tax reform demands an integrated approach to financial and operational planning. The impact goes far beyond the basic corporate rate adjustments.

Businesses must evaluate:

1. How the new progressive PIT affects executive and talent retention strategies.
2. How to structure new FDI to qualify for the 20-year CIT exemption.
3. Whether capital expenditures should be adjusted to leverage the new instant depreciation allowance

1Office Lithuania specializes in navigating the Lithuania’s evolving fiscal landscape, providing the clarity and strategic advice needed to turn these regulatory changes into a competitive advantage.

Contact us today to ensure your business is fully optimized for 2026 and beyond.