VAT is one of the first compliance topics international founders encounter when doing business in Lithuania. It is also one of the most misunderstood.
In 2026, Lithuanian VAT rules remain broadly stable, but the way they apply to foreign companies, e-commerce sellers and cross-border service providers continues to raise questions. Understanding when VAT registration is mandatory, when voluntary registration makes sense, and how EU VAT schemes such as OSS and IOSS fit into the picture is essential for avoiding mistakes that can become expensive later.
This guide explains how VAT registration in Lithuania works in 2026, with a specific focus on international businesses operating locally or remotely.
How VAT works in Lithuania
Lithuania applies a standard EU VAT system aligned with EU VAT directives. Companies registered for VAT must charge VAT on taxable supplies, submit periodic VAT returns and keep proper VAT records.
The standard VAT rate in Lithuania is 21%, which applies to most goods and services. In addition, Lithuania applies reduced and zero rates in specific cases, which are particularly relevant for accommodation, publishing, healthcare and cross-border transactions.
For international companies, the key question is not the rate itself, but when VAT registration becomes mandatory and how Lithuanian VAT interacts with EU-wide VAT rules.
VAT registration threshold in Lithuania
For domestic Lithuanian businesses, VAT registration becomes mandatory once taxable turnover in Lithuania exceeds EUR 45,000 within a rolling 12-month period. This threshold remains unchanged for 2026.
However, for foreign companies, the situation is different. In many cases, there is no VAT threshold at all.
If a foreign company:
supplies taxable goods or services in Lithuania, or
stores goods in Lithuania, or
makes local B2C supplies subject to Lithuanian VAT
VAT registration may be required from the first transaction, regardless of turnover.
This is a common pitfall for international founders who assume the domestic threshold applies automatically to non-resident businesses.
Unsure whether you need to register for VAT in Lithuania?
VAT obligations for foreign companies and e-commerce sellers often differ from domestic rules. A short review of your business model can clarify whether Lithuanian VAT registration or EU OSS applies to you.
Talk to 1Office Lithuania about VAT registration and compliance.
Voluntary VAT registration: when it makes sense
Even when VAT registration is not strictly mandatory, voluntary registration is often beneficial.
Companies commonly choose voluntary VAT registration when:
they incur Lithuanian VAT on costs and want to reclaim it
they operate B2B and want to appear VAT-registered to partners
they plan to scale quickly and want to avoid mid-year registration
they operate e-commerce or cross-border services where VAT logic is complex
For international businesses, early VAT registration often reduces long-term compliance risk, especially when combined with proper invoicing and accounting from the start.
Reduced VAT rates and exemptions in Lithuania
Lithuania applies reduced VAT rates to certain categories of goods and services.
In 2026, the main reduced rates include:
9% VAT for books, newspapers, periodicals, accommodation services and heating
5% VAT for pharmaceuticals and approved medical devices
In addition, some supplies are either zero-rated or VAT-exempt.
Zero-rated supplies include:
intra-Community supplies to VAT-registered EU businesses
exports of goods outside the EU
international transport services
VAT-exempt activities include:
education services
financial and insurance services
rental of residential property
Understanding the difference between zero-rated and VAT-exempt supplies is critical, as it affects the right to deduct input VAT.
VAT for e-commerce businesses and online sellers in Lithuania
E-commerce is one of the main drivers of VAT registration questions in Lithuania.
Companies selling goods online to EU consumers may be required to:
register for Lithuanian VAT, or
use the EU One-Stop Shop (OSS) scheme, or
use the Import One-Stop Shop (IOSS) for low-value imports
If goods are stored in Lithuania, for example in a local warehouse or fulfilment centre, VAT registration in Lithuania is usually required regardless of OSS usage.
For distance sales within the EU, OSS allows sellers to declare VAT for multiple EU countries through a single VAT return. However, OSS does not eliminate the need for local VAT registration in all scenarios.
This distinction is often misunderstood by international sellers expanding into the Baltic region.
VAT invoicing and reporting obligations in Lithuania
Once registered for VAT in Lithuania, companies must comply with local invoicing and reporting rules.
This includes:
issuing VAT-compliant invoices with mandatory details
applying the correct VAT rate depending on the transaction
submitting periodic VAT returns
keeping VAT records in accordance with Lithuanian law
Errors in invoicing or incorrect VAT treatment often surface during audits or cross-border checks, sometimes years after the original transaction.
This is why VAT registration should always be paired with proper accounting and local VAT knowledge.
Common VAT mistakes made by international companies in Lithuania
In practice, the most frequent issues include:
assuming the EUR 45,000 threshold applies to foreign companies
registering for OSS without assessing local VAT obligations
charging the wrong VAT rate on digital or cross-border services
failing to register when goods are stored in Lithuania
reclaiming VAT incorrectly on exempt activities
These mistakes are rarely intentional, but they can result in reassessments, penalties and interest.
VAT registration in Lithuania as part of broader compliance
VAT registration does not exist in isolation. It affects:
accounting setup
cash flow planning
pricing strategy
cross-border expansion decisions
For international founders, Lithuanian VAT compliance is most effective when handled as part of a broader accounting and tax framework, rather than as a one-off registration task.
This is why many foreign-owned companies prefer to work with a local partner who understands both Lithuanian VAT rules and EU VAT interaction.
Final thoughts on Lithuanian VAT in 2026
Lithuania remains an attractive EU jurisdiction for international business, but VAT compliance requires careful attention, especially for foreign companies and e-commerce sellers.
The rules in 2026 are stable, but the application of those rules depends heavily on how and where your business operates. Getting VAT registration right from the beginning is far easier than fixing it later.
For companies planning to operate in Lithuania or sell to EU customers, early assessment and proper setup are the most effective ways to avoid VAT-related problems.
Getting VAT right in Lithuania starts with the correct setup.
In 2026, Lithuanian VAT rules remain stable, but mistakes often happen at the registration and structuring stage, especially for international companies and online sellers.
