- From 1 October 2026, no daily allowance is payable for one-day domestic business trips in Lithuania. Only documented expense reimbursement applies.
- First or last trip days lasting under 4 hours now carry only a 20% daily allowance rate, down from the previous full-day rate.
- Employers without a collective agreement can only reduce daily allowances for trips of 7 or more days, and the minimum floor rises to 65% of the Government rate (previously 50%). Trips under 7 days must receive the full rate.
- These changes are introduced by Government Resolution No. 518 of 1 July 2026. The State Labour Inspectorate (VDI) recommends reviewing internal travel policies before 1 October.
- Companies with dormant or suspended UABs can reactivate them, including VAT re-registration, through a managed process with 1Office Lithuania.
The rules governing daily allowances for Lithuanian company employees on business trips change on 1 October 2026. The changes are introduced by Government Resolution No. 518 of 1 July 2026 and affect three specific situations: one-day domestic trips, very short first or last days of a trip, and the conditions under which employers may set rates below the Government maximum. The State Labour Inspectorate (VDI) has issued a formal notice to employers recommending that internal travel policies, payroll system configurations, and employment contracts are reviewed before the October deadline. This article sets out exactly what changes, what the new rules require, and what Lithuanian UAB employers need to do before 1 October.
What the Government Resolution No. 518 of 1 July 2026 changes for Lithuanian employers
Under the rules in force until 30 September 2026, a daily allowance could be paid for a one-day business trip within Lithuania. From 1 October 2026, this is no longer permitted. A trip that begins and ends on the same calendar day within Lithuanian territory does not carry a daily allowance entitlement.
The obligation to reimburse documented expenses associated with the trip remains unchanged. If an employee travels from Kaunas to Vilnius for a meeting and returns the same day, the employer must reimburse the transport cost, any parking fees, and other documented out-of-pocket expenses directly related to the trip. What changes is that a flat daily allowance on top of those expenses is no longer payable for same-day domestic trips.
Daily allowance payable for one-day domestic trips within Lithuania. Flat rate applied to the day regardless of destination.
No daily allowance for one-day domestic trips. Documented expenses (transport, parking, other direct costs) must still be reimbursed.
When the first or last day of a business trip (including international trips) lasts less than 4 hours, the employer pays 20% of the applicable daily allowance rate for that day rather than the full rate. This reflects the principle that a partial travel day of under 4 hours does not justify a full day's allowance.
For first and last days lasting 4 hours or more, the standard full daily rate continues to apply. Many companies already handled the first and last days of a trip at a proportionally reduced rate through internal policy. From 1 October 2026, the 20% rate for under-4-hour days is a statutory requirement, not a discretionary internal practice.
First and last day treatment varied by company policy. No statutory minimum for short departure or arrival days.
First/last days under 4 hours: 20% of applicable daily rate. First/last days of 4 hours or more: full rate applies.
Under the previous rules, a Lithuanian employer could set daily allowance rates lower than the Government maximum through an internal company act, subject to a minimum floor of 50% of the Government rate. The new rules tighten this significantly.
From 1 October 2026, an employer without a collective agreement may only reduce daily allowances for trips lasting 7 or more calendar days. The minimum floor for such reductions rises to 65% of the Government maximum. For trips under 7 calendar days, the full Government rate must be paid. An employer who has been paying, for example, 50% of the Government rate for a three-day trip must bring this to 100% of the Government rate from 1 October.
Employer could reduce daily allowances through internal act for any trip duration. Minimum floor: 50% of Government rate.
Reductions only permitted for trips of 7+ calendar days. Minimum floor: 65% of Government rate. Trips under 7 days: full rate required.
The VDI checklist for UABs with employees on business trips
The State Labour Inspectorate (VDI) recommends that employers review their internal travel policies, payroll configurations, and employment documentation before 1 October 2026. The following are the specific items that need to be reviewed and, where necessary, updated.
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Review internal business trip policies. Any company document that specifies daily allowance rates or calculation methods must be updated to reflect the three new rules. A policy that still refers to daily allowances for one-day domestic trips, or that specifies a reduction below 65% for longer trips, is non-compliant from 1 October.
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Check whether a collective agreement is in place. The flexibility to reduce daily allowances for trips under 7 days is only available through a collective agreement. Employers without one must pay the full Government rate for all short trips. If a collective agreement is planned, it must be agreed and documented before the rules take effect.
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Update payroll system configurations. The 20% rate for short first and last days and the zero rate for same-day domestic trips must be correctly configured in the payroll system. Incorrect automatic calculations create a systematic compliance risk across every trip processed after 1 October.
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Confirm the tax-exempt threshold for daily allowances. Daily allowances for foreign trips are fully tax-exempt when the employee's monthly salary is at least EUR 1,902.45 (the 2026 minimum wage of EUR 1,153 multiplied by the coefficient 1.65, per VMI guidance). For salaries below this threshold, only 50% of the applicable daily rate is tax-exempt. This calculation must be applied correctly for each eligible employee.
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Inform affected employees. The new rules introduce additional employee information obligations. Employees whose daily allowance entitlements are being adjusted must be formally notified before the change takes effect.
The change most likely to create an immediate compliance problem after 1 October is the prohibition on reducing daily allowances for trips under 7 days without a collective agreement. Many Lithuanian companies have internal policies that set daily allowances at 50% to 70% of the Government rate across all trip durations. Those policies become non-compliant for short trips from 1 October, and the error compounds with every trip processed at the wrong rate.
A Lithuanian UAB whose payroll is managed by 1Office Lithuania does not need to take any action on the October changes. 1Office will update the calculation rules in the accounting system before 1 October, review each client's daily allowance configuration, and confirm compliance. The burden of tracking legislative changes to payroll rules is part of the accounting service.
1Office Lithuania manages monthly payroll, SoDra declarations, and VMI filings including all rule changes from October 2026. From EUR 90/month.
Reactivating a dormant Lithuanian UAB or reinstating VAT registration
Not all companies that need accounting or payroll support are newly formed. A significant number of Lithuanian UABs registered by international founders are either dormant, have suspended their activity, or have had their VMI registrations lapse. Reactivating such a company, or reinstating a cancelled VAT registration, is a process that requires coordinated work across the Centre of Registers (Registru centras), VMI, and the company's own accounting records.
A Lithuanian UAB that has been dormant or suspended can be brought back to full operational status. The reactivation process typically involves the following steps, the exact combination of which depends on the current status of the company and its registrations.
1. Annual report catch-up. All outstanding annual financial reports must be filed with the Centre of Registers before the company's active status can be fully restored. A company that has not filed for two or more years requires catch-up accounting for each missing period before the reports can be prepared and submitted.
2. VMI compliance resolution. Any outstanding tax obligations, missing VAT returns, or unresolved VMI correspondence must be addressed. VMI will not restore a company's active tax status until all prior obligations are settled.
3. VAT re-registration. If the company's VAT registration was cancelled, a new registration application must be submitted to VMI. The application requires demonstrating that the company will carry out taxable economic activity in Lithuania and that all previous VAT obligations are settled. 1Office Lithuania manages the full VAT registration and re-registration process.
4. Prepayment register and employer register. If the company intends to resume paying salaries, the employer registration with SoDra must be confirmed active. If the company had previously been deregistered from the employer register, re-registration is required before the first payroll run.
1Office Lithuania advises on the current status of a dormant company and manages the full reactivation process, including accounting catch-up, VMI correspondence, and Centre of Registers filings.
Frequently asked questions
What changes to Lithuanian daily allowances from 1 October 2026?
Three changes take effect from 1 October under Government Resolution No. 518 of 1 July 2026. No daily allowance is payable for one-day domestic trips in Lithuania; only documented expenses are reimbursed. First or last trip days lasting under 4 hours carry only 20% of the applicable daily rate. Employers without a collective agreement can only reduce daily allowances for trips of 7 or more days, at a minimum of 65% of the Government rate; trips under 7 days must receive the full Government rate.
Can a Lithuanian employer pay less than the Government daily allowance rate?
From 1 October 2026, employers without a collective agreement can only reduce daily allowances for trips of 7 or more calendar days, and the minimum floor is 65% of the Government rate. For trips under 7 calendar days, the full Government rate is required. Employers with a collective agreement have more flexibility but rates still cannot fall below 65% for longer trips.
Are daily allowances taxable in Lithuania?
Daily allowances for foreign business trips are fully tax-exempt when the employee's monthly salary is at least EUR 1,902.45 (the 2026 minimum wage of EUR 1,153 multiplied by the VMI coefficient 1.65). For salaries below this threshold, only 50% of the applicable daily rate is tax-exempt and the remainder is treated as taxable income. Domestic daily allowances follow separate rules.
How do I reactivate a Lithuanian company?
Reactivating a dormant Lithuanian UAB involves bringing all outstanding annual reports up to date with the Centre of Registers, resolving any open VMI obligations, and confirming that all relevant VMI registers (VAT, employer, prepayment) are active. 1Office Lithuania advises on the company's current status and manages the full reactivation including accounting catch-up and VMI correspondence.
How do I reactivate VAT registration for a Lithuanian company?
If a Lithuanian UAB's VAT registration has been cancelled, a new application must be submitted to VMI demonstrating that the company will carry out taxable economic activity and that all previous VAT obligations are settled. If the cancellation was due to non-filing, the missing returns must be submitted before the new registration is approved. 1Office Lithuania manages the VAT re-registration process and any required accounting catch-up.
What accounting does a Lithuanian UAB with employees need?
A Lithuanian UAB with employees needs monthly payroll processing including calculation and deduction of employee income tax (20% to 32% from 2026), employee social insurance (19.5%), employer social insurance (1.77%), monthly SoDra declarations by the 15th, and VMI withholding tax declarations. All daily allowance calculations, including the new October 2026 rules, must be correctly processed in payroll. 1Office Lithuania provides full payroll and accounting services from EUR 90 per month.
Lithuanian payroll, accounting, and company reactivation, all in English.
1Office Lithuania manages monthly payroll including the October 2026 daily allowance changes, VMI filings, SoDra declarations, and full company or VAT reactivation for dormant UABs.
About this article
Written and reviewed by the 1Office Lithuania accounting and advisory team. All daily allowance rules reflect Government Resolution No. 518 of 1 July 2026, effective 1 October 2026, and VDI guidance published September 2026. Tax-exempt threshold is based on VMI guidance on the 2026 minimum wage of EUR 1,153.
Published September 2026 · 1Office Lithuania · T. Narbuto 5, Vilnius LT-08103 · [email protected]
Sources: Government of the Republic of Lithuania, Resolution No. 518 of 1 July 2026 on daily allowances and business trip expense reimbursement; State Labour Inspectorate (VDI), employer guidance on October 2026 daily allowance changes (vdi.lrv.lt); Lithuanian Trade Union Confederation (LPSK), summary of October 2026 changes; VMI, minimum wage and daily allowance tax-exempt threshold for 2026 (vmi.lt); VMI, 2026 minimum wage EUR 1,153 per Resolution No. 700 of 16 October 2025.
