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Lithuania's tax rates changed in two significant ways on 1 January 2026. The corporate income tax rate increased for the first time in a decade, affecting both standard-rate companies and the small company qualifying rate. The VAT rate structure was reorganised, with the general 9% reduced rate abolished and specific sectors moved to new rates. This article sets out the verified 2026 figures for both taxes, what changed from the previous year, and the practical implications for international founders using Lithuania as an operational or holding structure.
The CIT rate increased from 16% to 17% from 1 January 2026
Before 2026, the 0% startup rate applied for one tax period only and had an employee count condition. From 1 January 2026, the rate now covers two consecutive tax periods, and the employee count condition was removed. A newly registered Lithuanian UAB with three or four employees in its first year now qualifies on the same terms as a solo consulting company, provided it meets the revenue threshold of EUR 300,000 and the anti-fragmentation rules.
For a company registered in August 2026, the 0% rate covers the 2026 and 2027 financial years. From 2028, the 7% qualifying small company rate applies for subsequent periods as long as the company meets the eligibility criteria. If annual revenue exceeds EUR 300,000 or the employee count exceeds 10, the company moves to the standard 17% rate.
Lithuania abolished its general 9% reduced VAT rate from 1 January 2026
The threshold that applies depends on where your company is established, not just where it operates
The EUR 45,000 mandatory VAT registration threshold applies to businesses established in Lithuania. For a Lithuanian UAB with its registered office in Vilnius, this is the relevant figure: registration becomes mandatory once taxable turnover within a rolling 12-month period exceeds EUR 45,000. Voluntary registration below that threshold is permitted and is often beneficial for input VAT recovery.
For foreign companies not established in Lithuania but making taxable supplies in Lithuania, there is no threshold. Registration is required from the first taxable supply regardless of value. The EU-wide EUR 10,000 threshold for cross-border B2C digital services operates separately and determines whether the EU One Stop Shop scheme applies rather than direct Lithuanian registration. These are distinct regimes with separate rules. Confusing them is the most common VAT structuring error for international businesses expanding into Lithuania.
On corporate income tax: A newly registered qualifying UAB pays 0% for two years. For a company registered in August 2026, this covers 2026 and 2027. From 2028, the 7% small company rate applies if revenue stays below EUR 300,000 and employees below 10. The standard 17% applies above those thresholds.
On VAT: A Lithuanian UAB below EUR 45,000 is not required to register for VAT but may register voluntarily. Above EUR 45,000, registration is mandatory. The standard 21% rate applies to most supplies. The 12% rate applies to accommodation, transport, and cultural event tickets from 2026. The 9% rate no longer exists as a general reduced rate.
1Office Lithuania manages VAT registration, CIT calculations, annual reporting, and tax advisory for Lithuanian UABs owned by international founders across all rate brackets.
Frequently asked questions
What is the corporate income tax rate in Lithuania in 2026?
The standard CIT rate is 17% from 1 January 2026, up from 16%. Small companies with fewer than 10 employees and gross annual revenue under EUR 300,000 qualify for 7% (up from 6%). Newly registered qualifying small companies pay 0% for their first two tax periods.
What is the VAT rate in Lithuania in 2026?
The standard VAT rate is 21%, unchanged. Lithuania abolished its general 9% reduced rate from 1 January 2026. Accommodation, public transport, and cultural event tickets now carry 12%. Books and non-periodical publications carry 5%. District heating and firewood for households reverted to the standard 21% rate.
What is the VAT registration threshold in Lithuania?
For businesses established in Lithuania: EUR 45,000 of taxable turnover in a rolling 12-month period. For foreign companies making taxable supplies in Lithuania: no threshold applies. Registration is required from the first taxable supply.
Does a new Lithuanian company pay corporate income tax?
A qualifying small company pays 0% for its first two tax periods under the startup scheme extended in 2026. After the 0% period, the 7% small company rate applies while the company continues to meet the eligibility criteria. The company must have fewer than 10 employees and gross annual revenue under EUR 300,000, and must not be controlled by another corporate group.
Lithuanian VAT registration, CIT compliance, and annual reporting from a single team.
1Office Lithuania manages VAT and tax registration, CIT calculations, and annual returns for Lithuanian UABs owned by international founders.
About this article
Written and reviewed by the 1Office Lithuania business advisory team. All tax rates and thresholds have been verified against PwC Tax Summaries Lithuania 2026, VMI published guidance, amavat VAT guide 2026, and EU VAT rate database. This article is for general information only and does not constitute tax advice.
Published August 2026 · 1Office Lithuania · [email protected]
Sources and references: PwC Tax Summaries, Lithuania Corporate Taxes 2026 (taxsummaries.pwc.com); Eurofast, Lithuania 2026 Tax Reform; VMI State Tax Inspectorate guidance; amavat, VAT in Lithuania 2026; Work in Lithuania, Tax Rates 2026; Avalara, Lithuanian VAT Registration; 1Office Lithuania, VAT Registration Lithuania 2026 (1office.co/blog/vat-registration-lithuania/).
