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The consumer

Consumer Profile
With a GDP per capita of USD 22,240 (IMF, 2021) and a median age of 44.5 years (CIA World Factbook, 2020 est.), the average Lithuanian consumer is around the same age as consumers in other Baltic states and has a wealth status comparable to theirs (lower than Estonia, higher than Latvia) (World Bank). Lithuanian population is rapidly shrinking (-1.04% net growth rate coupled with a net migration rate of -4.75 migrants/1,000 population - CIA World Factbook, 2021 est.) and the share of the young population in the age structure is relatively low (people aged 0-24 years account for 25.49% of the total population - CIA World Factbook, 2020 est.).

The Lithuanian consumer is still price-sensitive despite a steady GDP growth as the purchasing power is not as high as in most European Union countries. The consumer market is also characterised by considerable income inequality as Lithuania has a Gini index score of 35.4 points (one of the highest in the EU - EU average standing at 30.2 points) (Eurostat, 2019 latest data available).
Consumer Behaviour
The market for consumer products in Lithuania is fragmented. Consumer preferences differ according to income, age and social group. More affluent consumers consider brand name and quality to be important selling points, with price an indicator of quality. In general, the Lithuanian consumer considers foreign goods to be a synonym of high quality. Lithuania’s growing economy has led to an increase in consumer confidence and household spending. Consumers have also become more interested in new health trends and gourmet food along with other discretionary items, and expect better customer service. As a sign of economic improvement, there has been a considerable drop in price promotion campaigns.
Consumers Associations
State Consumer Rights Protection Authority (VVTAT)
Lithuanian Consumer Institute
Alliance of Lithuanian Consumer Organisations (LVOA)
 

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Importing & Distributing

Import Procedures
As a member of the European Union, Lithuania applies EU Customs Code. When introducing goods into Lithuania, exporters shall fill in a Declaration of Exchange of Goods or Intrastat declaration. When the country of origin of the goods exported to Lithuania is not part of the European Union, customs duties are calculated Ad valorem on the CIF value of the goods, in accordance with the Common Customs Tariff (CCT).

As part of the 'SAFE' standards set forth by the World Customs Organisation (WCO), the European Union has set up a new system of import controls, the 'Import Control System' (ICS), which aims to secure the flow of goods at the time of their entry into the customs territory of the EU. This control system, part of the Community Programme eCustoms, has been in effect since 1 January 2011. Since then, operators are required to pass an Entry Summary Declaration (ENS) to the customs of the country of entry, prior to the introduction of goods into the customs territory of the European Union.

A new system, the Union Customs Code (UCC), entered into force in October 2013 as part of customs modernisation reform.

For more information, please visit the website of Lithuanian Customs.

Distribution market players

Large-scale retail is without doubt one of the most thriving sectors in Lithuania and major brands in the industry are owned by national companies. The sector is closely linked to land-use planning as supermarkets must first and foremost be easily accessible for their customers who choose where to shop largely based on the accessibility. Since the declaration of independence and accession to the European Union, foreign companies have sought to enter the Lithuanian market and develop large shopping centres and brand names.
Major retailers include:

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Operating a Business

Type of companies

Personaliné imoné or PI (Sole proprietorship)
Number of partners: Maximum 1 shareholder.
Capital (max/min): No minimum capital.
Shareholders and liability: Liability is unlimited.
Uzdaroji ackiné bendrové or U.A.B. (Private limited liability company)
Number of partners: 1 to 250 shareholders
Capital (max/min): Minimum capital of LTL 10,000.
Shareholders and liability: Liability is limited to the capital contributed.
Akciné bendrové or AB (Public limited liability company)
Number of partners: Minimum 1 shareholder, with no maximum.
Capital (max/min): Minimum capital of LTL 150,000 approximately, out of which 25% must be deposited upon incorporation.
Shareholders and liability: Liability is limited to the amount contributed.
Tikroji ukiné bendrija or TUB (General partnership)
Number of partners: Minimum 2 shareholders.
Maximum 20 shareholders.
Capital (max/min): No minimum capital required.
Shareholders and liability: Liability is unlimited for all the partners.
Kommanditiné ukiné bendrija or KUB (Limited partnership)
Number of partners: Minimum 2 shareholders.
Maximum 20 shareholders.
Capital (max/min): No minimum capital required.
Shareholders and liability: Liability is unlimited for active partners and limited for sleeping partners
 
Setting Up a Company Lithuania Eastern Europe & Central Asia
Procedures (number) 4.0 5.3
Time (days) 5.5 11.8

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
According to data from Eurostat, the minimum wage is EUR 642 per month in 2021.
Average Wage
According to the Lithuanian Office of Statistics, it amounted to EUR 1,524.2 per month in 2020.
Social Contributions
Social Security Contributions Paid By Employers: Between 1.77% and 2.77%.
Social Security Contributions Paid By Employees: 19.5%.
 

Intellectual Property

National Organisations
The State Patent Bureau is in charge of regulations around intellectual property in Lithuania.
Regional Organisations
EPO (European Patent's Office), EUIPO (European Union Intellectual Property Office).
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
Membership to the TRIPS agreement - Trade-Related Aspects of Intellectual Property Rights (TRIPS)
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Pridetines vertes mokestis (PVM)
Tax Rate
21%
Reduced Tax Rate
Reduced rates of 9% apply to public transport, heating and water for residential use, books and publications, firewood for household energy users and accommodation services supplied to tourists (until 31 December 2022).
A further reduced rate of 5% applies to the sale and repair of equipment for the disabled, pharmaceutical goods, medical devices and periodical publications.
A 0% rate applies to exports of goods from the EU and related services, international transport and related services, supplies related to ships and aircraft, intra-Community supplies of goods, certain works on movable tangible property. Until 31 December 2022, vaccines against COVID-19 and in-vitro diagnostic medical devices of COVID-19 are also zero-rated.

VAT-exempt goods and services include: health care services and goods; real estate rent and disposals; insurance and reinsurance services; certain financial services; cultural and sporting activities; educational services; betting and gaming services; universal postal services; social and related services; radio and television services.

Other Consumption Taxes
Excise duty is imposed on ethyl alcohol and alcoholic drinks, processed tobacco, energy products, electric energy, energy-related products, coal, coke, and lignite. More detailed information on excise duties is available concerning alcoholic beverages, tobacco products, energy products on the European Commission website.
 

Corporate Taxes

Company Tax
15%
Tax Rate For Foreign Companies
Lithuanian entities are subject to tax on their worldwide income after the deduction of the income of their permanent establishments; whereas non-resident entities are subject to tax on Lithuania-sourced income and income received by their permanent establishment in Lithuania.
Capital Gains Taxation
Capital gains of resident and non-resident companies are taxed as general taxable income at a rate of 15%. Capital gains from the sale of shares of a company that is resident in Lithuania or in another EU/European Economic Area member state may be exempted if the investor (Lithuanian firm or permanent establishment of a foreign company) maintains uninterrupted participation of more than 10% for at least two years (three years in the case of a reorganization).
Main Allowable Deductions and Tax Credits
Depreciation of tangible and intangible assets is tax-deductible at rates ranging from 5% (residential buildings) to 33.3% (computer, software). Goodwill is also deductible over 15 years.
Start-up expenses, interest charges and bad debts are generally deductible whereas provisions for doubtful debts are not deductible.
Donations to charitable organisations give rise to a 200% tax deduction, capped at 40% of taxable income (before the deduction of donations and the carryforward of tax losses).
Fines and penalties are not deductible. Taxes are deductible except for VAT and corporation tax.
Entertainment fees are deductible up to 50% and their deduction is capped at 2% of the company's income. Travel expenses related to the business are generally deductible, the same as contributions and expenses for the benefit of employees.
Tax losses can be carried forward indefinitely, yet for each year, they can only be offset by 70% of taxable income. The rest of the losses can be offset against income from previous years. Losses from the sale of shares may be carried forward for up to five years and may only be offset against income from the sale of shares. The carryback of losses is not permitted.
Other Corporate Taxes
The land tax varies between 0.01% and 4% (the rate is determined by the municipalities), the same as for the tax on land lease. The property tax varies between 0.5% and 3% (the rate is determined by municipal councils - properties with a value of up to EUR 150,000 are exempt).
There are no stamp duties in Lithuania. On the other hand, a small fee is payable for the issuance of certain documents by public services.
Social security contributions payable by the employer vary between 1.45% and 2.71% for income up to EUR 81,162 per year (employees' contributions are lower for incomes above this threshold). Employers withhold 0.16% of the gross salary for the Guarantee Fund (which provides financial assistance to employees in case their employers go bankrupt). They also pay a contribution equal to 0.16% of the gross salary for the Long-Term Employment Fund.
An environmental tax is levied on pollutants released into the environment, and a separate tax is payable on the value of extracted natural resources.
Other Domestic Resources
Consult the Doing Business Website, to obtain a summary of taxes and mandatory contributions.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the tax conventions signed by Lithuania.
Withholding Taxes
Dividends: 15%, Interest: 0 (paid to residents, EEA-resident companies and companies resident in countries that have concluded a tax treaty with Lithuania)/10% (non-resident companies)/15% (non-resident individuals), Royalties: 0 (paid to resident companies)/10% (non-resident companies)/15% (individuals).
The rates can be reduced under a tax treaty.

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