Updated 09.02.2025   If you buy a new car for 30,000 and an old one for 15,000, you probably think that the old car costs 15,000 cheaper. But the reality is that a car is only worth what it depreciates over the life of it. If you used the car for 5 years and then sold it, then you spent the difference between the purchase and sale prices.   An example You bought a new car for 30,000, after 5 years sold it for 15,000, so you spent 15,000 in 5 years. You bought an old car for 15,000, after 5 years sold it for 5,000, which means you spent 10,000 in 5 years.   Conclusion A new car cost more, not 15,000 as it seems at first glance, but 5,000. Dividing this amount by 60 months (5 years), we get that a new car cost 83 per month more. In addition, lower fuel and repair costs should be subtracted, and higher insurance costs should be added, and you will get an exact amount that will probably surprise you.   We will be happy to assist you with accounting, taxation or finance matters Get in touch with us today   +370 5 2430344  /  info@audita.lt

Updated 01.09.2023   Why companies buy back their own shares — Companies whose shares are traded on the stock exchange can distribute profits to shareholders in this way, it is like paying out dividends, only in this case the shareholders do not receive money, but acquire the right to a larger share of the company's assets and future profits. Such stock buybacks are similar to reinvesting money without paying the money. — When paying dividends, you need to pay income tax, but when you buy your own shares, there are no taxes, so this method has a significant advantage. — Companies can buy back their shares in order to give them to their employees as a motivational tool. — Private companies can use share buybacks to buy back shares from shareholders who want to exit. If the exiting shareholder's shares are purchased by the company itself, then the exiting shareholder sells the shares and the remaining shareholders gain a larger share of the company's assets and future profits without investing personal funds.   What is the impact of buying own shares — The number of shares and, accordingly, the authorized capital decreases. — The company's assets decrease because the company spends money to buy shares that it later cancels. — The number of shareholders decreases, so the company's assets and future profits accrue to a smaller number of shareholders. — The price of a publicly traded stock has a tendency to rise, as a decrease in the number of shares results in more profit per share, and in addition, the P/E and return on equity ratios improve. — The liquidity ratio deteriorates because the company spends money while the liabilities remain the same.   Legal restrictions in Lithuania — The total nominal value of the company's owned and/or purchased own shares cannot exceed 1/10 of the authorized capital. — The company cannot buyback its shares if its own capital becomes less than the amount of the authorized capital, the mandatory reserve and the reserve for the purchase of its own shares, therefore the decision to buy back its own shares affects the payment of dividends. — After the company has boughtback its shares, it will not have the right to use the property and non-property rights provided by them, e.g. the company cannot distribute dividends to itself, purchased shares will not be able to participate in voting.     We will be happy to assist you with accounting, taxation or finance matters Get in touch with us today   +370 5 2430344  /  info@audita.lt

Updated 22.05.2026   Advance corporate income tax is payable quarterly on these dates 15.03 /15.06 / 15.09 / 15.12. The amount of the advance payment depends on the chosen calculation method. The following methods are available: 1. According to the profit of the previous year. 2. According to the profit for the following year. If you forecast that the company's profit in the current year will be lower than in the previous year, then the advance income tax will be lower using the 2nd calculation method. If your accountant calculated the advance income tax using Method 1, consult with him about changing the method. To change the method of calculating the tax, indicate this by submitting an advance income tax return. If you have already submitted a tax return for the first quarter and would like now to change your method, you can do so by resubmitting this tax return.  

Notes

— Newly registered companies do not pay advance income tax for the first tax year. The tax is also not paid by companies whose taxable income in the previous tax period did not exceed EUR 300 000 (PMĮ 47str. 5d.). — The amount of advance income tax calculated on the basis of the expected profit must be at least 80% of the actual amount of annual income tax. If the forecasts are incorrect and the amount of the advance income tax is lower, the STI will charge interest.     We will be happy to assist you with accounting, taxation or finance matters Get in touch with us today   +370 5 250 2657 /  info@audita.lt

Updated 22.05.2026   When a shareholder grants a loan to a company, the tax consequences arise in the following cases: 1. The interest paid by the company (for a loan to a shareholder) may be included in the allowable deductions* if the interest rate corresponds to the market interest rate. If the amount of interest paid exceeds the interest available on the market, the excess will not be considered as a allowable deduction. In order to prove the market interest rate, it is necessary to prove the interest that a particular company can borrow on the market from an unrelated person. Therefore, we recommend that you have documentation of the loan transaction with the shareholder that would justify the compliance of the applied interest rate with the interest in the market (for example, offers of commercial banks to the company to conclude a loan agreement). 2. If the amount borrowed exceeds the company's equity** more than 4 times, the tax administrator may recognize the interest paid on the excess as a not allowable deduction and tax it as dividends if both of the following conditions are met: a) The interest rate is higher than the market interest rate; b) The shareholder (lender) controls*** the company on the last day of the tax period. 3. Interest paid to a shareholder who is a natural person (a resident of Lithuania) will be taxed from 2026 under the new progressive personal income tax (PIT) system. A 15% PIT rate applies to the portion of interest income up to 12 average monthly salaries (AMS) (EUR 27,745 in 2026). A 20% PIT rate applies to the portion of interest income from 12 AMS to 36 AMS (from EUR 27,745 to EUR 83,237 in 2026). A 25% PIT rate applies to the portion of interest income from 36 AMS to 60 AMS (from EUR 83,237 to EUR 138,729 in 2026), while a 32% PIT rate applies to the portion exceeding 60 AMS (above EUR 138,729 in 2026). Please note that, when determining the amount of income earned by an individual and the applicable tax rate, not only interest income but also other income received by the individual is aggregated (Article 6 of the Law on Personal Income Tax). 4. Interest paid to a Lithuanian legal entity is taxed at a corporate income tax rate of 17% or 7% (the 7% rate may be applied to legal entities meeting the criteria for a small enterprise). 5. Interest paid to a legal person registered in a state of the European Economic Area or in a state with which Lithuania has concluded a double taxation agreement is not taxable. 6. Interest paid to a legal person that is not registered in a state of the European Economic Area or in a state with which a double taxation agreement has been concluded shall be taxed at the rate of 10%. 7. An individual shareholder may lend to the company without interest. In this case, there are no tax consequences for either the shareholder or the company.   * Allowable deductions are company expenses that can reduce the company's profit on which corporate income tax is calculated. ** The ratio of borrowed amount to equity is calculated on the last day of the tax period (excluding the result of that tax period). *** A shareholder is considered to control a company if he directly or indirectly owns more than 50% of the shares or together with related parties holds more than 50% of the shares and the shareholder himself owns at least 10% of the shares.   We will be happy to assist you with accounting, taxation or finance matters Get in touch with us today   +370 5 250 2657 /  info@audita.lt

We have invested in the company	1.000.000	500.000	200.000
Loan with 6% interest	--	500.000	500.000
Bond issue with 8% interest	--	--	300.000
Company capital	1.000.000	1.000.000	1.000.000

 

Operating profit	120.000	120.000	120.000
Interest expenses	--	30.000	54.000
Net profit	120.000	90.000	66.000
Return on our investment	12%*	18%	33%

 

How much would we earn by selling this company

Buyer's expected return 12%	1.000.000	750.000**	550.000
Profit from selling the company	0	250.000***	350.000

  Notes: ** (120.000/1.000.000) ** (90.000*100)/12  or 750.000*18%=90.000 *** 750.000-500.000 that is, we subtract the invested amount from the sale price.