Updated 22.05.2026  

Important details

Dividends are entitled to shareholders who were shareholders of the company on the day of the shareholders' meeting announcing the dividends, regardless which year profit are distributed. Dividends are also considered to be shareholders' income received by reducing the company's authorized capital, if this capital has been increased from the company's profit. Income received by the owner of an Individual enterprise (IĮ) or a member of a Small partnership (MB) after the distribution of the company's profits is treated as dividends. Private limited companies (UAB) and public limited companies (AB) may pay dividends only in cash. Dividends cannot be paid in advance. Dividends are usually paid once a year, when the result for the year ended, is calculated, but they can also be paid for a period shorter than the financial year, provided that all the requirements for the payment of interim dividends are met.  

Taxation of dividends

If dividends are received by individuals, they are subject to personal income tax (PIT), if legal entities are subject to corporate income tax (CIT).  

Lithuanian company pays a Lithuanian resident

Dividends paid by a Lithuanian company to a Lithuanian resident are taxed at 15% PIT.  

Lithuanian company pays a foreigner

Dividends paid by a Lithuanian company to a foreigner (natural person) are taxed at 15% PIT in Lithuania. If Lithuania has concluded a double taxation avoidance agreement with the state of residence of the foreigner receiving the dividends, then the dividends are taxed in both countries according to the rates provided for in the agreement, which in Lithuania is usually lower than the standard rate.  

Lithuanian company pays another Lithuanian company

Dividends paid by a Lithuanian company to another Lithuanian company are not taxable if the company receiving the dividends holds (or intends to hold) at least 10% of the voting shares in the company paying the dividends for 12 months. If a company with the intention of holding shares for more than 12 months has benefited from this benefit but has subsequently transferred the shares before the end of 12 months, the dividends paid must be taxed at 17% CIT. If the company receiving the dividends does not meet any of these conditions, the dividends paid are taxed at 17% CIT.  

Lithuanian company pays a foreign company

Dividends paid by a Lithuanian company to a foreign company are not taxable if the foreign company holds (or intends to hold) at least 10% of the voting shares in the company paying the dividends for 12 months and is not registered in the offshore territories. If a foreign company does not meet any of these conditions, the Lithuanian company must pay 17% CIT when paying dividends. If Lithuania has concluded a double taxation avoidance agreement with the state where the foreign company receiving the dividends is registered, the rate provided for in the agreement shall be applied. Note: If a foreign company meets the above conditions under which dividends paid to it are not taxable, then the tax rate provided for in the double taxation agreement does not apply.  

A foreign company pays a Lithuanian company

Dividends paid by a foreign company to a Lithuanian company are not taxable in Lithuania if: — The foreign company is registered in a state of the European Economic Area and is a payer of corporate income tax or similar tax; or — The Lithuanian company has been holding (or intends to hold) at least 10% of the voting shares in a foreign company paying dividends for 12 months without interruption and this company is not registered in the offshore territories. If none of these conditions is met, the Lithuanian company pays 17% CIT on the dividends received from the foreign company.  

A foreign company pays a resident of Lithuania

Dividends paid by a foreign company to a resident of Lithuania are taxed at 15% PIT in Lithuania. If Lithuania has concluded a double taxation avoidance agreement with the state where the company paying the dividends is registered, then the dividends are taxed at the rate provided for in the agreement, which is usually lower than the standard rate.   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

Notes * Average monthly salaries (AMS) in 2026 for the calculation of personal income tax amounts to EUR 2.312,15. ** The following categories of income are not aggregated with other annual income and are subject to a separate 15% personal income tax rate: 1. Dividends; 2. Income received through an investment account; 3. Income from the sale or other transfer of shares acquired outside an investment account, provided that the shares were acquired more than five years prior to the date of sale; 4. Income from the sale or other transfer of shares acquired under stock option agreements from an employer or a related party, or through other employee share incentive arrangements; 5. Sickness, maternity, paternity, childcare, and long-term employment benefits; 6. The portion of life insurance benefits equal to the insurance premiums paid; 7. The portion of pension benefits received from a pension fund equal to the contributions paid.   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 01.09.2021   The employer may not unilaterally reduce the employee's salary without the employee's consent, with the following exceptions: 1. When the remuneration of a certain industry, enterprise or category of employees is changed by laws or Government resolutions. 2. When the provisions of a collective agreement change the remuneration of the whole enterprise or of a certain category of employees. The written consent of an employee is required only if the change in the terms of remuneration reduces the employee's salary agreed in the employment contract concluded prior to the conclusion of the collective agreement. 3. Where the conditions of remuneration are changed not in the employment contract but in the regulations, the orders of the head of the company, other administrative acts and the employment contract do not contain specific references to these documents.   Example The employment contract stipulates the following payment terms: the employee is paid a fixed part of the salary of EUR 2,000 and a variable part - up to 30% the amount of the fixed part of the salary (there is no reference to a specific document). In this case, the variable part is calculated and paid according to the procedure approved by the order of the manager. Changing this procedure will not require the employee's consent to the variable part, as the terms of payment set out in the employment contract will not be changed.   Tips for the employer The employment contract shall provide only for a fixed part of the salary and shall not discuss the payment of bonuses or bonuses. It is recommended that bonuses and bonuses be provided in local documents (regulations, company manager's orders, other administrative acts), as in this case the employer may change, pay or not pay bonuses and bonuses at its discretion and does not require the written consent of the employee.   We will be happy to assist you with accounting, taxation or legal matters Get in touch with us today +370 5 2430344 / info@audita.lt

Updated 01.11.2023   The classic situation 2 shareholders set up a company, the shares of which were divided equally 50/50, and one of them became the manager. The company has been operating successfully for some time, orders have been growing and profits have been rising, but one day the attitude of the shareholders differed. As the disagreement escalated, they encountered unexpected problems: — the company did not pay dividends because none of the shareholders had enough votes to make a decision; — the shareholders could not change the manager because none of them had enough votes to make a decision; — the shareholder who became the manager was able to act at his own discretion and use the company's resources, as the manager is allowed to make many decisions without the consent of the shareholders; — the manager could fire another shareholder (who worked for the company) and separate him from the company's activities. Unfortunately, such situations occur often and regardless of the number of shareholders in the company.   Shareholders’ agreement To avoid similar situations, shareholders can enter into a shareholders ’agreement and agree on how they will behave in certain situations. For example, shareholders may agree that if the shareholders do not make a decision on the distribution of profits, the company must pay a proportion of the distributable profits as dividends. The shareholders may agree that the manager is appointed for a specified period, after which the decision on the manager is made by another shareholder. Shareholders may also agree: how the shares would be redeemed if they could no longer work together; whether shareholders can engage in competing activities; how the shareholder can obtain information about the company's activities; and other issues. A shareholders' agreement can be concluded when setting up a new company or already in operation, it is important to do so before the start of disagreements.    

Updated 31.01.2024   These forms of companies are most often used in Lithuania: — Limited liability company (UAB) – the most popular form of a company, suitable for any size of businesses. — Small partnership (MB) – is a popular company form for a small business. — Personal enterprise (IĮ) – is a company form intended for a small business, but the founder can be only one person, and the founder is responsible for the company's obligations with his own assets. — Public limited company (AB) – appropriate for a large business. — Public Institution (VšĮ) – adapted for non-profit activities.   The most important criteria for choosing the legal form of a company are: 1. Liability of the founders (whether the company's obligations are covered by personal assets). 2. Management, decision-making and voting methods. 3. Taxation.   UAB features  — UAB is a limited liability legal entity. This means that the shareholders are not liable with their own assets for obligations of UAB. — The founders can be natural and legal persons of any state. The number of shareholders is not limited. — The minimum amount of authorized capital is EUR 1000. — The director (manager) of UAB may be only a natural person, but of any nationality. It is mandatory to hire a manager. An employment contract must be concluded with the manager. — Shareholders have the right to receive a share of profit (dividend) in proportion to the number of shares held. UAB profits can be distributed more than once a year. Advance payment of dividends is prohibited. — UAB can be liquidated if it has no debts. The liquidation procedure lasts 5-8 months   Decision-making methods — The most important management decisions of the company are made by shareholders by voting. Each share carries one vote, so the person with the most shares has the greatest influence on voting. — Decisions may be adopted if more than 1/2 of the votes of the shareholders who participated in the voting are collected for it. — Some decisions require a majority of at least 2/3 or 3/4 of the votes cast, e.g. a decision on the payment of dividends may be adopted if at least 2/3 of the votes are cast for such a decision. — UAB must have one-person management body - the director (manager), a collegial management body - the board is optional.   MB features — The small partnership (MB) is a limited liability legal entity. The members are not liable for the obligations of MB with their own assets. — MB may be set up by a maximum of 10 natural persons (legal entities cannot be founders). — When setting up the partnership there is no need to contribute a required amount of share capital, but members must make contributions (the amount is determined by the members themselves). — MB profits are distributed in proportion to the size of the member's contribution. MB profits can be distributed more than once a year. Advance payment of dividends is prohibited. — A member may work for MB without entering into an employment contract (no need to pay high taxes on wages). MB can only enter into employment contracts with employees who are not members of the partnership. — MB can operate with or without a manager. If there is a manager, a civil contract is concluded with him. Income under such contract is taxed at a rate of 15%, what is significantly less than under employment contract ̴ 40%. — MB can be transferred in to UAB.   Decision-making methods The following MB management bodies are available: 1. Meeting of members only. In this case, the meeting of members is also the management body, one of the members being appointed as the representative of the small partnership, who in principle performs the functions of the director (manager). 2. The meeting of members plus the one-person management body – a manager.   — The most important management decisions of the company are made by members by voting. — One member shall have one vote, regardless of the size of its contribution. — If the small partnership has a director (manager), the regulations may provide for a different voting procedure (eg the number of votes depends on the size of the contribution). — Decision is may be adopted if more than 1/2 of the votes of all members of the small community are in favor. — Some decisions have a majority of at least 2/3 of the votes (eg on the distribution of annual profits), there are decisions that are taken unanimously (eg on the distribution of profits for a period shorter than the financial year).   MB is well appropriate in the following circumstances: — If the business is small (income does not exceed 100.000 Eur). — If the business will be not hindered by the image of a small company. — If some tax savings are significant to your business.     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