Updated 04.01.2024
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 or a member of a Small partnership 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 income tax (IT).
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 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 15% IT.
If the company receiving the dividends does not meet any of these conditions, the dividends paid are taxed at 15% IT.
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 15% IT 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 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 15% IT 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.
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