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Developments in the Member States

Part II

From 2009 to 2013, an up to 50 % reduction in taxable profit, subject to conditions, has been granted to firms
acquiring assets such as plant and machinery, structures, ICT equipment, and rights on intangible assets.
Companies employing 20 % or more disabled persons also benefit from generous tax credits. L
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Lithuania adopts a modified classical system whereby dividends are taxed both at the level of the company and in
the hands of the shareholder, in the case of a physical person. CIT is applied to all types of registered commercial
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enterprises, including sole proprietorships and partnerships, but a tonnage tax regime exists. Dividends distributed h
to another company are subject to the 15 % CIT rate, withheld by the distributing company, unless participation u
exemption applies. A 10 % withholding tax is applied to interest (with some exceptions) and royalties. Trading
losses can be carried forward for five years. Both straight-line and declining-balance depreciation are permissible.
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Since 2007, capital gains on shares of EEA-registered entities, or countries having a tax treaty with Lithuania, are n
exempt if they are subject to corporate income taxation and the transferring entity has held more than one quarter i
of the capital for two years.
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VAT and excise duties
After an increase by two points in standard VAT rate to 21 % as from 1 September 2009 an extension of reduced
VAT rates was adopted in 2011. The temporary arrangement, whereby a 9 % reduced rate applies to books and
non-periodical publications, has been extended for an indefinite period. The 5 % reduced VAT rate applicable to
medicines was prolonged until the end of 2012; similarly, the 9 % reduced rate for residential heating was
extended to 31 December 2012. The temporarily introduced (in 2011) reduced rate of 9 % on accommodation
services was abolished as from 1 January 2012.

With effect from 1 January 2011 the excise duty applicable to gas oil used as motor fuel was increased from €
274.27 to € 302.07 per 1000 l. Similarly, with effect from 1 March 2012, the excise duty applicable for tobacco
products was increased: for cigarettes from € 64 to 67.19 per 1000 cigarettes and for cigars and cigarillos from €
23.16 to 24.32 per kilogram of the product.

Wealth and transaction taxes


Land tax is levied at 1.5 % of land value, while an immovable property tax ranges between 0.3 % and 1 % but
applies only to legal persons or premises used for economic activities. With effect from 1 January 2012 Lithuania
introduced an annual property tax of 1 % on properties whose value exceeds LTL 1 000 000 (€ 290 000).

Inheritance tax is levied at 5 % and 10 %, while gifts are taxed under the PIT. There is no net wealth tax.

Other taxes
A pollution tax is applied on emissions from stationary and mobile sources (automobiles equipped with an exhaust
emission neutralisation system are exempt), certain goods (e.g. batteries, mercury lamps), as well as packaging.
The rate depends on the specific pollution-related indices determined by state institutions. There is also a tax on
natural resources.

Social contributions
The basic social insurance contribution is currently 30.8 % of which 27.8 % are contributed by employer and 3.0 %
by employee. A basic health insurance of 9 % in total applies to employer (3 %) and to employee (6 %). The
general rate for the insurance covering professional diseases and accidents at work stands at 0.3 %, but three
special groups exist which are subject to different rates. With effect from 1 August 2012 the relief in social security
contributions in respect of first-time employees will be abolished. The relief refers to all individuals, who are
employed under a labour contract for the first time from 1 August 2010 until 31 July 2012. Under condition that
their gross monthly salary does not exceed three times the minimum statutory monthly salary (i.e. the amount of
LTL 2 400), they are not subject to pension insurance contribution paid by the employers and employees (23.3 %
and 3 % respectively) for a period that does not extend one year.

Taxation trends in the European Union 119