DEFENSE FUND FINANCING SOURCES (FROM 2026)
It is expected that the Defense Fund will additionally consist of:
In addition, it is intended to allocate a larger share of budget revenues to the Defense Fund, received from:
These changes are based on the geopolitical situation and the need to ensure long-term stability in defense financing, especially in response to regional threats and strengthening NATO commitments.
The Ministry of Finance presents a package of tax proposals for the defense fund on its website at https://finmin.lrv.lt/lt/naujienos/seimo-priimti-mokesciu-istatymu-pakeitimai/ (updated 2025-07-01).
NEW SECURITY CONTRIBUTION (FROM NON-LIFE INSURANCE AGREEMENTS)
A new mandatory security contribution is proposed for national security financing:
The contribution will supplement the income of the State Defense Fund.
RATE INCREASE BY 1 PERCENTAGE POINT
A standard corporate tax rate increase from 16% to 17% would take effect in 2026. This would also increase the rate for small businesses from 6% to 7%.
SMALL BUSINESS TAX RELIEF (0%) EXTENDED FROM 1 TO 2 YEARS
The period during which newly registered small businesses will be subject to a 0% corporate tax rate on profits earned is being extended. This period will be extended from 1 to 2 years in order to provide additional support to growing businesses.
NEW "INSTANT" DEPRECIATION ALLOWANCE FOR FIXED ASSETS
It is envisaged to allow a possibility of applying instantaneous depreciation of fixed assets to the asset groups "Machinery and equipment", "Equipment (structures, wells, etc.)", "Computer equipment and communications equipment", "Software", "Acquired rights", and "Trucks, trailers and semi-trailers".
This preferential instantaneous depreciation does not apply to assets that are subject to the investment projects relief under Article 46-1 of the Corporate Income Tax Law (i.e., it is possible to chose, to either depreciate immediately but only once through instantaneous depreciation, or twice - by applying the investment projects relief and then also further depreciating the asset in the "classic" way).
RESTRICTION ON GROUP LOSS CARRYFORWARDS
It is planned to limit the possibility of tax loss carryforwards to 70% of the company's taxable income. It is also determined that the conditions of duration (2 years) and scope (2/3) of group membership are assessed on the last day of the period, and not at the moment of transfer, as previously established by the Supreme Administrative Court of Lithuania. The motivation is indicated as the desire to prevent abuses.
STEM SCHOLARSHIP DEDUCTION
A possibility is envisaged for companies to deduct scholarships for students and researchers in the STEM fields (science, technology, engineering and mathematics) as expenses, up to EUR 2,500 per tax period under tripartite agreements, in order to promote science and technology.
PERSONAL INCOME TAX (PIT)
It is planned to change the PIT rates, applying them taking into account the total annual amount of all types of income, except income from distributed profits:
Shares received via stock options or similar mechanisms:
The Ministry of Finance provides examples of PIT calculations on its website at https://finmin.lrv.lt/lt/gpm-skaiciavimo-pavyzdziai/ (updated 2025-06-09).
An annual contribution limit of EUR 350 is envisaged for voluntary health insurance premiums (the amount in excess would be taxed as personal income).
REAL ESTATE TAX
VAT CHANGES
The reduced VAT rate will be increased to 12% (from 9%) for:
The reduced VAT rate will be decreased to 5% (from 9%) and additionally applied to:
The 9% rate for heating, firewood, and hot water will be abolished - the standard 21% rate will be applied.
EXCISE DUTIES CHANGES
To contribute to the financing of state defense and public health policy goals, non-alcoholic sweetened beverages, energy drinks, and beverage concentrates will be taxed, thus avoiding a potential substitution effect.
