LITHUANIA Law and Practice Contributed by: Evaldas Klimas and Vygintas Kuprys, WALLESS
8.4 Income Tax Withholding for Foreign Investors Foreign investors’ income from the transfer and/ or rent of a property located in Lithuania is tax - able in Lithuania by applying the general taxation principles. The received taxable rent income is decreased by costs related to real estate mainte - nance. Taxable income (gains) from the transfer of the property is decreased by the acquisition price (minus depreciation, if applied). In 2024, real estate-related income is subject to 15% income tax and to 20% income tax on the taxable income exceeding EUR228,324. Howev - er, the 20% rate only applies to natural persons. When the buyer or the lessee is a Lithuanian entity, it must withhold taxes and pay them to the State on behalf of the foreign investor. If the buyer/lessee is a natural person, the foreign investor must take care of the Lithuanian tax liabilities themselves. 8.5 Tax Benefits Premises used in commercial activity are fixed assets of the entity. Fixed assets (buildings) may be depreciated for up to eight years for new buildings and 15 years for other commercial buildings.
estate alone (asset deal) or in the business as a going concern related to the particular real estate (share deal). If a real estate transaction is structured as a share deal, it might be subject to income tax (on capital gains received) but not VAT. Before entering into a large real estate portfo - lio transaction, parties are therefore advised to carefully analyse the subject of the transaction and to consider all the available protections, including individual advance tax rulings on the tax treatment of the transaction. 8.3 Municipal Taxes Business premises are subject to real estate tax in Lithuania. The annual rate of the tax is set every year by the local municipality and ranges between 0.5% and 3%. A company must pay real estate tax on the premises if those premises are: • owned by the company; or • transferred by a natural person for the use of the enterprise for a period exceeding one month. There are various tax exemptions applicable to real estate tax, including for the property of com - panies in free economic zones or the property of bankrupt companies. The municipality also has the right to reduce the tax rate for a particular taxpayer or to exempt them from taxation (after receiving the application from the taxpayer, the municipality council adopts a decision on the reduction of the tax rate or exemption from taxa - tion).
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