Lithuania: Amendments to the Personal Income and Real Estate Tax


Lithuania Personal Income Tax

As of 2010 the definition of individual activities is changed. It will no longer include income from rent and sale of immovable property. Consequently taxpayers who registered the individual activity of rent or sale of immovable property in 2010 will be obliged to declare income as derived from the rent or sale of immovable property but not as derived from the individual activity.
In January the Tax Authorities provided explanation related to the taxation of income derived from individual activities in 2010 and further tax years. In addition the new definition of “free profession” is introduced which includes the activities of accountants, tax consultants, architects, etc.
On income derived from individual activities in 2010, the new tax rate of 5% will be applied except for the income derived from free professions and the sale of securities. The possibility to reduce the income by bad debts is also included in the taxation scheme of the individual activities.

Lithuania Real Estate Tax

Amendments to the law on Real Estate Tax adopted in November establish that real estate tax on real estate purchased is due under a contract of financial lease (leasing).
Exemptions of real estate tax may be used by the person who purchased such real estate but not by the formal owner (leasing company), provided that information related to the contract is registered with the Real Estate Register.
Amendments establish that when a municipality board does not establish a tax rate for the next tax period in time or establishes it after the deadline, the tax rate of 0,3% is applied.
Companies that have an obligation to pay real estate tax for the purchase of real estate from 1 January 2011 need not pay advance real estate tax for such real estate for the tax period of 2011. These amendments became effective on 1 January 2011.


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