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Lithuania 鈥� Changes in Taxation of Employment-Related Income for 2024

GMS Flash Alert 2024-005 | January 10, 2024

Lithuania鈥檚 government approved the 2024 country鈥檚 average monthly salary used for the social security contribution (SSC) base and progressive personal income tax (PIT) calculation.1

Following Lithuanian legislation, a cap is applied for the SSC (ceiling) and progressive income tax rate.听 The value of the SSC ceiling and threshold for the progressive PIT amounts to 60 times the average monthly salary, which gets adjusted annually as the country鈥檚 average salary tends to increase.

The changes became effective as of 1 January 2024.

WHY THIS MATTERS

Employers will need to take into account the changes for 2024.听 In cases of assignments to Lithuania where assignees are subject to Lithuanian taxation, and for assignees working outside Lithuania but still subject to Lithuanian taxation, international assignment cost projections and budgeting should reflect the changes described.

Where appropriate, adjustments to gross-up packages and withholding taxes may need to be considered.

Summary of Taxation of Employment-related Income as of 2024

The approved average monthly salary amount (applicable for tax purposes) is EUR 1,902.70.

  • The ceiling for SSC (except for mandatory health insurance contributions and employer鈥檚 contributions) equals EUR 114,162 (EUR 101,094 in 2023).
  • The standard SSC rates for income up to the SSC ceiling:
    • Employer鈥檚 part 鈥� 1.77 percent.
    • Employee鈥檚 part 鈥� 19.5 percent (an additional 3 percent is withheld if the employee is participating in a certain second pillar pension accumulation fund).
  • The standard SSC rate for income exceeding the SSC ceiling:
    • Employer鈥檚 part 鈥� 1.77 percent.
    • Employee鈥檚 part 鈥� 6.98 percent.
  • PIT rates for total annual employment-related income together with remuneration paid for activities of the supervisory or management board and certain income of managers of small partnerships:
    • 20 percent for income up to EUR 114,162 (EUR 101,094 in 2023).
    • 32 percent for income exceeding EUR 114,162 (EUR 101,094 in 2023).

乐鱼(Leyu)体育官网 INSIGHTS

Companies that need assistance with determining the appropriate workforce subject to the SSC and PIT revised base for 2024 and payroll-related obligations, should contact their qualified tax professional or a member of the GMS team with 乐鱼(Leyu)体育官网 in Lithuania (see the Contacts section).听 Penalties may be incurred for lack of compliance.

Contacts

Ignas Ri膷kus

Manager, Tax

乐鱼(Leyu)体育官网 in Lithuania

Lina Grainiene

Senior Manager

乐鱼(Leyu)体育官网 in Lithuania

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Footnotes

1 听听(Lietuvos Respublikos Valstybin臈s socialini懦 fond懦 biud啪et懦 2024 met懦 rodikli懦 patvirtinimo 寞statymas)听accepted by the Parliament of Lithuania (in Lithuanian).


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The information contained in this newsletter was submitted by the 乐鱼(Leyu)体育官网 International member firm in Lithuania.

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