Standard corporate tax rate was reduced from 20 % to 15 % from 2010.

Companies can apply 5 percent corporate tax rate from 2010, if:

• average number of employees does not exceed 10 people and
• income for taxable period does not exceed 500 thousand litas.

Companies may not pay advance corporate tax in 2010, if taxable income did not exceed 1 million litas in 2009.

Starting from 2010, all benefit of employees costs may be deducted from income, if employees' received benefits are subject to income tax under the Republic of Lithuania Law on Personal Income Tax.

The cost of employees' received benefits may be deducted from income up to 5 percent employees salary calculated per taxable period, if:

• it is impossible to identify individual employee's and (or) family member's (spouse, child (adopted child)) benefit and
• it is stated in collective agreement about the possibility to use benefit and
• all employees may use benefit without discrimination or other restrictions

Transfer of tax losses
Company may transfer calculated tax losses to another group company, which has right to reduce calculated taxable profit with this amount, for the 2010 tax year and for subsequent tax periods. Such tax loss transfer is permitted if:

1.      on the date of tax loss transfer  parent company owns directly or indirectly not less than 2/3 shares of each company, that participates in this operation, and

2.       companies, who transmits and take losses, belong to the group at least 2 years before the tax loss transfer date or are in group from the date of registration and will be in a group not less than 2 years from the date of registration.

Foreign entity may transfer tax losses to Lithuanian entity only if:

1)      a foreign entity is the European Union Member States resident for tax purposes, and

2)      a foreign entity transferred tax losses can not be carried to other tax year (or deducted from income (profit)) in accordance with European Union member state, where foreign entity is resident,  legislation, and

3)      a foreign entity transferred tax losses are calculated (recalculated) under the Lithuania Law on Corporate Income Tax.

Company may not transfer tax losses if:

• company has tax arrears
• corporate tax would not be paid on taxable profit due to exemption stated in a Law on Corporate Income Tax.

Dividend Taxation in Lithuania
From 1 January 2010 all dividends are eligible for the participation exemption rule (under which the dividends are exempt from tax if the shareholder holds least 10 % of shares at least 12 months).

Health insurance premiums

Additional (voluntary) health insurance premiums paid by the employer for the employee health services are not subject to income taxes (until 2009-12-31 it was taxed at 15 % income tax rate).

The Law on VAT

The European Union VAT Directive was incorporated in The Lithuania Law on VAT. It was changed the principles of defining the place of supply of services.

Articles of Association and Memorandum of Association

The Government has prepared and confirmed the standard Articles of Association and the standard Memorandum of Association in the end of autumn 2009. Everyone can use these standards, but they are not mandatory.

Legal address of the company

From 2010.01.05 the legal address of the company can be changed only informing Lithuanian Register Center about the new address. 

Director's recall and shareholders' list

From 2010.03.01 the director will be able resign/recall himself from the director's position. Previously he might be resigned/recalled from the director's position only by the shareholder or the Board on condition a new director was appointed. Now if the director presents the application to the Board or the shareholder to recall and dismiss him but the company delays or ignores his application, it shall be deemed that he is recalled and he has a right to inform Register Center by himself.

If there is more than one shareholder of the company, the list of shareholders shall be concluded and Register Center shall be informed about all shareholders.