Lithuania plans to reduce taxable profit for companies investing in designated municipalities, allowing up to a 100% deduction on eligible fixed asset costs from 2026.
The Lithuanian parliament (Seimas) is reviewing a draft bill proposing a reduction in taxable profit for companies investing in municipalities demonstrating “self-sustaining economic growth.” Under the bill, companies could reduce taxable profits by the actual costs of acquiring eligible fixed assets necessary for investment projects.
The eligible assets must fall under the fixed asset groups of “machinery and equipment,” “equipment (structures, boreholes, etc.),” “computer equipment and means of communication (computers, their networks and equipment),” “software,” “acquired rights,” and “trucks, trailers, and semi-trailers.” Additionally, these assets must be unused and manufactured no earlier than two years before their first use.
The incentive also applies to companies investing in other municipalities, provided their total income in the previous tax period does not exceed EUR 10 million and all other conditions are met. Taxable profits may be reduced by up to 100%, with any excess qualifying costs carried forward to offset taxable profits over the next four tax periods.
If qualifying assets are not used in the company’s activities for at least three years, the corporate income tax previously not calculated due to the reduction will become payable. Exceptions include loss of assets caused by force majeure or criminal acts by third parties.
The draft bill is expected to take effect on 1 January 2026.
