Tax authorities finalised guidance on 20-year corporate tax exemptions for major investments.
Lithuania’s tax authorities have published a commentary on 18 November 2025, detailing how legal entities undertaking major manufacturing or data-service investments may qualify for a corporate income tax (PMĮ) exemption lasting up to 20 years.
The updated commentary on PMĮ Article 58 consolidates the conditions, thresholds and timelines that apply to “Large Projects” implemented under investment contracts concluded by 31 December 2035.
The rules apply only to income arising directly from the designated Large Project activity and introduce two investment tiers with differing private capital requirements.
Separate commencement rules apply depending on when the investment contract was signed.
Investment Categories and Thresholds
A project qualifies as a Large Project if it involves data processing, internet server services (hosting) and related activities, or manufacturing, and is supported by an auditor’s verification of the private capital investment amount.
- Tier 1 – PMĮ Article 58(162):
Minimum private investment of EUR 20 million, or EUR 30 million if the project is located in Vilnius. - Tier 2 – PMĮ Article 58(163):
Required investment of at least EUR 110 million, reduced to EUR 100 million for contracts signed before 1 November 2025. This tier also requires authorisation from the European Commission.
Eligibility Requirements
Legal entities may apply the exemption only if all specified conditions are met:
- Valid Investment Contract: The entity must be implementing the project under an active Large Project investment contract with an authorised government institution.
- Income Composition: At least 75% of income in a tax period must be derived from the qualifying Large Project activities. Ancillary income may account for up to 25%.
- Employee Requirement: Either an average of 150 employees (200 in Vilnius) or creation of 20–149 new jobs (20–199 in Vilnius), linked explicitly to the Large Project.
- Exclusivity Rule: The entity cannot use other designated PMĮ tax incentives in parallel.
Relief Start and Duration
The 20-year exemption window is fixed and cannot be extended:
- Contracts signed before 1 November 2025: The 20-year period begins on the contract’s effective date. Relief is applied from the tax period in which all requirements are first satisfied.
- Contracts signed on or after 1 November 2025: The period begins in the tax year when the mandatory investment level is reached and all other conditions are met.
Periods of non-compliance are still counted within the 20 years. In such years, the entity must apply standard PMĮ taxation.
Loss Treatment and Non-Project Income
The exemption applies strictly to income generated from the Large Project. Income from unrelated activities remains subject to general PMĮ rules. Losses generated from exempt activities cannot be offset against taxable income from other activities nor carried forward.
The regime aligns with EU state aid rules, including Commission Regulation (EU) No. 651/2014 for Tier 1 projects. If the amount of state aid exceeds EU limits, the excess is taxed under standard PMĮ provisions.
