Lithuania has proposed a 200% tax deduction for qualifying investments in advanced technologies, including robotics, artificial intelligence, digital twins and Industrial Internet of Things (IIoT) systems, from 1 January 2027.
Lithuania is proposing a 200% tax deduction for companies investing in certain advanced technologies under draft amendments to the Law on Corporate Profit Tax published on 25 August 2026.
The proposal would allow entities implementing investment projects to reduce taxable profit by twice the amount spent on qualifying long-term assets listed in a new Annex 2, “Technologies Accelerating Competitiveness”.
Proposed 200% deduction
The draft would amend Article 461 of the Law on Corporate Profit Tax No. IX-675 to expand the existing investment project tax relief.
Under the proposed rules, qualifying expenditure on long-term assets listed in Annex 2 could reduce taxable profit by double the amount incurred. For other eligible investment project assets, the existing 100% reduction would continue to apply.
Where eligible expenditure is higher than taxable profit for a tax period, the excess could be carried forward. The standard carry-forward period would remain four consecutive tax periods, while expenditure relating to Annex 2 assets could be carried forward for five consecutive tax periods.
The draft also provides that taxable profit may be reduced by up to 100% in each tax period.
Technologies covered
The proposed Annex 2 would cover tangible and intangible assets used in advanced manufacturing, automation and digital production.
The machinery and equipment category would include:
- Additive manufacturing machines and equipment for layer-based production processes using digital modelling;
- Robotics, automation, and collaborative robotics machines and equipment;
- Machine vision machines and equipment for real-time production monitoring;
- Production machines and equipment based on computerised control systems, sensors, drives and data transmission systems;
- Micro- and nano-processing machines and equipment; and
- Autonomous internal logistics, warehousing, and transportation machines and equipment.
For computer hardware and communication equipment, the proposed list includes Industrial Internet of Things (IIoT) and equipment condition monitoring tools, human–machine interface (HMI) tools, and traceability and identification tools.
The latter would cover systems using RFID, QR codes, barcodes, sensors or digital registries to track raw materials, components or products in the value chain.
Software and digital systems
The proposed relief would also apply to specified software.
This includes artificial intelligence, data analytics, cloud computing and edge computing systems used to optimise, forecast and ensure quality in production processes.
Digitalised and integrated production management systems would also qualify, alongside digital twins used for the virtual representation and analysis of production processes, equipment or systems.
Resource and energy management software would be included where it is used to optimise energy, raw materials and waste, monitor energy consumption and manage loads.
Conditions for qualifying assets
The assets would need to be necessary for implementing an entity’s investment project and meet the conditions set out in Article 461.
They must fall within the relevant long-term asset groups under Annex 1 of the Law on Corporate Profit Tax, including “machinery and equipment”, “installations (structures, boreholes, etc.)”, “computer hardware and communication equipment (computers, networks, and devices)”, “software” and “acquired rights”.
The rules also cover “freight vehicles, trailers and semi-trailers, buses – not older than five years”, subject to the conditions in the law.
Qualifying assets must be unused and manufactured not earlier than two years before the start of their use as long-term assets.
For the technologies listed in Annex 2, the draft limits eligibility to the Annex 1 groups “machinery and equipment”, “computer hardware and communication equipment (computers, networks, and devices)” and “software”.
If adopted, the amendments would enter into force on 1 January 2027 and apply to corporate profit tax calculations and declarations for the 2027 and subsequent tax periods.
