Lithuania’s parliament has approved changes to loss carryforward rules, capping annual use at 70% of taxable income from 2026, with exceptions for certain low-rate taxpayers, as part of a broader tax reform to support the Defence Fund.
The Lithuanian parliament (Seimas) has approved amendments to the loss carryforward rules, effective from 2026, as part of a revised tax reform package adopted in May 2025 to support the Defence Fund.
Under the new rules, the use of carried forward losses will be limited to 70% of taxable income per year. This limitation applies to all types of losses, including those incurred directly, transferred during restructurings, or transferred from group members.
Exceptions to the 70% cap apply to taxpayers subject to the reduced corporate tax rate, currently 6% and scheduled to increase to 7% from 2026 and in certain other specified cases.
Earlier, Seimas approved for further consideration of a package of tax law amendments designed to increase state revenues, primarily to finance national defence on 22 May 2025.
