The Lithuanian parliament is reviewing Draft Law No. XIVP-2226(2), which aims to broaden the definition of eligible shares for capital gains tax exemptions and loss carryforward from the sale of shares in foreign companies. Currently, these tax benefits apply exclusively to shares classified as securities.
The proposed amendments seek to extend these benefits to encompass a wider range of company structures, including foreign limited liability company forms, which are often favored by investors but do not fit the traditional share-based models of joint-stock companies or other entities.
Under the current rules, capital gains are exempt and losses can be carried forward when shares are sold in foreign companies located in European Economic Area (EEA) countries or treaty partner countries, provided the shareholder has held at least 10% of the shares continuously for 2 years (or 3 years in case of reorganizations).
The expansion of the definition of eligible shares is intended to align Lithuania’s tax regime with modern investment practices, making the country more attractive to foreign investors seeking to establish or maintain holding companies.
If approved, these amendments will take effect from 1 January 2025. The proposed changes underscore Lithuania’s commitment to fostering a favorable environment for foreign investment and supporting economic growth.
