Lithuania's parliament has proposed amendments to the Law on Personal Income Tax (PIT) that would exempt qualifying gains from the sale of startup shares from Personal Income Tax (PIT), subject to eligibility conditions including a three-year holding period, a 25% ownership cap and startup qualification requirements, with the changes set to apply from the 2027 tax period if enacted.
Lithuania’s parliament has proposed amendments to the Law on Personal Income Tax (PIT) that would introduce a new Personal Income Tax (PIT) exemption for individuals investing in startups. If enacted, the measure will take effect on 1 January 2027 and apply when calculating and declaring income for the 2027 and subsequent tax periods.
Proposed exemption for startup investments
Under the draft amendments to Article 17 of the Law on Personal Income Tax, income derived from the sale or other transfer of ownership of shares, interests or member units will be exempt from Personal Income Tax (PIT) where the entity met the definition of a start-up under the Law on the Development of Small and Medium-sized Business at the time the investment was made.
To qualify, the startup must also have been registered in a European Economic Area state no earlier than five years before the date the shares, interests or member units were acquired.
Holding period and ownership conditions
The proposed relief will apply only if the shares, interests or member units are sold or otherwise transferred at least three years after acquisition.
The draft law also sets a 25% ownership cap, requiring that, during the three-year holding period, the individual, acting alone or together with related persons, did not directly or indirectly hold more than 25% of the shares, interests or member units of the entity.
Transactions excluded from the exemption
The exemption will not apply where shares, interests or member units are sold back to the issuing entity, where securities are deemed to have been sold under Article 11 of the Law on Personal Income Tax, or where the shares were received following an increase in nominal value as specified in Article 2(14)(1) of the law. In the latter case, the exemption will not apply to the portion of income equal to the amount of the increase in nominal value.
The proposal also extends the existing restriction that denies specified exemptions where the relevant income is received from foreign entities registered or otherwise organised in target territories, or from individuals whose permanent place of residence is in a target territory.
Effective date
The draft amendments, dated 7 July 2026, provide that the new Personal Income Tax (PIT) relief would enter into force on 1 January 2027 and would apply when calculating and declaring income for the 2027 tax period and later years, if approved by the Seimas and promulgated by the President of the Republic.
