Lithuania’s State Tax Inspectorate (STI) has introduced new guidelines on the increase of the dividend tax rate from 15% to 16%, effective from 1 January 2025.

A dividend tax is levied by a jurisdiction on dividends paid by a corporation to its shareholders. The main responsibility for the tax lies with the shareholder, although the corporation may also be subject to a withholding tax obligation. In some cases, the withholding tax may represent the full tax liability on the dividend.

Dividends paid between Lithuanian entities will be taxed at the new 16% rate. The responsibility for calculating, withholding, and paying this tax falls on the dividend-paying entity, with the payment due by the 15th of the following month.

Dividends from controlled foreign companies (CFCs) will be taxed according to the parent company’s previous taxable income under CFC rules, with any excess dividends taxed at 16%.

For dividends paid to foreign entities, the same 16% tax rate applies. However, tax reductions may be available under tax treaties. Foreign recipients can request a reduced withholding rate using the DAS-1 form or reclaim any overpaid taxes through the DAS-2 form.

Additionally, dividends declared in 2024 but paid in 2025 will be subject to the new 16% tax rate, whether they are received by Lithuanian or foreign entities.

Lithuanian entities receiving dividends from foreign companies will also be taxed at 16%, although exemptions such as the EEA corporate tax exemption may apply. If a tax treaty exists, the receiving entity may claim a tax credit; otherwise, a deduction can be applied under domestic law.