On 9 May 2023, Lithuania has enacted Law No. XIV-1936, published in the Official Gazette, introducing a temporary solidarity contribution on banks operating within the country. The law, which came into effect on 16 May 2023, aims to address the inflationary crisis resulting from Russia’s war against Ukraine and strengthen the national defense budget.

Under the new legislation, banks established and operating in Lithuania, branches of banks licensed in EU/EEA member states and foreign banks, as well as financial groups of central credit unions, will be subject to the temporary solidarity contribution.

The contribution will be payable for the years 2023 and 2024, with a rate of 60% imposed on net interest income exceeding the average of the previous four years, increased by 50%. For the calculation, the reference period is set as 2018 to 2021 for 2023, and 2019 to 2022 for 2024.

To ensure compliance, banks will be required to make quarterly payments, with advance returns due by the last day of the second month of each quarter. Additionally, an annual return must be submitted by June 15 of the following year. The contribution payment period for 2023 covers the period from the law’s effective date until December 31, 2023, while for 2024, it encompasses the full calendar year ending on 31 December 2024.

The funds collected through the solidarity contribution will be allocated to financing military mobility and military transport infrastructure projects, further bolstering the country’s defense capabilities.

These unique economic measures underscore Lithuania’s dedication to protecting its interests and consolidating its position in the international community.