Lithuania's State Tax Inspectorate opened a consultation on 2 October on draft amendments to the Corporate Income Tax Law commentary, which would widen the participation exemption to cover interests in certain foreign limited liability entities from 2027.
Lithuania’s State Tax Inspectorate has initiated a consultation on 2 October 2026 by publishing the draft, which covers Articles 12 and 30 of the law.
Under the draft, the term “share” would also include an interest in a foreign limited liability entity whose statutory capital is divided into interests rather than shares. The entity must be established or organised in the European Economic Area, or in a country with which Lithuania has an effective tax treaty. It must also be subject to corporate income tax or an equivalent tax.
The commentary lists examples such as a German or Austrian Gesellschaft mit beschränkter Haftung (GmbH), an Estonian Osaühing, a Latvian Sabiedrība ar ierobežotu atbildību (SIA) and a Polish Spółka z ograniczoną odpowiedzialnością (sp. z o.o.). Equivalent entities in other jurisdictions would also qualify.
The existing conditions remain unchanged. The Lithuanian company must generally have held more than 10% of the voting rights continuously for at least two years, or three years where the interests were acquired in certain reorganisations or transfers.
Documentation requirements
Taxpayers must be able to show the foreign entity’s legal form, its corporate income tax status, and the percentage and period of the participation held. A foreign commercial or companies register extract may be used for the legal form. Confirmation from the foreign tax authority is needed for the tax status.
Treatment of losses
The loss limitation rules in Article 30 are extended in the same way. If the disposal of such an interest results in a loss and the conditions corresponding to the participation exemption are met, the loss will not be deductible and cannot be carried forward to later tax periods.
Comments on the draft commentary may be submitted until 16 October 2026.
