Lithuania introduced a 17% dividend tax covering both withholding and treaty relief, which goes into effect in January 2026.
Lithuania’s tax authority, the State Tax Inspectorate (VMI), has published an updated commentary on the Corporate Income Tax Law on 29 October 2025, explaining how the new 17% dividend tax rate will take effect from 1 January 2026.
The revised guidance confirms that the 17% rate replaces the 15% rate (applicable until 2024) and the 16% rate (applicable in 2025). It covers dividends distributed by Lithuanian companies to both domestic and foreign shareholders, as well as dividends received from foreign entities, unless an exemption or treaty relief applies.
Companies are required to withhold and remit the tax to the authorities by the 15th day of the month following the month in which the dividend payment occurred. If dividends are declared in 2025 but paid in 2026, the 17% rate will still apply.
For dividends received from foreign sources, Lithuanian companies must also apply the 17% rate, but may credit foreign withholding tax in accordance with relevant double tax treaties. The commentary includes examples illustrating how treaty relief works in practice, referencing agreements with Denmark, Slovakia, and Ukraine.
Earlier, the VMI updated its commentary on the Law on Corporate Income Tax on 30 September 2025 to reflect recent legislative changes and provide clarity on the application of various tax rates and exemptions. These updates are effective from the 2026 tax year.
