Corporate Income Tax incentives

Tax incentive

Relevant to

Main conditions

0% reduced rate of Corporate Income Tax

Small companies on the first year of operation

• For 3 years, the company is not restrained, the company is not liquidated or reorganized, and the shares are not transferred to other participants;
  
• The number of employees does not exceed 10;
• The income does not exceed EUR 300.000;
• The shareholders are individual persons.

5% reduced rate of Corporate Income Tax

Small companies

• The number of employees does not exceed 10;
• The income does not exceed EUR 300.000;
• The controlling terms specified in the Law are met.

Transfer of tax losses between group companies

Group of companies having both profitable and loss-making companies.

The profitable company can reduce its taxable profit by the amount of transferred losses.

• Losses are transferred between group of companies which are controlled by the same parent company controlling no less than 2/3 of voting rights;
• The companies participating in the transfer of losses belong to the same group of companies for a period not shorter than 2 years or will belong to the same group of companies for at least 2 years from the company’s registration date (if a newly registered company is participating in the transfer of losses). 

Incentive for investment project

Companies expanding their activities and investing in capital assets.

 Companies can reduce its taxable profit by the amount of investments incurred (up to 100% of taxable profit) (applicable from 2018).

 Tax incentive might be used up to year 2023.

• The assets acquired pertains to groups of fixed assets stipulated in the Law (e.g. machinery and equipment, computer equipment, etc.);
• The assets purchased must be new and previously unused;
• The assets are directly involved in the process of production or rendering of services;
• The assets will be used by the company for at least 3 year;
• Other conditions. 

Film production incentive

Companies that have provided gratuitous funds for the production of a film or a part of it in Lithuania

Companies can reduce its payable Corporate Income Tax (up to 75%) by the fund provided for the film making

Tax incentive might be used up to year 2018.

• The film meets the criteria for cultural content and production;
• At least 80 percent of all production costs of the film or its part are incurred in the Republic of Lithuania and are not less than EUR 43 000;
• The total amount of all Lithuanian units or foreign units through their permanent establishments in the Republic of Lithuania does not exceed 20% of the total cost of production of the film or its part;
• A certificate has been received regarding the use of gratuitous funds compliance with the requirements (investment certificate).

Incentive for research and experimental development activities (REDA) (for costs)

Companies carrying out research and experimental development activities

The costs can be deducted three times

• Research and / or experimental development work is related to the company's ongoing or planned activities;
• The documentation of REDA work approved by the director of the company or its authorized person is received, which describes the work performed by the REDA (their objectives, course of execution, other important information);
• It is recommended, but not obliged to have an assessment of the activities of the Research, Innovation and Technology Agency, and the expert findings that the activity meets the requirements of the REDA activities.

Incentive for research and experimental development activities (REDA) (for the profit)

5% reduced rate of Corporate Income Tax for the profit generated by the use, sale or other transfer of R & D activities (copyright protected computer programs or patented inventions).

• The income is received by the company that created the asset and only it will bear all the costs associated with the mentioned incomes;
• Incomes are earned on the basis of copyrighted software programs or patented inventions. 

The donation

Donation can be deductible twice from taxable profit (if the amount of support is up to 40% of taxable profit).

• Support is provided to the unit having the status of the recipient of donation;
• The amount of donation in cash does not exceed EUR 9 500;
• If the amount of support exceeds 40% of the taxable profit, the excess is considered as a non-deductible expense for Corporate Income Tax purposes;
• For companies with a tax loss, all support costs are considered as non-deductible expense for Corporate Income Tax purposes.