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Salary taxation changes from 2020

Changes of minimum monthly salary from 1 January 2020

Please be informed that minimum monthly salary has been increased by the Lithuanian Government as from 1 January 2020 as follows:
·       minimum monthly salary will be EUR 607;
·       minimum hourly salary will be EUR 3,72.

Below is the table with the comparison of minimum rates applied until 31 December 2019 and from 1 January 2020:

 

Till 2019.12.31

From 2020.01.01

Minimum monthly salary

EUR 555

EUR 607

Minimum hourly salary

EUR 3,39

EUR 3,72


Untaxable income tax

From 2020 there are changes of untaxable income amount applicable to the employees of limited working capacity and as well changes in the variable untaxable amount. In the table below, we provide comparative information about current untaxable income amounts and their changes from 2020.        

 

Variable monthly untaxable income amount (MUIA) (formula)

Untaxable income amount for limited working capacity employees

0-25%

30-55%

Till 2019.12.31

MUIA=300-0,15*(MEI- 555)

EUR 353

EUR 308

From 2020.01.01

MUIA=350-0,17*(MEI- 607)

EUR 645

 EUR 600

From 2021.01.01

MUIA=400-0,18*(MEI- MMS)

EUR 645

EUR 600


The following abbreviations are used in formula:
·       MEI – monthly employment income;
·       MMS – minimum monthly salary, valid at 1 January of the year.

Personal income tax (PIT)

Starting 2020 the progressive PIT rate would be 32% instead of 27%. Progressive PIT rate of 32% will be applicable if employment income exceeds 84 average monthly salaries (hereinafter – AMS). In the table below, we provide comparative information about current PIT rates and their changes from 2020.

 

Standard PIT

Progressive PIT

When progressive PIT is applied?

Till

2019.12.31

20%

27%

For the part of employment income exceeding 120 AMS* (EUR 136 344)

From

2020.01.01

20%

32%

For the part of employment income exceeding 84 AMS* (EUR 104 277,60)

From

2021.01.01

20%

32%

For the part of employment income exceeding 60 AMS*

*illness, maternity, paternity, parental leave pays and payments from long-term unemployment fund are not included into income from which progressive PIT is calculated.

Social security contribution (SSC)

The main changes regarding the social security contribution are:
·       the higher rate of contribution of additional pension accumulation: 2,1% instead of 1,8%;
·       lower social security contribution ceilings.

Starting 1 January 2020, the rate of the contribution of additional pension accumulation will be 2,1% and it will be increased gradually up to 3% till 2023. In the table below, we provide comparative information about current social security contribution rates and their changes from 2020.

 

SSC (employee’s)

Transfer to additional pension fund (voluntary)

SSC (employer’s)

Ceilings to SSC*

Till 2019.12.31

19,50%

1,8% or 3%

1,77%

For the part of employment income exceeding 120 AMS (EUR 136 344)

From 2020.01.01

19,50%

2,1% or 3%

1,77%

For the part of employment income exceeding 84 AMS (EUR 104 277,60)

From 2021.01.01

19,50%

2,4% or 3%

1,77%

For the part of employment income exceeding 60 AMS

From 2022.01.01

19,50%

2,7% or 3%

1,77%

For the part of employment income exceeding 60 AMS

From 2023.01.01

19,50%

3%

1,77%

For the part of employment income exceeding 60 AMS

*except 6,98% of health insurance

Please do not hesitate to contact us if you have any questions.

06.01.20


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Aistė Baltutė

Aistė Baltutė

Controller

Mobile: +370 5 2106818, +370 685 06255

Email: aiste.baltute(at)leinonen.lt

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