TAX CHANGES IN LITHUANIA AS OF 1 JANUARY 2023

Changes of the minimum monthly salary from 1 January 2023

Please be informed that the minimum monthly salary has been increased by the Lithuanian Government as of 1 January 2023 as follows:

  • minimum monthly salary will be EUR 840;
  • minimum hourly salary will be EUR 5,14.

Below is the table with the comparison of minimum rates applied until 31 December 2022 and from 1 January 2023:

 Till 2022.12.31From 2023.01.01
Minimum monthly salary
EUR 730EUR 840
Minimum hourly salary
EUR 4,47EUR 5,14

Daily allowances taxation

In order to calculate a non-taxable daily allowance for foreign business trips, the agreed salary in the employment contract of an employee shall be compared with the minimum monthly salary or the minimum hourly salary multiplied by a coefficient that is equal to 1,65.

Daily allowances for foreign trips shall be non-taxable if the agreed salary is equal to or greater than the amounts provided in the table below:

SalaryTill 2022.12.31From 2023.01.01
Agreed monthly salary, EUR
1204,501386
Agreed hourly salary, EUR
7,388,48

Untaxable income amount

From 2023 there are changes in the formula of untaxable amount calculation and untaxable income amounts for limited working capacity employees. 

In the table below, we provide comparative information about untaxable income amounts till the end of December 2022 and their changes from 2023.

   Variable monthly untaxable income amount (MUIA) (formula) Untaxable income amount for limited working capacity employees
 0-25% 30-55%
 Till 2022.12.31 MUIA=540 EUR if a monthly salary does not exceed 730 EURMUIA=540-0,34*(MEI- 730) when monthly salary is higher than 730 EUR but does not exceed  1 704EURMUIA=400-0,18*(MEI- 642) when a monthly salary exceeds 1 704 EUR EUR 870 EUR 810
 From 2023.01.01MUIA=625 EUR if a monthly salary does not exceed 840 EURMUIA=625-0,42*(MEI- 840) when a monthly salary is higher than 840 EUR but does not exceed 1 926 EURMUIA=400-0,18*(MEI- 642) when a monthly salary exceeds 1 678 EUR EUR 1005 EUR 935

The following abbreviations are used in the formula: MEI – monthly employment income.

MUIA is applicable if the monthly salary amount is up to 2 865 EUR.

Personal income tax (PIT)

From 2023 there are no changes in PIT rates. From 2023 there is a change in an employee’s employment income limit. If the employee‘s employment income exceeds 60 average monthly salaries (hereinafter – AMS; 101 094 EUR), a progressive PIT rate of 32% will be applicable for the exceeded part.

 Standard PITProgressive PITWhen progressive PIT is applied?
 Till2022.12.31  20%  32% For the part of employment income exceeding 60 AMS*(EUR 90 426)
 From2023.01.01  20%  32% For the part of employment income exceeding 60 AMS* (EUR 101 094)

*illness, maternity, paternity, parental leave pays, and payments from long-term unemployment fund are not included into the 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: 3 % instead of 2,7%;
  • higher social security contribution floors;
  • higher social security contribution ceilings.

Starting 1 January 2023, the rate of the contribution of additional pension accumulation will be 3 % for all employees participating in the additional pension accumulation program.

Employers have to pay additional social security contributions for employees whose monthly salary is lower than the minimum monthly salary (hereinafter – MMS) from the gross amount of MMS. Regarding the changes in MMS from 2023, the minimum amount from which social security contributions should be paid is 840 EUR (in 2022 – 730 EUR).

In the table below, we provide comparative information about social security contribution rates and their changes from 2023.

  SSC(employee’s)Transfer toadditional pension fund (voluntary)
SSC
(employer’s)
 Ceilings to SSC*
 From2022.01.01 19,50% 2,7% or 3% 1,77%For the part of employment income exceeding 60 AMS(90 246 EUR)
From2023.01.0119,50%3%1,77%For the part of employment income exceeding 60 AMS (101 094 EUR)

*Except 6,98% of health insurance and employer’s part of social security contributions.

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

Virginija Guleva

Head of Tax & Legal

virginija.guleva@leinonen.lt

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