[ESTABLISHING A BUSINESS ENTITY IN LITHUANIA] 321
carried forward for 5 years to be offset against future capital gains. Tax losses can be also transferred from one company to another within the same group of companies and within the same tax period if certain conditions are met. 4.1.6. Further Corporate Tax Exemptions For corporate taxpayers who have been implementing investment projects (e.g., acquisition of fixed assets such as machinery and equipment, trucks and trailers, computer hardware and software, communication equipment and rights), taxable profits may be reduced up to 100%. R&D costs may be deducted by a triple amount in the taxable period when they are incurred. Companies established in free economic zones are exempt from corporate income tax for the first 10 years following the date of capital investments and they are subject to a 50% reduction in the CIT rate for 6 subsequent years: • if capital investments are not less than EUR 1,000,000 and the companies meet certain other conditions; • if capital investments are not less than EUR 100,000, the average number of employees is not less than 20 in the financial year, and the companies meet certain other conditions. 4.1.7. Employment Related Taxes The government of Lithuania has set forth the minimum pay (EUR 6,35 per hour) and minimum monthly wage (EUR 1038 per month). The hourly pay or monthly wages of an employee may not be lower than the minimum hourly pay or the minimum monthly wage. The minimum monthly wage can only be paid for unqualified work.
Taxes that shall be deducted from the agreed employee wage are the following: • personal income tax (standard rate is 20%, any portion exceeding
EUR 126,532 (60 average monthly wage) is subject to taxation at a rate of 32%);
social insurance tax (19,5%);
•
• pension saving contributions (3% or if the employee decides to additionally save for a pension in pillar 3 of pension accumulation system, employee can set the percentage of savings individually. The employer shall pay in addition the social insurance tax (1,77% in case the employee is employed for unlimited term, 2,49% in case the employee is employed for a fixed term). The amount of 60 average wages (EUR 126,532) shall be calculated in accordance with the annual income as provided below: • income related to an employment relationship or other relationship that corresponds to the employment relationship; • bonuses and remuneration for the activities at the supervisory board, management board or the loan committee; • income received from the employer under the copyright agreements; • income received by the heads of small partnerships who are not members of those small partnerships under a civil (service) contract for the management activities.
ILN Corporate Group – Establishing a Business Entity Series
Made with FlippingBook Ebook Creator