[ESTABLISHING A BUSINESS ENTITY IN LITHUANIA] 322
4.2 Taxation of Non-Residents The income tax base of non-resident individuals is worldwide income derived through a fixed base maintained in Lithuania, if any, and the following types of income from Lithuanian sources: • employment income; • distributed profits, including dividends; • any payments made to members of the board or the supervisory board; • interest; • royalties; • income from the lease of immovable property located in Lithuania; • income from the disposal of immovable property located in Lithuania or movable property that is subject to mandatory registration in Lithuania; • income from sports and entertainment activities; and • compensation for violation of copyright or similar rights. The general flat rate of personal income tax is 15%. However, the share of annual income exceeding EUR 253,065 is subject to a 20% rate. Employment-related income and payments made to members of the board or the supervisory board are subject to taxation at a rate of 20%, any portion exceeding EUR 126,532 is subject to taxation at a rate of 32%. Income from distributed profits and individual activities derived through a fixed base maintained in Lithuania is subject to a 15% rate.
4.3 Harmonization with EU Tax Legislation The Lithuanian tax system is harmonized with EU tax legislation. 4.4 Residency and Visas Lithuania is a member of the European Union, and it is a Schengen country. The basic rules regarding EU and non-EU nationals are as follows: 4.4.1 Citizens of the European Union A citizen of the EU and his family members may enter and stay in the Republic of Lithuania upon a valid travel or identity document for a period of three months starting from the first day of entry. A citizen of the EU arriving to Lithuania for a period exceeding three months within a half a year and meeting at least one of the grounds specified in the Law on the Legal Status of Foreigners (e.g. employment in Lithuania) shall be issued a certificate of temporary residence in the Republic of Lithuania and declare the place of residence. The certificate shall be valid for a period of five years (or a shorter period requested by the foreigner). The family members of the EU citizens who are not EU citizens shall be issued temporary residence cards of the family members of a Union citizen valid for the period of the EU citizen's certificate but in any case, for no longer than five years. A citizen of EU who has been lawfully residing in the Republic of Lithuania for the last five years shall acquire the right of permanent residence in the Republic of Lithuania. Absence from Lithuania for more than six months within a year may constitute grounds for refusing the right of permanent residence, except in cases where absence is caused due to serious reasons (due to pregnancy, childbirth, acute illness, studies, professional training or assignment to
ILN Corporate Group – Establishing a Business Entity Series
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