A dividend in Lithuania is taxed twice and the halves are almost never quoted together. The company pays corporate income tax on the profit; the shareholder then pays personal income tax on what is distributed. Neither gives credit for the other, so the figure that decides whether a distribution is worth making is the combined one.
The personal half moved everywhere else in 2026 and did not move here. Income not from employment relations is now taxed at 15% only up to twelve average wages, €27,746, above which the 20%, 25% and 32% bands take over. Dividends were left outside that scale — VMI: gauti dividendai nėra įskaičiuojami į metinę pajamų dalį, kuri apmokestinama 20, 25 ar 32 proc. mokesčio tarifais.
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The Flat Rate, and Why the 2026 Bands Miss It
A dividend paid to a resident individual carries personal income tax at 15%, from the first euro, whatever else they earned that year.
Three things follow. No threshold: a dividend of €500 and one of €500,000 are taxed alike. No interaction with salary: a director already in the 32% band on pay still pays 15% on the dividend. No allowance: the NPD that reduces taxable pay on an ordinary salary is not applied here — VMI, on the income code dividends are declared under, šios rūšies pajamoms metinis NPD netaikomas.
Running a dividend through the new bands gets it wrong twice over
The reform moved the boundary tenfold, from 120 average wages to twelve, and so catches capital gains and property sales far sooner than older guidance suggests. Dividends were not part of it, and applying the new scale to one overstates the tax.
The Profit Is Taxed Before the Dividend Is
A dividend can only be paid out of profit, and profit has already met corporate income tax. The 2026 standard rate is 17%, a percentage point above 2025. A small company — income within €300,000, passing the related-party tests — pays 7%; VMI records that the employee-count condition was dropped from 1 January 2026, so a single-owner company qualifies on income alone. A qualifying new company pays 0% for its first 2 tax periods, provided every shareholder is a natural person and there is no cessation of activity, liquidation, reorganisation or transfer of shares to new members across 3 consecutive periods including the first.
| Company's corporate rate | Corporate tax | Tax on the dividend | Combined on the profit |
|---|---|---|---|
| 0% — a qualifying new company | 0% | 15% | 15% |
| 7% — income within €300,000 | 7% | 15% | 20.95% |
| 17% — the standard rate | 17% | 15% | 29.45% |
The 0% first-period relief is a company relief, not a shareholder one. Profit that bore no corporate income tax still carries the full 15% when it reaches a shareholder, so a founder keeps 85% of it.
Order matters when comparing a company against individuali veikla or a company as a freelancer: corporate tax comes off first, so on €30,000 of profit at the small-company rate the personal tax is €4,185.00, not €4,500.00. A dividend from a foreign company is also 15% here, with relief for foreign tax by the credit method — see foreign income.
What a Dividend Does Not Buy
A dividend carries no Sodra contribution of any kind. That is the saving people take dividends for and the whole of the cost, because Sodra insures by the relationship a person works under — employment contract, membership of a small partnership or individual enterprise, individual activity, a business certificate — and a shareholding is none of those.
So an owner living on dividends alone has no compulsory health insurance, and PSD entitlement is what admits a person to the public system covered on the Sodra page. It must come from a job, a spouse, or the self-paid €80.48 a month, €965.76 a year. That person also accrues no pension record, no sickness or maternity entitlement and no unemployment insurance, none of it recoverable later: the record is built by contributions, not income.
Salary Versus Dividends for an Owner-Manager
What matters is not one rate against another but what happens to a fixed sum of company money on its way to a personal account. The salary route treats it as the cost of employing the director: employer's Sodra of 1.77% comes off first, then income tax on gross less the NPD, plus the employee's 19.5% on the whole gross. The dividend route treats it as profit: corporate income tax at 7%, then 15% on what is distributed.
| €60,000 of company money | All salary | All dividend |
|---|---|---|
| Employer's Sodra | −€1,043.53 | — |
| Corporate income tax | — | −€4,200.00 |
| Gross pay / distributable profit | €58,956.47 | €55,800.00 |
| Personal income tax | −€11,791.29 | −€8,370.00 |
| Employee's Sodra at 19.5% | −€11,496.51 | — |
| In the owner’s hands | €35,668.66 | €47,430.00 |
| Less self-paid health cover of €965.76 | Not needed — covered | €46,464.24 |
At €30,000 the same arithmetic gives €18,094.19 by salary against €23,715.00 by dividend. The dividend is ahead by €5,620.81 at €30,000 and €11,761.34 at €60,000 — €4,655.05 and €10,795.58 once health cover is bought back. The gap widens with the sum because Sodra is proportional with no allowance against it, while the NPD tapers to nothing at €2,677.49 of monthly gross.
Two qualifications. The salary column is not a loss — its 19.5% buys a year of pension record, sickness and maternity entitlement, unemployment insurance and health cover, where the self-paid contribution costs €965.76 for the health limb alone. The timing differs — a salary is monthly, a dividend follows the annual accounts and arrives in a lump. Run any figure through the salary calculator first; the columns above are that calculator's own code over a full year.
An MB Member's Withdrawal Is Not a Dividend
The confusion that costs people most is specific to the mažoji bendrija. A member may take money out during the year for personal needs (lėšos asmeniniams poreikiams), without a salary and without waiting for the annual accounts. It is legitimate, and it is not a dividend:
| Withdrawal for personal needs | Dividend | |
|---|---|---|
| Income code | 02 | 26 |
| Class of income | Treated as related to employment relations | Income from distributed profit |
| Income tax | The ordinary bands — 20%, then 25% and 32% | 15% flat, from the first euro |
| Sodra | ✓ Yes — the member’s own contributions | ✗ None |
| Needs profit to exist | ✗ No | ✓ Yes |
The Sodra line is where the money is. A withdrawal is the base for that member's own contributions — VSD at 13.83% and PSD at 6.98%, charged on 50% of the sum until 30 June 2026 and 90% from 1 July 2026, a mid-year change that nearly doubles the base.
Choosing the label after the fact does not work. Money taken before there is a distributable profit and a decision to distribute it is a withdrawal, and reporting it later under the dividend code understates both the income tax and the contributions. A member who wants the 15% treatment takes the decision first and the money afterwards.
A third route sits alongside: pay to a member for running the partnership under a civil contract, taxed from 2026 at 15% while it and other non-employment income stay within €27,746. Unlike a dividend, that one sits on the scale the reform rewrote.
Declaring It and Paying It
Under the Law on Companies (Akcinių bendrovių įstatymas), the ordinary general meeting approves the annual financial statements and decides on the distribution of profit. Article 60 requires payment of a declared dividend within one month of the decision, and none on shares not fully paid up where the payment term has expired. Article 60-1 allows an interim dividend: interim financial statements for the period, a decision within 3 months of that period's end and no earlier than the approval of the previous year's accounts and the distribution of that year's profit, and no further allocation sooner than 3 months after the last. The amount is capped at the period's result plus retained earnings less compulsory reserve transfers, and the company must have no overdue obligations and remain able to meet the year's obligations.
| Who is paid | Return the payer files | When |
|---|---|---|
| A resident individual | Monthly GPM313, then annual GPM312 | By the 15th of the following month; the annual return by 15 February |
| A non-resident individual | Monthly GPM313 | By the 15th of the following month |
| A company, resident or foreign | FR0640, the dividend corporate income tax return | By the 15th of the following month |
The company withholds in every case. The payment date is not simply "the 15th": a dividend paid in the first half of a month is paid over by the 15th of that same month, one paid in the second half by the last day of it. A resident withheld correctly at source normally has nothing further to file — where the dividend came from a foreign company, it goes on the annual declaration.
Frequently Asked Questions
What is the tax rate on dividends in Lithuania in 2026?
A flat 15% to a resident individual, from the first euro, no threshold and no allowance. It is the second of two taxes: the profit already met corporate income tax at 17%, or 7% within €300,000 of income, or 0% in a qualifying new company's first 2 periods. Combined: 29.45%, 20.95% or 15%.
Did the 2026 reform change the tax on dividends?
Not on the personal side. The reform cut the 15% rate on non-employment income to twelve average wages, €27,746, above which the 20%, 25% and 32% bands apply, replacing the old split at 120 average wages. VMI states dividends are not counted into that annual part. The corporate side did change: dividends between companies follow the standard 17%.
Do I pay Sodra on dividends?
None of any kind, for shareholder or company. A year lived on dividends alone leaves no pension record, no sickness or maternity entitlement, no unemployment insurance and no compulsory health insurance; cover must come from a job, a spouse or the self-paid €80.48 a month.
Is it better to pay myself a salary or a dividend?
On arithmetic the dividend wins, and the gap widens with the sum: €23,715.00 against €18,094.19 on €30,000 of company money, €47,430.00 against €35,668.66 on €60,000. Health cover at €965.76 a year narrows it. The salary buys the rest of the Sodra cover, and a monthly income rather than an annual lump.
What is the participation exemption and what are its exact conditions?
Articles 33 to 35 of the Law on Corporate Income Tax tax dividends paid to and received by companies at 17% from 1 January 2026. The exemption lifts that where two conditions hold together: not less than 10% of the shares carrying voting rights, held 12 months without interruption, including at the moment of distribution — continuous rather than cumulative, votes rather than capital. The dividend is then excluded from taxable income altogether. Miss either and the full rate applies.
How is a dividend paid to someone living outside Lithuania taxed?
The paying company withholds. A non-resident individual pays the same 15% as a resident; a non-resident company is withheld at 17% unless the participation exemption applies. A treaty can cap what Lithuania keeps — 60 are in the Ministry of Finance's table, typically 5% for a beneficial owner holding at least 25% of the capital directly and 15% otherwise, several dropping that to 10%. Relief is claimed before withholding, on form FR0021 (DAS-1) certified by the other state's tax authority. The treaties with Russia and Belarus are not applied from 1 January 2026.
I am a member of a mažoji bendrija. Is the money I take out a dividend?
Not unless it is one. A withdrawal for personal needs is income related to employment relations, taxed on the ordinary 20%, 25% and 32% bands and forming the base for the member's own Sodra — VSD 13.83%, PSD 6.98%. A dividend needs profit, approved accounts and a decision, and carries 15% with no contributions.
Can I pay myself a dividend from individuali veikla?
No. Individual activity is not a legal person, has no share capital and no shareholders, so there is nothing to distribute; its income is the person's income, taxed as it arises. Someone with individual activity who separately owns shares has two streams computed apart — the dividend does not enter the individual-activity income, does not affect the income-tax credit, and is not part of the base Sodra is charged on.
When can a dividend be declared, and when must it be paid?
The ordinary general meeting approves the annual accounts and decides the distribution; article 60 of the Law on Companies requires payment within one month of that decision, and none on shares not fully paid up where the payment term has expired. An interim dividend under article 60-1 needs interim financial statements, a decision within 3 months of the period's end, and no further allocation for 3 months.
Which forms are filed, and by when?
The paying company files: to an individual, monthly GPM313 by the 15th of the following month and annual GPM312 by 15 February; to a company, FR0640 by the same monthly deadline. The tax is paid over by the 15th for a dividend paid in that month's first half, and by the last day of the month for one paid in the second.
Does the 0% corporate rate for a new company make the dividend tax-free?
No. It relieves the company for its first 2 periods, not the shareholder: profit that bore no corporate tax still carries 15%, so the founder keeps 85%. Distributing profit does not break the relief, whose conditions turn on ceasing activity, liquidation, reorganisation, a share transfer or a new member joining across 3 consecutive periods.
How does a dividend interact with my salary for the progressive bands?
It does not, in either direction. Dividends are not counted into the annual part the 20%, 25% and 32% bands apply to, so neither can push the other into a higher band. The NPD is not applied to dividend income either.
Disclaimer
This is general information, not tax advice. Rates, thresholds and conditions change — verify against VMI, the State Tax Inspectorate, or consult a qualified Lithuanian tax adviser before making decisions.