Add VAT to a net price, or strip VAT out of a gross price. Lithuania's standard VAT rate โ pridฤtinฤs vertฤs mokestis, PVM โ is 21%. The rates, the exemptions and what falls under each are set out in full in our VAT guide.
Calculate VAT
Calculating VAT is the easy part; registering for it, filing it and reclaiming input VAT is where most people want help.
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How VAT Works in Lithuania
VAT is a consumption tax added at each stage of the supply chain and ultimately paid by the end consumer. Businesses collect it on sales and reclaim it on purchases, passing the difference to the tax authority.
The arithmetic
Two operations, and people get the second one wrong constantly.
| Operation | Method | Worked example |
|---|---|---|
| Adding VAT | Multiply the net price by 1.21 | โฌ1,000 ร 1.21 = โฌ1,210 |
| Removing VAT | Divide the gross price by 1.21 โ don't subtract 21% | โฌ1,210 รท 1.21 = โฌ1,000 |
The common mistake
To remove VAT from a gross price, you divide by 1.21 โ you don't subtract 21%. Taking 21% off โฌ1,210 gives โฌ955.90, which is wrong by โฌ44.10. The percentage is applied to the net figure, not the gross one, so you have to work backwards.
The 12% rate covers exactly three service categories for 2026 โ accommodation under the tourism rules, scheduled passenger and baggage transport, and admission to art and culture institutions and events โ and nothing else, per VMI's list.
The 5% rate is set by article 19(4) of the VAT Law: medicines, medical aid devices and special medical-purpose foods where the cost is compensated, plus non-compensated prescription medicines; technical aids for people with disabilities and their repair; and printed and electronic newspapers, magazines and other periodicals, alongside books and non-periodic publications. That last point does not apply where advertising exceeds four fifths of the publication, or where the content is mostly music or video โ see the consolidated VAT Law.
Note what is not in the reduced rates at all: district heating, hot water and firewood went from the old 9% straight to 21%.
When You Need to Register for VAT
Not every business charges VAT. Registration becomes compulsory once your taxable turnover from economic activity in Lithuania exceeds โฌ45,000 within a calendar year โ from 1 May 2025 this is calculated over the calendar year, not the rolling last-12-months period used previously. A second, independent trigger is acquisitions of goods from other EU member states above โฌ14,000 per calendar year, which obliges you to register whatever your sales look like โ see VMI's registration guidance. You can also register voluntarily below the threshold, which is often worth doing if your customers are VAT-registered businesses and you have significant input VAT to reclaim.
Running the other way is the small business scheme (smulkiojo verslo schema), in force since 1 May 2025 โ not, as is often reported, part of the 2026 rate reform. It lets a small business trade VAT-exempt up to โฌ45,000 in Lithuania and โฌ100,000 of EU-wide turnover, with quarterly reporting; the identification number is issued within 35 working days.
Which of those applies depends on what you trade as. Individuali veikla and a UAB meet the same threshold but report differently, and both want a business bank account to keep input VAT auditable. The annual income tax declaration is a separate filing and does not stand in for a VAT return.
Practical Notes
- Displayed prices include VAT. Consumer prices in Lithuanian shops are shown gross, so what's on the label is what you pay.
- Business-to-business quotes are often net. If you're freelancing, be explicit about whether your rate includes VAT โ this is a frequent source of invoice disputes.
- Reverse charge applies to many cross-border B2B services within the EU, meaning you don't charge VAT and the customer accounts for it. Check whether it applies to you before invoicing an EU client.
- Keep your invoices. Input VAT can only be reclaimed with valid documentation.
- Filing is periodic and digital. VAT-registered businesses submit returns through VMI's electronic system.
Other Lithuanian Taxes
VAT is one of several. If you're working here, income tax and social contributions matter more to your monthly position:
| Tax | Rate | Applies to |
|---|---|---|
| VAT (PVM) | 21% standard | Goods and services |
| Income tax (GPM) | 20% / 25% / 32% | Progressive: thresholds โฌ83,237 and โฌ138,729 |
| Sodra โ employee | 19.5% | Gross salary, incl. 6.98% health |
| Corporate tax | 17% / 7% / 0% | Company profits: 17% standard, 7% where income is โฌ300,000 or less, 0% for a new company's first two tax periods |
| Dividends | 15% | Flat, regardless of other income |
The 7% small-company rate applies for 2026 where income does not exceed โฌ300,000, and a new company pays 0% for its first two tax periods โ that one also requires income of โฌ300,000 or less, natural-person shareholders, and no restructuring for three tax periods. Both conditions come from VMI's corporate tax page; the GPM brackets are confirmed for 2026 on the same basis.
Frequently Asked Questions
What is the VAT rate in Lithuania?
The standard rate is 21%. Since 1 January 2026, reduced rates of 12% and 5% apply. The 12% rate covers exactly three service categories: accommodation under the tourism rules, scheduled passenger and baggage transport, and admission to art and culture institutions and events. The 5% rate, set by article 19(4) of the VAT Law, covers medicines and medical aid devices including non-compensated prescription medicines, technical aids for people with disabilities and their repair, and printed and electronic newspapers, magazines and other periodicals alongside books and non-periodic publications. Some supplies are zero-rated.
How do I remove VAT from a price?
Divide the gross price by 1.21 for the standard rate. Don't subtract 21% โ that gives the wrong answer, because the percentage is calculated on the net figure rather than the gross one.
What does PVM mean?
Pridฤtinฤs vertฤs mokestis โ value added tax. You'll see PVM on Lithuanian invoices and receipts where an English invoice would say VAT.
Do I have to register for VAT as a freelancer?
Only once your taxable turnover exceeds โฌ45,000 within a calendar year, though voluntary registration is possible and sometimes advantageous. This changed from a rolling 12-month basis to a calendar-year basis on 1 May 2025.
Can I reclaim VAT on business purchases?
If you're VAT-registered, you can generally reclaim input VAT on qualifying business purchases, provided you hold valid invoices. Some categories are restricted.
Do I charge VAT to clients in other EU countries?
Often not, for B2B services โ the reverse charge mechanism usually shifts the obligation to the customer. The rules depend on the service and the customer's status, so check before invoicing.
Are prices in Lithuanian shops shown with VAT?
Yes. Consumer prices are displayed gross, so the shelf price is what you pay at the till.
What happened to the 9% rate, and is that why my heating bill went up?
The 9% rate was abolished on 1 January 2026 and replaced by the 12% and 5% rates. The part that catches households is where the old 9% supplies went: district heating, hot water and firewood did not move to a reduced rate โ they went to the standard 21%. In a country where heating runs from roughly October to April and dominates a winter utility bill, that is a real change to a household budget rather than an accounting detail. It also means most VAT guidance you will find online is wrong, because almost all of it was written before 2026 and still refers to 9%. Check the date on anything you read.
How often do I actually have to file a VAT return?
It depends on whether you are a natural person or a company, and the default is more generous for the self-employed than most people expect. A natural person gets the calendar half-year automatically under article 84(4) of the VAT Law โ you file twice a year with no application. You only apply if you want to file monthly instead, and the change takes effect from the start of the next half-year rather than immediately. Legal entities file monthly by default, or quarterly on request where last year's economic-activity income was โฌ300,000 or less. Separately from all of that there is the annual return, FR0516, due by 1 October of the following year under article 87(1) โ but it is only owed where the year-end figures mean your VAT deduction has to be adjusted, so most filers never touch it.
Can I be forced to register for VAT even though my sales are below the threshold?
Yes, and this is the trigger people do not see coming, because it is about what you buy rather than what you sell. Acquisitions of goods from other EU member states above โฌ14,000 in a calendar year oblige you to register regardless of your turnover โ so a small trader stocking up from a German or Polish supplier can cross into VAT registration while their own sales are still nowhere near โฌ45,000. Note also that the sales threshold itself is measured over the calendar year, not a rolling twelve months, since 1 May 2025. Running the other way, the small business scheme lets you trade VAT-exempt up to โฌ45,000 in Lithuania and โฌ100,000 of EU-wide turnover, with quarterly reporting and an identification number issued within 35 working days.
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Disclaimer
This calculator is for general guidance and does not constitute tax advice. VAT rules around registration, reduced rates, exemptions and cross-border supplies are more complex than any calculator can capture. Confirm your position with VMI or a qualified accountant before relying on these figures for invoicing or filing.