The Law on Corporate Income Tax (2001) (last edition 2021) establishes the procedure for imposing corporate income tax on profits earned and/or income received. According to the Law, the applied tax rate is 15 per cent of the taxable profits of Lithuanian entities and permanent establishments. The Law was amended in 2013 by adding Article 172 and in 2018 by extending the period relating to Article 172 until 2023. The Article states that in calculating corporate income tax, funds granted free of charge to a Lithuanian filmmaker during the period from 1 January 2019 until 31 December 2023 for the production of a film or a part thereof in the Republic of Lithuania may be deducted from taxable income where: 1) the film meets the criteria for a cultural content and production assessment established by the Government of the Republic of Lithuania or an institution authorised by it, and 2) at least 80% of all the expenses of production of the film or a part thereof are incurred in the Republic of Lithuania and the expenses incurred in the Republic of Lithuania, regardless of the expenses specified in paragraph 3 of this Article, comprise at least EUR 43 000, and 3) the total amount of funds granted by all Lithuanian entities or foreign entities through their permanent establishment in the Republic of Lithuania does not exceed 30% of all the expenses of production of the film or a part thereof (more about this tax incentive see chapter 7.3).
The Law on Corporate Income Tax also foresees corporate income tax relief for non-profit organisations. For non-profit units whose taxable income from economic commercial activities does not exceed EUR 300 000, taxable income corresponding to the amount of EUR 7 250 is taxed at the 0 per cent tax rate and the remainder at the 15 per cent tax rate. Income from the economic activities of a non-profit unit, which is directly awarded to the financing of activities in the public interest, shall be excluded.
Article 28 of the Law on Corporate Income Tax provides for the regulation of sponsorship. According to the article, taxpayers who are entitled to provide sponsorship under the Law of the Republic of Lithuania on Charity and Sponsorship shall be allowed to deduct from their income two times the payments made, including assets transferred and services rendered, which are intended for sponsorship in accordance with the procedure laid down in the Law of the Republic of Lithuania on Charity and Sponsorship.
The Law on Charity and Sponsorship (1993) (last edition 2020) establishes the framework for providing and receiving charity and sponsorship. According to Article 9 of the Law, natural persons can transfer an amount not exceeding 1.2% of the income tax payable on the basis of an annual income tax return to Lithuanian entities that are entitled to charitable donations and sponsorship. Recipients of sponsorship may be charitable and sponsorship funds; budget financed institutions; associations; public organisations; artists registered as beneficiaries in the Information System of Artist’s and Artist’s Organizations maintained by the Ministry of Culture.
The Law on Personal Income Tax (2002) (last edited in 2022) establishes the procedure for levying income tax on individuals. The tax rate of personal income received from an employment relationship is 20 per cent if individual income does not exceed the sum of 60 average wages. Income above that sum is taxed at 32 per cent rate. The tax rate of self-employed persons that have a certificate of self-employment is 15 per cent. Royalties are also taxed at 15 per cent. According to Article 34 of the Law, after the end of the tax period, the tax administrator must, at the request of a resident of Lithuania transfer to Lithuanian entities that are entitled to charitable donations and sponsorship under the Law on Charity and Sponsorship an amount not exceeding 1.2 per cent of the income tax payable on the basis of an annual income tax return.
The Law on Value Added Tax (2002) (last edition in 2021) establishes the guidlines for value added tax (VAT) and the obligations of taxable persons, VAT payers and other persons incidental to the payment of the tax. According to the law, the standard VAT rate is 21 per cent. Article 19 of the Law sets a reduced VAT rate of 9 per cent for books and non-periodical publications. The same reduced VAT rate is applied to accommodation in hotels and other special accommodation services supplied according to the procedure laid down in the legal acts regulating tourist activities. The reduced VAT of 5 per cent is applied to newspapers and periodicals, except for publications publicising eroticism and violence, which have been recognised as such by an institution authorised by legal acts and for printed matter, 4/5 of which is devoted to paid advertising.
Article 23 of the Law states that cultural services supplied by non-profit making legal persons shall be exempt from VAT. Cultural services are defined as the following activities: 1) activities of museums, zoological and botanical gardens, circuses; 2) cultural events of all kinds (theatre performances, choreographic performances, cultural events for children and young people, art exhibitions and exhibitions of folk art, etc.), film production (including ancillary activities – dubbing, subtitling, etc.), film rent and presentation; 3) services in the field of bibliography and information supplied by libraries. Article 26 states that supply to the public of public information services by non-profit making legal persons – radio and/or television broadcasters shall be exempt from VAT. However, this provision is not applicable to the sale of broadcasts, advertising services and other commercial activities.
The Law on Patronage (2018) lays down requirements for national patrons, municipal patrons, criteria and essential conditions for patronage projects, areas where these projects can be carried out, recognition of the project as subject to patronage, awarding of the title of national and municipal patron, awarding of the sign of national and municipal patron, and the procedure of the memorialisation and the loss of the title of patron.