In short
This Law establishes the rules for how corporate income tax is applied to profits and income earned by companies and other entities in the Republic of Lithuania. It ensures that these tax procedures align with European Union legal acts.
What it regulates
- The process for imposing corporate income tax on earned profits and received income.
- The application of these tax rules within the territory of the Republic of Lithuania.
- Compliance with specific EU legal acts related to corporate income tax.
Who it concerns
- Lithuanian taxable entities (legal persons registered in Lithuania).
- Foreign taxable entities (foreign legal entities or organizations with registered offices abroad).
Key points
- A "controlled taxable entity" is one where a "controlling person" holds directly or indirectly over 50% of shares or rights to distributable profits, or together with related persons, holds over 50% with the controlling person holding at least 10%.
- A "non-profit entity" is established for non-profit purposes and cannot distribute profits to its founders or members.
- A "group of entities" consists of a parent entity and one or more taxable subsidiaries where the parent holds more than 25% of shares.
- "Associated persons" include "related persons" or those who can influence each other's transaction conditions.
Įstatymo tekstas
OFFICIAL TRANSLATION Republic of Lithuania LAW ON CORPORATE INCOME TAX 20 December 2001 No IX-675 Vilnius (As amended on 20 December 2005 – No X-456) CHAPTER I GENERAL PROVISIONS Article 1. Purpose an
Article 41
of this Law, members of an entity receive shares (interests, member shares) of another entity in exchange for those held in the former entity, the increase in the value of assets shall not be treated as income of such members. In this case, the acquisition price of the new shares (interests, member shares) received by the members of an entity shall be the acquisition price of the shares (interests, member shares) exchanged before the transfer was effected. 2. Where,
Article 41
of this Law, an entity transfers assets to another entity, the increase in the value of assets shall not be treated as income of the transferring entity. In this case, the acquisition price of such assets with respect to the receiving entity shall be the acquisition price of the assets before the transfer was effected. 3. Where,
Article 41
of this Law, a foreign entity transfers a permanent establishment situated in Lithuania to another entity, the increase in the value of assets with respect to the permanent establishment shall not be treated as its income. In this case, the acquisition price of such assets with respect to the receiving entity shall be the acquisition price of the assets before the transfer was effected. 4. Where,
Article 41
of this Law, a Lithuanian entity transfers a branch of activity in a Member State of the European Union to a foreign entity, the increase in the value of assets shall not be treated as income of the transferring entity. 5. Where,
Article 41
of this Law, a Lithuanian entity transfers a branch of activity to another Lithuanian entity, the increase in the value of assets shall not be treated as income of the transferring entity. In this case, the acquisition price of such assets with respect to the receiving entity shall be the acquisition price of the assets before the transfer was effected. 6. Where,
Article 41
of this Law, a foreign entity transfers a branch of activity in a Member State of the European Union to a Lithuanian entity, the acquisition price of such assets with respect to the receiving entity shall be the acquisition price of the assets before the transfer was effected.
- Where, in the case specified in subparagraph 9 of paragraph 2 of Article 41 of this Law, a Lithuanian entity transfers its registered office, the increase in the value of assets shall not be treated as income of the Lithuanian entity, while the acquisition price of such assets with respect to the permanent establishment situated in the Republic of Lithuania through which the entity continues to carry on its activities in the Republic of Lithuania shall be the acquisition price of the assets before the transfer of the registered office was effected.
- Where,
Article 41
of this Law, an entity transfers assets to another entity, the receiving entity shall continue to calculate the depreciation or amortisation of such assets according to the rules applied by the transferring entity before the transfer was effected. Where, in the case specified in subparagraph 9 of paragraph 2 of Article 41 of this Law, a Lithuanian entity transfers its registered office, the assets attributed to the permanent establishment in the Republic of Lithuania due to the transfer of the registered office shall be depreciated and amortised according to the rules applied by the Lithuanian entity before the transfer was effected. 9.
Article 41
of this Law, the difference which arises at the moment of reorganisation or transfer (the amount by which the price paid by the acquiring entity exceeds the value of the net assets acquired) shall not be deducted from income, while the negative difference (the amount by which the value of the net assets acquired exceeds the