Lithuania Raises VAT Exemption Threshold for Small Businesses to €60,000 by 2026

March 4, 2025

The Lithuanian Parliament reviewed the proposed amendments to the VAT Law regarding the small business regime and approved further discussion of them. The proposed changes follow the EU VAT Directive and EU regulatory framework regarding the SME scheme.

In addition to amending rules for resident taxable persons, Lithuania legislators also approved a threshold for SMEs from other EU countries.

Impact on the Taxable Persons

Under the current rules, businesses that exceed the EUR 45,000 threshold within the last 12 months must register for VAT purposes in Lithuania and charge, collect, and remit VAT on their taxable transactions. However, a new regulation proposes increasing the VAT registration threshold to EUR 60,000, which would have two effects.

On one hand, small businesses close to exceeding the current threshold would not need to register for VAT. Conversely, companies that exceeded the threshold and registered for VAT may be able to deregister if they do not exceed the newly proposed VAT threshold.

Finally, according to EU SME rules, Lithuanian small businesses will not have to register for VAT in another EU country if their annual turnover in that country does not exceed EUR 100,000. Consequently, with the implementation of this rule, small businesses from other EU countries that have business activities in Lithuania will not be required to register for VAT if their annual turnover is below the EUR 100,000 threshold.

Conclusion

The proposed measure should reduce the administrative and financial burdens on small businesses and help them become more competitive in Lithuania and the EU single market. The proposed changes affect not only Lithuanian taxable persons but also small businesses from other EU countries that operate in the Lithuanian market.

Once adopted, a new EUR 60,000 VAT registration threshold will take effect on January 1, 2026. This gives all taxable persons enough time to determine how this will affect their businesses and prepare for upcoming regulatory changes.

Source: Lithuanian Parliament, European Commission

What is the new VAT registration threshold for small businesses in Lithuania?

The VAT registration threshold in Lithuania will increase from €45,000 to €60,000 starting January 1, 2026.

How will the VAT threshold change impact small businesses in Lithuania?

Businesses below the new €60,000 threshold won’t need to register for VAT, reducing administrative and financial burdens. Some previously registered businesses may deregister.

What are the VAT registration rules for EU SMEs operating in Lithuania?

Small businesses from other EU countries won’t need to register for VAT in Lithuania if their annual turnover there stays below €100,000.

Why is Lithuania increasing the VAT exemption threshold?

The change aligns with the EU VAT Directive and aims to support small businesses by simplifying tax compliance and enhancing competitiveness.

When will the new VAT threshold take effect?

The new €60,000 VAT threshold will be implemented on January 1, 2026, allowing businesses time to prepare for the regulatory change.

Will the VAT threshold increase apply to all businesses in Lithuania?

Yes, it applies to all resident taxable persons, and it also affects SMEs from other EU countries operating in Lithuania.