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

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