Lithuania Updates VAT Rules for Financial Services 2026

Lithuania’s State Tax Inspectorate released updated guidance on VAT exemptions for financial services ahead of the January 1, 2026, changes. In addition to introducing new technical administrative services rules, the guidance outlines which services remain exempt, which are taxable, and under what conditions certain exempt services may optionally be subject to VAT. 

Main Points from the VAT Guidance

One of the key clarifications in the guidance is that purely administrative, technical, or physical services that do not affect the legal or financial position of parties in a financial transaction will no longer be exempt from VAT and will generally be treated as standard taxable supplies.

Notably, the VAT exemption will continue to cover core financial activities, including the granting and management of loans, payment-related services such as deposits, money transfers, clearing, and non-cash settlements, as well as the issuance and servicing of payment cards. Furthermore, currency transactions and cash handling linked to banknotes and coins remain exempt, along with transactions involving securities and derivatives, including associated intermediation and directly related services.

In its guidance, the State Tax Inspectorate further explains that some exempt financial services can be optionally brought under VAT, provided minimum application periods are met, and proper notification is given. The State Tax Inspectorate also added that services of a technical nature, including debt collection, factoring, and IT support for banking systems, remain taxable. Additionally, digital currency exchanges, such as those involving Bitcoin, are VAT-exempt, whereas specific rules govern the safekeeping and management of securities.

Conclusion

Essentially, the updated VAT guidance for financial services confirms that core financial activities, such as loans, payment services, currency transactions, and securities operations, remain VAT-exempt. In contrast, purely administrative or technical services are generally taxable. Given the importance of the financial sector, the provided clarifications and explanations provide more straightforward rules and greater consistency for financial institutions and service providers.

Source: Lithuania’s State Tax Inspectorate