Prime Minister Gintautas Paluckas says that the growing needs for defence and better public services – which are our health, education, social security system and many other areas of everyday life – require more and sustainable funding, which cannot be achieved without a more efficient, socially fair and solidarity-based tax system.
"This is precisely what these amendments are focused on, discussed and improved with social partners. I can assure you that they will not affect vulnerable groups in society and will not practically change our business environment and competitiveness," G. Paluckas states.
Proposed amendments to VAT, health insurance, and excise duties
Taking into account the comments received during the consultations, it is proposed that certain income – shares held for 10 years, life insurance and pension savings benefits, sickness, maternity, childcare and long-term employment benefits – as well as dividends, continue to be taxed at the current 15 % income tax rate.
At the same time, it is proposed that all income of residents exceeding 60 AW be taxed at a 32 % rate (i.e. the additional 36 % tax rate for the highest income exceeding 120 AW has been waived) and thus maintain the prerequisites for attracting highly qualified specialists.
In relation to voluntary health insurance contributions paid by the employer, it is planned to narrow the scope of the relief and consider only the employee's benefit exceeding EUR 350 per year as part of taxable wages. By considering this benefit as part of wages, the employer will continue to be able to reduce taxable profit by the entire amount of such costs.
Taking into account the objectives of public health policy, it is proposed to tax sweetened beverages containing only added sugars, the amount of which exceeds 2.5 g per 100 ml of the beverage, or containing sweeteners, by setting excise duty rates based on the amount of sugars in them, without distinguishing between individual beverage categories. In this way, beverages containing natural sugars, e.g. from fruit or milk, would not be classified as an object of excise duty.
Immovable property tax proposals approved
"The issue of the immovable property tax has attracted the most discussions and proposals in the public space. There were a number of proposals, but after discussions we now have an option that is a compromise and acceptable to most groups in society," Minister of Finance Rimantas Šadžius emphasized.
After the discussion, it is proposed to tax a resident's non-commercial property differently - distinguishing between the main residential property and the remaining non-commercial property of the person.
Regarding the main residential property, the municipality has been granted the right to determine the amount exempt from the immovable property tax. The municipality has also been granted the right to determine the immovable property tax rate from 0.1 to 1 %.
According to R. Šadžius, during discussions with the heads of municipalities, a compromise acceptable to all parties was reached, that the municipality, knowing its residents best and taking into account the two most important criteria - the economic and social situation of the owner and the tax value of the housing - will determine the effective and most appropriate immovable property tax rates for the main residential property.
It was decided to maintain a 50 % (and 75 % for large families or raising a child with disabilities) tax credit for the portion of the value of the main housing not exceeding EUR 450,000.
It is proposed that the value of the remaining non-commercial property of the person be taxed until 2030 in the following manner:
- 0 % rate applies to the value of the property not exceeding EUR 20,000;
- 0.1 % rate applies to the value of the property above EUR 20,000, but not exceeding EUR 200,000;
- 0.2 % rate applies to the value of the property above EUR 200,000, but not exceeding EUR 400,000;
- 0.5 % rate applies to the value of the property above EUR 400,000, but not exceeding EUR 600,000;
- 1 % rate applies to the value of the property exceeding EUR 600,000.
It is proposed to include the immovable property tax paid for the main residential housing in the municipal budget, and for other property – in the Defence Fund.
It is important to note that the arguments presented regarding the liquidity of the property used in agricultural activities were taken into account, therefore, the package of tax proposals was supplemented with a proposal to exempt the property of legal entities and residents from taxation for 5 years from the date of cessation of agricultural activities, which was used to earn income from agricultural activities until the date of cessation of agricultural activities.
If the Seimas adopts the relevant tax proposal laws, they would enter into force on 1 January 2026.
You can find the presentation of the 2025 tax proposals here.
