Lithuania: Government Focuses on Supporting Households and Businesses Amid Energy Price Spikes

Lithuania has scheduled its budget adoption hearing for November 2022, and more and more discussions on the measures for navigating the energy crisis are reaching the public sphere.

A package of 2.5 billion euros was proposed to address the negative impact of energy prices on Lithuanian businesses. It is planned that the country will borrow around 6.673 billion euros domestically and abroad next year.

Among the most recent measures to help Lithuanian businesses is the government’s proposal to make a VAT relief for hotels permanent and extend the VAT reduction for catering companies. The VAT for hotels was reduced to 9% during the pandemic. The Lithuanian government hopes that the relief extension will help hospitality companies better cope with energy price increases.



To help the households, the government agreed to cut VAT on domestic heating from 21% to 5%, while central heating is now zero-rated. The proposal was first discussed back in February, and the government returned to it in August. However, Lithuania is still delaying putting out proposals for cutting VAT on food due to concerns about further budget losses.

Together with the VAT cuts, the Lithuanian government is actively considering and has already confirmed several compensation mechanisms for low-income households and businesses. For households eligible for heating subsidies, heating prices will be compensated throughout the cold season.

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