Lithuania: Plans to Increase the VAT Threshold

Currently, the Lithuanian VAT threshold is set at €45, 000. Now, the Baltic state is considering raising it by almost half to €65, 000. This would make this VAT threshold the fourth highest in the EU.

If the Lithuanian Parliament adopts the change of the Value Added Tax Law NO. IX-751, it would increase the annual sales threshold for mandatory VAT registration to €65, 000 from January 1, 2024. According to the legislation authors, the higher VAT threshold would help small businesses by reducing their compliance responsibilities. At the same time, B2C service providers would achieve a tax break by not charging VAT from their customers.

Another reason the country is considering the steep VAT threshold increase is the inflation which exceeded 20% in the country after Russia started its war in Ukraine.

The EU VAT directive constrains the general VAT threshold levels. Yet, countries can apply for a derogation process that allows breaching the defined levels for a set amount of time. In case the derogation was to be prolonged, an economic evaluation would be applied.

Several European countries have decided to lift the VAT thresholds. At the beginning of this year, Italy raised its VAT registration threshold to €85, 000.

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