Lithuania - Regulatory Changes for Gambling and Lotteries Sector

On 18 June 2024, the Lithuanian Parliament(Seimas) adopted the first reading of the amendment to the Law on Lotteries and Gambling. The amendment introduces an increase in the VAT rate for the lottery and gambling sector. The new rate for these sectors and related services shall be 22% of the tax base.

At present, the taxable persons who provide these services are required to impose a 20% tax rate on these activities.

If the Seimas adopts the proposed amendment on the second reading, the new tax rate of 22% will apply from 2025.

Timeline
The required taxable persons should levy the new tax rate for gambling and lottery services starting on January 1, 2025.

Regulatory Framework and Impact

Lithuania's gambling and lottery sector is an important source of revenue, considering the number of employees working in this sector and the flow of tax money derived from its activities. Notable business analysis shows that the revenue generated in these sectors has grown steadily by double digits.

This sector's revenue from 2023 grew by 50% compared to 2022. This undoubtedly shows the tendency for growth in the upcoming years.

The scope of the services provided by the different types of businesses operating in this sector is extensive. Some of the examples of the services covered by the Gambling and Lotteries Act are as follows:
• Onsite betting games;
• Remote online betting games;
• Table games;
• Bingo;
• Slot machines.

Based on the factual data, the scale of growth of the businesses that are part of the betting industry in Lithuania is quite significant, and it could be concluded without doubt that it will expand and bring more revenue in years to come.

The Government notes that this sector should be taxed with higher VAT rates, not just to increase the fragment of the state budget made from the tax levies but also to try to combat the “challenges” connected to its activities.

In this direction, the Ministry of Finance has prepared a draft Law about stricter rules in the betting industry. This Law aims to institute better monitoring solutions that will be incorporated into the daily activities of business operators as a tool to combat players' dependency and the related struggles for their mental health.

One proposal for implementing better monitoring systems for the participants of remote gambling and betting games is for platform operators to develop a centralized remote platform that will identify all the remote players in this ecosystem and monitor their activities.

Tax advisory