Lithuania Payroll Information

Updated on: 2025/08/04 14:35 (UTC)

Overview

Lithuania, which officially is known as the Republic of Lithuania, is a parliamentary democracy located in Eastern Europe. Lithuania borders Poland to the southwest, Belarus to the south and east and Latvia to the north, and also borders to its southwest the Kaliningrad Oblast, which is an exclave of Russia. The Baltic Sea borders Lithuania to its west. Lithuania is a member state of the European Union.

Lithuania consists of 60 first-order administrative divisions known as municipalities, or savivaldybe.

Lithuania’s currency is the euro.

Employers in Lithuania must withhold income taxes and social security contributions from employee’s paychecks in addition to contributing to social security for employees. Employers must also uphold laws in regards to compensation and benefits practices.

Foreign workers in Lithuania generally are subject to the same laws for taxes and labor as Lithuanian citizens. Foreign workers in Lithuania are subject to income tax on Lithuanian source income while Lithuanian nationals are subject to income tax on worldwide income.

Lithuanians working in the United States are covered by U.S. tax law with possible treaty and work status exclusions applying. Work within the U.S. states and territories is covered by various labor laws.

Developments in Lithuania can be found in Payroll News.

CURRENCY DETAILS

The currency of Lithuania is the euro (€), which Lithuania uses because it is part of the euro area, also known as the eurozone, which is a group of countries that adopted the euro as their currency. While the European Commission officially recognizes the spelling of the euro currency in Lithuanian as in accordance with the commission’s standard spelling of euro, in common Lithuanian parlance the singular form of the currency’s name is euras. The internationally recognized three-letter currency code for the euro is EUR, which also is one of the currency’s two commonly used currency symbols. The English plural form of euro officially recognized by the European Commission is the same as its singular form, although in common English parlance the plural form is euros. In Lithuanian, the plural form of euras is the same as its singular form, or eurai or euru, with usage depending on context.

When an amount of euro is written using the currency symbol € in accordance with the European Commission’s standard placement treatment of the symbol, which is the placement treatment used for the English language, the symbol precedes the numerical value with no space between the numerical value and symbol. When an amount of euro is written in Lithuanian using the currency symbol €, the symbol follows the numerical value with a space between the numerical value and symbol.

When an amount of euro is written using the currency symbol EUR, the symbol precedes or follows the numerical value with a space or no space between the numerical value and symbol.

One hundredth ( ¹ ⁄ ₁₀₀ ) of a euro is referred to in English as a cent and the English plural form of cent officially recognized by the European Commission is the same as its singular form, although in common English parlance the plural form is cents. In Lithuanian, as officially recognized by the European Commission, one hundredth of a euro also is referred to as a cent and its standard plural form also is the same as its singular form, although in common Lithuanian parlance, one hundredth of a euro is referred to in its singular form as a centas and has a plural form that is the same as its singular form, as well as the plural forms of centai and centu, with usage depending on context.

When amounts of euro are written in Lithuanian, the comma that in English separates the thousands place from the hundreds place instead usually is rendered as a space, although some government entities prefer to merely have the numbers in the thousands place and hundreds place adjacent to each other with no symbol or space between them, and the dot (.) that in English separates the ones place from the tenths place instead is rendered as a comma.

TAXES

The national government generally enacts laws relating to income taxes and social taxes in Lithuania.

The tax year in Lithuania is the calendar year, from Jan. 1 to Dec. 31.

Coronavirus (Covid-19) Guidance: Employers on a list (Lithuanian) of those determined to have been adversely affected by the new coronavirus pandemic may postpone tax payments due from March 16, 2020, to April 30, 2021, to the State Tax Inspectorate (Valstybine mokesciu inspekcija, abbreviated as VMI) or Sodra interest-free to two months after the end of Lithuania’s officially-declared state of emergency. Employers not on the list, but that have also been adversely affected by the pandemic, may apply to VMI for postponements covering both VMI and Sodra.

According to European Commission guidance, employees who normally work in one European Union member country and live in another are still considered to be insured by the social insurance system of the normal work country while working at home.

Income Taxes

Coverage: Any individual receiving income is subject to the income tax law. Individuals are considered residents of Lithuania if their permanent place of residence is within Lithuania during a tax year, they are within Lithuania at least 183 days within a tax year or if they are within Lithuania for at least 280 days in two successive tax years.

Employees: Employees are defined as those employed for remuneration.

Rates and Thresholds: A multiple of Lithuania’s applicable average salary (vidutinis darbo uzmokestis, abbreviated as VDU) is used, starting with 2019, as the rate differentiation threshold for the country’s new progressive income tax system for employment income. The applicable average salary is a monthly amount that is subject to adjustment each year. The applicable average salary in effect for tax calculations during a year usually is determined in December of the previous year.

Effective for 2021, Lithuania’s two personal income tax rates for employment income are applicable as follows:

• a rate of 20% applies to annual income of up to 60 times the applicable average salary of €1,352.70, which is €81,162; and
• a rate of 32% applies to annual income in excess of 60 times the applicable average salary of €1,352.70, which is €81,162.

Effective for 2020, Lithuania’s two personal income tax rates for employment income were applicable as follows:

• a rate of 20% applies to annual income of up to 84 times the applicable average salary of €1,241,40, which is €104,277.60; and
• a rate of 32% applies to annual income in excess of 84 times the applicable average salary of €1,241,40, which is €104,277.60.

Individuals whose income does not exceed the monthly minimum wage are entitled to treat an amount of their monthly income as exempt from income taxation, and for individuals who earn more than the monthly minimum wage the monthly exemption decreases according to a formula until it reaches zero.

Effective for 2021, individuals whose monthly income does not exceed the monthly minimum wage of €642 are entitled to a monthly exemption of €400, and the monthly exemption is zero for individuals who earn at least €2,864 per month. Effective from July 1, 2020, to Dec. 31, 2020, individuals whose monthly income did not exceed the monthly minimum wage of €607 were entitled to a monthly exemption of €400, and the monthly exemption was zero for individuals who earned at least €2,713 per month. Effective from Jan. 1, 2020, to June 30, 2020, individuals whose monthly income did not exceed the monthly minimum wage of €607 were entitled to a monthly exemption of €350, and the monthly exemption was zero for individuals who earned at least €2,666 per month.

Registration: Businesses registered as a business with the State Enterprise Registration Center (Valstybes imone Registru centras) are automatically registered as taxpayers. Foreign entities must register as a taxpayer with the State Tax Inspectorate (Valstybine mokesciu inspekcija, abbreviated as VMI) using Form FR0227 within five days of starting business in Lithuania. Employed individuals are registered with the State Social Insurance Fund (Valstybinio socialinio draudimo fondo, abbreviated as VSDF or Sodra) through their employers using Form 1-SD by the day before employment starts.

Taxable Amounts: Income subject to income tax in Lithuania includes the following: income from property, royalties, income from an employment relationships including benefits in kind, income from sports, income from performance activities and compensation from copyrights or any related rights.

Individuals may make the following deductions annually: expenses from paying life insurance premiums, contributions to private pension funds and tuition fees paid for themselves or their family members. These deductions can be calculated by the individual on returns.

Withholding Methods: Employers must withhold income tax at source at the flat rate specified.

Returns and Remittance: With regard to income that was paid during a month by the 15th day of the month, remittance of income tax withheld from that income is due to the government by the 15th day of the month. With regard to income that was paid during a month after the 15th day of the month, remittance of income tax withheld from that income is due to the government by the last day of the month.

Employers must submit returns for income withheld monthly and quarterly. Monthly tax returns are due by the 15th day of each month.

Employers are required to submit annual returns of Class A income for a tax year by Feb. 15 of the following tax year using Form GPM312L. Class A income refers to income and benefits paid to permanent residents of Lithuania.

Employers are required to submit annual returns of Class B income for a tax year by Feb. 15 of the following tax year using Form GPM312U. Class B income refers to income and benefits paid to nonpermanent residents of Lithuania.

Individuals must submit an annual income tax return by May 1 following the tax year in question.

Employee Share Plans: Any gains from shares within an employee share plan are taxed as income. Gains are taxed on the difference between the market value of a shares at the time of acquisition and the amount the employee actually paid for the shares.

Effective since Feb. 1, 2020, shares acquired from stock options are exempt from income tax if an employee acquires the shares at least three years after the options are granted.

Recordkeeping: Tax records generally must be kept for 10 years.

Penalties: Depending on the circumstance, tax violations are punishable with a fine of 10% to 50% of the tax liability amount.

Social Taxes

Social Security in Lithuania is administered by the State Social Insurance Fund (Valstybinio socialinio draudimo fondo, abbreviated as VSDF). The State Social Insurance Fund, and the administrative organization that manages the fund, are commonly referred to as Sodra, which is an abbreviation of the two middle words of the fund’s Lithuanian name.

Lithuania’s six main types of social insurance, with tax liability split between employees and employers, are pension (pensiju), sickness (ligos), maternity (motinystes), health (sveikatos), unemployment (nedarbo), and occupational injury and disease (nelaimingu atsitikimu darbe ir profesiniu ligu). Social taxes for funding these types of social insurance are submitted to Sodra. The pension, sickness, and maternity taxes sometimes are collectively referred to as state social insurance (valstybinis socialinis draudimas, abbreviated as VSD). The health tax sometimes is referred to as compulsory health insurance (privalomasis sveikatos draudimas, abbreviated as PSD).

Employers are assessed social taxes for the guarantee fund (garantinis fondas), which is a wage-protection fund for individuals whose employer became insolvent, and the long-term employment fund (ilgalaikio darbo ismoku fondas), which provides replacement income for some individuals who are separated from employment after more than five years of working for the employer from which they separated.

Coverage: All employers are required to withhold social taxes from all employees and make social tax payments. Individuals who are self-employed may contribute to social security voluntarily.

Rates and Thresholds: There is a maximum amount of employment income paid to an employee upon which pension, sickness, maternity, unemployment, occupational injury and disease, guarantee fund, and long-term employment fund taxes may be assessed, and there is no maximum amount of assessable employment income applicable to health taxes.

The maximum amount of employment income paid to an employee upon which pension, sickness, maternity, unemployment, occupational injury and disease, guarantee fund, and long-term employment fund taxes may be assessed is a multiple of Lithuania’s applicable average salary (vidutinis darbo uzmokestis, abbreviated as VDU), which is a monthly amount that is subject to adjustment each year. The applicable average salary in effect for tax calculations during a year usually is determined in December of the previous year.

The maximum amount of employment income paid to an employee upon which pension, sickness, maternity, unemployment, and occupational injury and disease social taxes may be assessed:

• for 2021 is 60 times the applicable average salary of €1,352.70, which is €81,162; and
• for 2020 was 84 times the applicable average salary of €1,241,40, which was €104,277.60;

Employer rates: Employers are assessed social tax rates based on the wages they paid to employees.

Effective for 2021, unchanged from 2020, the standard total social tax rate for employers pertaining to the six main types of social insurance is 1.45%, and this rate contains an unemployment component of 1.31% and an occupational injury and disease component of 0.14%, but not components for the other four types because employers no longer are assessed for those types.

Employers are assessed a higher unemployment component rate on wages paid to an employee on a fixed-term contract than they are assessed on wages paid to an employee without a fixed-term contract.

The unemployment component rate applicable for fixed-term contracts is 1.55 times the standard rate.

Effective for 2021, unchanged from 2020, the unemployment component rate for employers with regard to wages paid to an employee on a fixed-term employment contract is 2.03%, which is 1.55 times the standard unemployment component rate of 1.31%.

The 2021 standard occupational injury and disease component rate of 0.14% is for employers that based on their occupational injury and disease risk factors are assigned to Rate Group 1, and employers assigned to Rate Group 2 are assessed a rate of 0.47%; Rate Group 3, 0.7%; and Rate Group 4, 1.4%. The 2020 standard occupational injury and disease component rate of 0.14% was for employers that based on their occupational injury and disease risk factors are assigned to Rate Group 1, and employers assigned to Rate Group 2 were assessed a rate of 0.4%; Rate Group 3, 0.7%; and Rate Group 4, 1.4%.

The employer contribution rate for the guarantee fund is 0.16% and the employer contribution rate for the long-term employment fund is 0.16%.

Employee rates: Social taxes payable by employees generally are deductible from their employment income.

Effective for 2021, unchanged from 2020, employees are assessed a total social tax rate of 19.5%, which consists of the following components:

• pension: 8.72%;
• health: 6.98%;
• sickness: 2.09%; and
• maternity: 1.71%.

Employees may provide additional pension accumulation contributions for financing private pension funds, alternatively known as second-pillar or tier-2 pension funds.

Effective starting with 2019, the ability of employees to transfer part of their mandated pension contribution toward a private pension fund no longer is available, and employees enrolled in the system of providing additional pension accumulation contributions into a private pension fund are assessed an additional pension accumulation contribution rate of 2.4% or 3% (effective for 2021) deductible from their wages. The rate of 2.4% is for those who start providing additional pension accumulation contributions after December 2018 and the rate is to increase by 0.3 percentage points each year until 2023, when all employees providing additional pension accumulation contributions are to have a contribution rate of 3%. Employees who start providing additional pension accumulation contributions after December 2018 but before January 2023 may choose to be assessed an additional pension accumulation contribution rate of 3% from the start of their contributions. Effective until Dec. 31, 2018, employees enrolled in the system of providing additional pension accumulation contributions into a private pension fund could transfer part of their mandated pension contribution to a private pension fund and were assessed an additional pension accumulation contribution rate of 2% deductible from their wages.

Effective since Jan. 1, 2019, employees younger than 40 years of age are automatically enrolled in the system of providing additional pension accumulation contributions into private pension funds, although they may choose to opt out of the additional contributions by providing written notice to Sodra.

Registration: All employers are required to register with local tax administration branches of the social security fund. Employers must register employees using Sodra’s Form 1-SD by the day before the employee’s employment starts.

Taxable Amounts: All income received from employment, including bonuses, allowances and severance payments, is taxable for social security. Survivor benefits and allowances are not taxable sources of income for social security purposes.

Withholding Methods: Employers must withhold social security contributions from an employee’s paycheck at the time of pay.

Employee Share Plans: Shares acquired from stock options are exempt from social taxes if an employee acquires the shares at least three years after the option is granted.

Returns and Remittance: Employers must remit social security payments and complete returns by the 15th of the month each month to be submitted to Sodra.

Recordkeeping: Records relating to tax must generally be kept for 10 years.

Penalties: Violations are punishable with a fine of 10% to 50% of the tax liability amount.

Other Taxes

Lithuania’s national government does not assess any taxes on employment income other than those covered in the Income Taxes and Social Taxes sections of this primer.

State/Jurisdiction Taxes

Taxes on employment income are not assessed by any of Lithuania’s savivaldybe or local jurisdictions.

COMPENSATION AND BENEFITS

The Labor Code of Lithuania regulates issues regarding minimum wage, overtime, hours of work, holidays, leave, wage payment and termination pay. Workers’ compensation and retirement plans are covered by social security. Collective bargaining agreements may also be agreed upon between employers and employees that stipulate different terms for some policies.

Coronavirus (Covid-19) Guidance: Employers may apply to the Lithuanian Employment Service (Uzimtumo tarnyba, abbreviated as UZT) for subsidies for employees who cannot work because of coronavirus-related restrictions, which are paid for as long as Lithuania’s officially-declared state of emergency and quarantine measures are in effect. Starting with January 2021, the amount of the subsidy is 100% of the employee’s salary, up to a maximum of €963 per month.

Minimum Wage

Effective for 2021, Lithuania’s monthly minimum wage is €642 and its hourly minimum wage is €3.93. Effective for 2020, Lithuania’s monthly minimum wage was €607 and its hourly minimum wage was €3.72.

The monthly minimum wage often is referred to in Lithuania as the minimum monthly salary (minimalia menesine alga, abbreviated as MMA) and the hourly minimum wage sometimes is referred to in Lithuania as the minimum hourly rate (minimalu valandini atlygi, abbreviated as MVA).

Overtime

Overtime work should not exceed 12 hours in a day or 48 hours in a week. Work on Sundays and holidays is paid at twice the normal rate of remuneration.

Hours of Work

The average workday is eight hours and the average workweek is 40 hours. The normal work week is a five day work week, from Monday to Friday with Saturday and Sunday being rest days.

Night work is defined as any work done between the hours of 10 p.m. and 6 a.m.

Holidays

The following are paid public holidays in Lithuania (although the indicated holidays that occur on Sunday generally are paid holidays only for employees who regularly work on Sunday):

• Jan. 1: New Year’s Day (Naujuju metu diena), celebrating the start of a new Gregorian Calendar year
• Feb. 16: Day of the Restoration of the State of Lithuania (Lietuvos valstybes atkurimo diena), commemorating the restoration of sovereignty of Lithuania as an independent country on Feb. 16, 1918, following the dissolution of the Polish-Lithuanian Commonwealth in 1795.
• March 11: Day of the Restoration of the Independence of Lithuania (Lietuvos nepriklausomybes atkurimo diena), commemorating the departure of Lithuania from the Soviet Union on March 11, 1990.
• Easter Sunday (Velykos), celebrating the traditional Christian belief in the resurrection of Jesus Christ. Effective for 2021, the date of Easter Sunday recognized in Lithuania is April 4, 2021. Effective for 2020, the date of Easter Sunday recognized in Lithuania was April 12, 2020.
• Easter Monday (Antroji Velyku diena), the Monday immediately after Easter Sunday: celebrating the grandeur of life, in recognition of the traditional Christian belief in the resurrection of Jesus Christ. Effective for 2021, the date of Easter Monday recognized in Lithuania is April 5, 2021. Effective for 2020, the date of Easter Monday recognized in Lithuania was April 13, 2020.
• May 1: Labor Day (Tarptautine darbo diena), which internationally is the most common date for Labor Day, celebrating workers around the world.
• Mother’s Day (Motinos diena), the first Sunday in May: celebrating mothers in thankfulness for the multitude of ways they care for children and benefit society. Effective for 2021, the date of Mother’s Day recognized in Lithuania is May 2, 2021. Effective for 2020, the date of Mother’s Day recognized in Lithuania was May 3, 2020.
• Father’s Day (Tevo diena), the first Sunday in June: celebrating fathers in thankfulness for the multitude of ways they care for children and benefit society. Effective for 2021, the date of Father’s Day recognized in Lithuania is June 6, 2021. Effective for 2020, the date of Father’s Day recognized in Lithuania was June 7, 2020.
• June 24: Dew and Midsummer’s Day (Rasos ir Joniniu diena), also known as the Festival of Saint John the Baptist (Jonines), celebrating the life and work of St. John the Baptist, the Summer Solstice, and traditional beliefs of Lithuanians.
• July 6: State Day (Valstybes), commemorating the coronation of King Mindaugas of Lithuania on July 6, 1253.
• Aug. 15: Assumption (Zoline), commemorating the Christian belief in the ascension of the Virgin Mary to heaven.
• Nov. 1: All Saints’ Day (Visu Sventuju diena), celebrating the lives and work of saints.
• Starting with 2020: Nov. 2: Day of Remembrance of the Dead (Mirusiuju atminimo (Veliniu) diena, also known internationally as All Souls’ Day, honoring those who have passed away, in praying and remembering for them.
• Dec. 24: Christmas Eve (Kuciu diena), starting the celebration of Christmas.
• Dec. 25: Christmas Day (Kaledu dienomis), celebrating the birth of Jesus Christ and also celebrating togetherness of family and friends.
• Dec. 26: Second Day of Christmas, continuing the celebration of the birth of Jesus Christ and also celebrating togetherness of family and friends.

Christian holidays in Lithuania with varying dates among Gregorian Calendar years: The dates of one of Lithuania’s national public holidays for which paid leave is required, Easter Monday, based on the date of Easter Sunday, and Easter Sunday itself is a paid holiday in Lithuania for employees who normally would work on Sunday. Each year, Easter Sunday is celebrated on the first Sunday after the first full moon is visible following the first day of Spring of that year. As Lithuania accords with the Western method for determining Christian holiday dates based on the Gregorian Calendar instead of the Eastern method for determining Christian holiday dates based on the Julian Calendar, the first day of Spring is considered to be the Vernal Equinox of March 21. The date of Easter Sunday varies among years because it is based on lunar cycles, which do not directly correlate to the Gregorian Calendar as it is a solar calendar, not one based on phases of the Moon.

Effective for 2021, the date of Easter Sunday recognized in Lithuania is April 4, 2021. Effective for 2020, the date of Easter Sunday recognized in Lithuania was April 12, 2020.

Leave

Employers are required to give employees a minimum of 28 days of paid leave per year. Employers are required to provide employees with pay for their annual leave three days prior to the employees taking their vacation. Employees may choose to be compensated for up to three years of unused leave.

If an employee works in a position that is unusually stressful or hazardous, as determined by the government, then the employer must give the employee 58 days of annual leave.

Maternity Leave: Employees are entitled to maternity leave, paid for by social security, if they have contributed to social security at least 12 months out of the last 24 months before taking leave. Maternity leave is paid for 126 days. Women can qualify for an extra 14 days of paid leave upon complications during childbirth or the birth of more than one child. Maternity leave is paid at the rate of 100% of normal remuneration. Women who give birth prematurely are subject to different regulations for days of leave.

Sick Leave: Employers must cover the first two days of sick leave at a rate not less than 80% of normal remuneration. Upon the third day of sick leave, sick leave is covered by social security. For the 3rd sick day to the seventh sick day, social security will cover sick leave at a rate of 40% of normal remuneration, and from the eighth day of sick leave, sick leave is compensated at a rate of 80% of normal remuneration. Employees must have contributed to the social security fund no less than three months out of the past 12 months or six months out of the past 24 months before receiving sickness benefits from social security.

Paternity Leave: Employees must have contributed to social insurance for at least seven months before the first day of paternity leave to qualify for leave.

Effective since Jan. 1, 2020, 30 days of paternity leave, which must be taken consecutively, can be taken from the day the child is born until the child reaches one year of age. Effective until Dec. 31, 2019, paternity leave could be taken from the day the child is born until the child reaches one month of age.

Paternity leave is covered at a rate of 100% of normal remuneration by social security.

Bereavement Leave: Employers must give employees three days of unpaid leave upon the death of a family member.

Wage Payment

The government does not regulate wage payments. Specifics for the time and place of payment are determined within the employment contract between an employer and the employee.

Bonuses and Special Benefits

Lithuania does not require employers to provide bonus payments to employees.

Termination Pay

Employers must give employees at least two months of notice in written form before termination. Employers are required to pay termination pay as follows:

• For up to a year of service, one month of salary;
• more than one year of service and less than three years of service, two months of salary;
• more than three years of service and less than five years of service, three months of salary;
• more than five years of service and less than 10 years of service, four months of salary;
• more than 10 years of service and less than 20 years of service, five months of salary; and for
• more than 20 years of service, six months of salary.

Employers must pay termination pay to the terminated employee in full upon the day of dismissal.

Workers’ Compensation

Workers’ compensation insurance is funded by the employer and covered under social taxes.

Recordkeeping

Employers must keep records of employees’ total working time, including overtime, night work, and work on public holidays or rest days. Employers must also be able to issue a statement at employees’ request showing an employee’s position, length of service, salary, and income tax and social taxes paid.

FOREIGN WORKERS

Foreign workers are covered by the same tax and labor laws as Lithuanian citizens. Foreign workers are taxed on their Lithuanian-sourced income while Lithuanian citizens are taxed on their worldwide income.

Visas: Individuals can apply either for a temporary or for a permanent residence visa in order to live and work in Lithuania. Foreigners must also obtain a work permit from the Ministry of Social Affairs and Labor in Lithuania to be allowed to work in the country. Work permits can be issued for a period of up to two years at one time.

Foreign workers from other EU countries may work in Lithuania without a special work visa or residence permit for up to three months without any work or residence permit. After three months, these citizens must register with the Migration Authority and may receive a temporary resident permit for up to five years.

Taxes: Nonresidents generally are subject to the same income tax rates as Lithuanian nationals. Nonresidents must file an income tax return by May 1 of the year following the tax year in question.

Foreign workers must register to pay income taxes using Form REG812 and submitting it to the appropriate local income tax authority.

Foreign residents who are from countries that have social security agreements with Lithuania and who qualify for Lithuania social security coverage may take part in social contributions and benefits, including the disability benefit.

Wages/Payments: Wage payment is defined in an employment contact between employers and employees.

WORKING IN THE UNITED STATES

Foreign workers from Lithuania must meet general visa requirements and be certified to be employed in the United States. General visa requirements for the U.S. are included in the separate

Lithuania is eligible for the visa waiver program for business visitors, which allows Lithuanian citizens to travel to the U.S. for 90 days or less for business-specific purposes without having to obtain a B-1 business visa. Stays longer than 90 days will require a visa. Individuals may return to the U.S. under the visa waiver program if a “reasonable length of time” has passed. The determination for a reasonable length of time is at the discretion of the Department of Homeland Security.

Lithuanian workers also are eligible to work in the U.S. under H-2B visas, which cover labor or services of a temporary or seasonal nature in occupations other than agriculture or registered nursing. The number of H-2B visas issued each year is limited by U.S. law.

U.S. employers also must check the names of all new-hires and employees against the Specially Designated Nationals and Blocked Persons List, administered by the Treasury Department’s Office of Foreign Assets Control (OFAC). Because OFAC prohibits financial transactions with individuals on the list, employers cannot employ them and may face fines for failing to comply.

For tax purposes, Lithuanians are subject to U.S. employment-based taxation on income earned in the U.S. unless they can claim an exemption under certain tax treaty provisions or they work under specific visa types that exempt earnings from taxes.

Lithuania has a tax treaty with the U.S.

State and local taxation of Lithuanian workers also can apply, although some states within the U.S. recognize international tax treaties that can eliminate that income tax liability for foreign workers.

The U.S. labor laws apply to all workers employed and providing services in the country.

Work eligibility as an employee is contingent upon Department of Homeland Security and Labor Department approval and the employee receiving a U.S. Social Security number from the Social Security Administration.

Tax Residency: In general, employees working in the U.S. on a temporary basis are considered nonresidents for tax purposes unless they qualify for resident status. Employees can be granted permanent resident status through the so-called green card test or if they meet the substantial presence test under the U.S. tax code. More information on these requirements is in the

Permanent residents are subject to U.S. tax requirements the same as U.S. citizens and are taxed under the U.S. system on their worldwide earnings.

Income Taxes: Generally, nonresidents in the U.S. who are from Lithuania and are working in the U.S. are subject to U.S. taxes based on their U.S.-sourced income. Income is taxed differently based on whether it is categorized as wage income or nonwage income, which includes interest and dividends.

A Form W-4, Employee’s Withholding Certificate, must be filed by each employee with their employer. All nonresidents in the U.S. who are from Lithuania and are working in the U.S. must claim “single” in Step 1c, regardless of marital status; write “Nonresident Alien” or “NRA” in the space under Step 4c of the form; and may not claim “exempt” in the space under Step 4c.

Nonresident alien employees may adjust withholding using Step 2b or 2c of the Form W-4; certain employees also may be able to use Steps 3, 4a, or 4b. More information about Form W-4 requirements for nonresident alien employees is available in the

Although the versions of Form W-4 issued in 2020 or later significantly differ from the versions issued in 2019 or earlier, nonresident employees that filed a valid version of Form W-4 from 2019 or earlier with their employer do not need to file another Form W-4 with the employer unless they need to implement a change for their withholding. On Forms W-4 issued in 2019 or earlier, nonresident alien employees were required to check the “single” box on line 3, regardless of marital status; write “Nonresident Alien” or “NRA” above the dotted line on line 6; and were not permitted to claim “exempt” on line 7 of the form.

An additional amount is added to a nonresident alien employee’s wages for calculating federal income tax withholding, with the amount based on pay period frequency and the date of the employee’s most recently filed Form W-4. The table of additional amounts applicable to Forms W-4 from 2020 or later and the table applicable to Forms W-4 issued before 2020 are available in the

Nonwage income and self-employed foreign workers can be subject to income tax withholding at a flat rate of 30%.

Additionally, foreign workers may be taxed differently based on the specific type of visa they hold.

Tax treaties: Lithuania and the U.S. have a tax treaty with provisions addressing host country taxation of the nonresident workers. A summary of those benefits is listed in the Tax Treaty Exemption Comparison Chart. To claim the treaty benefit, the nonresident must file Form 8233, Exemption From Withholding on Compensation for Independent (and Certain Dependent) Personal Services of a Nonresident Alien Individual, with the employer.

Students and trainees in particular must include a statement with Form 8233 to claim a tax treaty exemption from withholding of tax on compensation for dependent personal services. This statement affirms that the student or trainee is temporarily in the U.S. for purposes of studying by a university or other recognized educational institution in the U.S. for no more than five years. It also must affirm that the individual will receive compensation for services performed in the U.S. The student/trainee exemption is not to exceed $5,000 a year.

Examples of the statements necessary to claim a treaty exemption from U.S. taxes are included in Internal Revenue Service Publication 519, U.S. Tax Guide for Aliens.

Social Taxes: Most foreign workers are subject to paying into the U.S. Social Security system. Foreign nationals who are exempt from paying income tax and who do not have the eligibility to receive a social security number may not be required to pay social taxes. Foreign workers contributing to Social Security for a certain time period may be eligible to receive benefits.

Generally, foreign workers in the U.S. that have specific visas as exchange visitors or students or who are temporarily in the U.S. for agricultural work are not subject to social taxes on income that is obtained from the purpose in which they originally entered the U.S.

Totalization Agreements: Lithuania and the U.S. have not entered into a totalization agreement.

Wage Payment: Under certain visas for certain types of employment, employers are required to pay foreign workers the higher of either the prevailing wage or the actual wage that is paid to U.S. workers that have similar skills and qualifications.

There are no particular requirements that employees be paid in U.S. dollars.

TREATY ARRANGEMENTS

Lithuania has entered into more than 50 income tax treaties, including an income tax treaty with the United States.

The countries with which Lithuania has a bilateral income tax treaty in effect are Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, India, Ireland, Israel, Italy, Japan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Luxembourg, Macedonia, Malta, Mexico, Moldova, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, Turkmenistan, Ukraine, the United Arab Emirates, the United Kingdom, the United States, and Uzbekistan.

Lithuania has totalization agreements for social tax purposes with several countries, including the United States. Other countries with which Lithuania has entered into agreements are Belarus, Canada, Estonia, Latvia, Moldova, Russia, and Ukraine.

RESOURCES

All resources are in English unless otherwise noted.

General

CIA World Factbook: Lithuania

U.S. State Department: U.S. Relations With Lithuania

Currency Details

Unicode Consortium: Currency Symbols

International Organization for Standardization: Currency Codes - ISO 4217

United Nations: United Nations Terminology Database: Lithuania

Taxes

State Tax Inspectorate (Lithuanian)

State Social Insurance Fund

National Health Insurance Fund: Health Insurance Contributions

Social Insurance Contribution Rates (Lithuanian)

Ministry of Finance (Lithuanian)

Law on Income Tax, No. IX-1007 (Lithuanian)

Law on State Social Insurance, No. I-1336 (Lithuanian)

Law No. XIII-1335 (Lithuanian)

Law No. XIII-1336 (Lithuanian)

Law No. XIII-1341 (Lithuanian)

Law No. XIII-1348 (Lithuanian)

Law No. XIII-1360 (Lithuanian)

Law No. XIII-2311 (Lithuanian)

Law No. XIII-2649 (Lithuanian)

Compensation and Benefits

Ministry of Social Security and Labour (Lithuanian)

Labor Code (Lithuanian)

Foreign Workers

Embassy of Lithuania in Washington, D.C.:Residence Permits

Ministry of Foreign Affairs: Consular Information

Lithuanian Labor Exchange: Employment of Foreigners in Lithuania

Working in the United States

U.S. Department of Labor:

• Foreign Labor Certification
• Hiring Foreign Workers

U.S. Internal Revenue Service:

• IRS Notice 1392, Supplemental Form W-4 Instructions for Nonresident Aliens
• IRS Publication 15, Circular E, Employer’s Tax Guide
• IRS Publication 515, Withholding of Tax on Nonresident Aliens and Foreign Entities
• IRS Publication 519, U.S. Tax Guide for Aliens
• IRS Publication 901, U.S. Tax Treaties

U.S. Department of State, Visa Waiver Program

Treaty Arrangements