VAT Rates in Lithuania: 21%, 12%, 5% and 0% Explained

Value added tax (VAT) in Lithuania is not a single-rate tax. Although the standard rate is 21%, the Lithuanian VAT Law also provides reduced rates of 12% and 5%, plus a 0% rate for specific cross-border and international transactions.

For a business, selecting the right VAT rate is not simply a pricing decision. It affects invoices, VAT returns, the amount charged to customers and the ability to recover input VAT. Applying a reduced rate without meeting every legal condition can create a VAT underpayment, interest and penalties.

This guide explains the VAT rates currently applicable in Lithuania and the practical distinctions that matter most to local and international founders.

Lithuanian VAT rates at a glance

The rate must always be tested against the exact service or product, the customer, the place of supply and the supporting documents. A 0% supply is not the same as a VAT-exempt supply, which is an important distinction discussed below.

The standard 21% VAT rate in Lithuania

The standard Lithuanian VAT rate is 21%. It applies to taxable supplies of goods and services in Lithuania unless the VAT Law expressly allows a reduced rate, a 0% rate or an exemption.

In practice, 21% is the rate that applies to most ordinary commercial activity, including many consulting, marketing, software, retail, construction, professional and business services supplied in Lithuania. It also applies where a business assumes that a reduced rate applies but cannot meet the relevant statutory conditions.

For example, a company selling ordinary products to Lithuanian consumers will normally charge 21% VAT. A Lithuanian business providing a local B2C service will also often charge 21%, unless the specific service falls under a different rule. Cross-border B2B services require a separate place-of-supply analysis and may instead be subject to the reverse-charge mechanism in the customer’s country.

The official VMI guidance on the standard 21% VAT rate is the starting point when no specific reduced-rate rule applies.

The 12% reduced VAT rate

From 1 January 2026, Lithuania applies a 12% reduced VAT rate to certain categories that were previously generally subject to the 9% reduced rate. The 12% rate is not a general benefit for every business in these sectors: each supply must satisfy the conditions in the VAT Law.

Accommodation services

The 12% rate applies to qualifying accommodation services provided in accordance with tourism legislation. This can include hotels, guest houses, motels, campsites and qualifying private accommodation providers.

Where breakfast is part of a genuine bed-and-breakfast accommodation service, it can follow the accommodation treatment. However, services such as spa treatments, gym access, bicycle hire, sauna services, equipment hire and room or facility rental are not automatically accommodation services. They must be reviewed separately, and the standard rate may apply.

There are also transitional rules for advance bookings made before 1 January 2026. The date and terms of payment or booking can matter, so accommodation providers should retain clear booking records.

Regular passenger transport

The 12% rate applies to passenger transport and baggage transport on regular routes set by the Ministry of Transport, an authorised institution or municipalities. This may cover qualifying regular local, suburban and long-distance public transport.

It does not mean every passenger journey receives the reduced rate. Special, charter or one-off routes can be taxed at 21%. International passenger transport may be subject to different rules, including 0% VAT in qualifying circumstances.

Admission to art and cultural institutions and events

Admission to qualifying art and cultural institutions and events can be taxed at 12%, provided the supply is not already VAT-exempt under the separate cultural-services exemption rules.

This is an important distinction. Some cultural activities may be exempt from VAT; others may be taxable at 12%. The correct result depends on the supplier, the nature of the event or institution and the conditions of the exemption.

See VMI’s 12% VAT rate guidance for the current scope and transition rules.

The 5% reduced VAT rate

The 5% rate is reserved for specific socially important products and qualifying publications. It should not be applied merely because a product is related to health, education or information.

Medicines and medical products

The 5% rate applies to:

• prescription medicines, including non-compensated prescription medicines;

• medicines, medical aids and special medical-purpose foods where acquisition costs are fully or partly reimbursed under Lithuania’s health-insurance rules; and

• qualifying disability-assistance equipment and its repair.

For non-prescription products, the reduced rate generally depends on reimbursement status and documentation. Not every health-related product qualifies. For disability-assistance equipment, the law and VMI guidance distinguish qualifying technical aids from general-use products and distinguish repairs from installation or maintenance services.

Newspapers, magazines and other periodicals

Printed and electronic newspapers, magazines and other qualifying periodical publications may be taxed at 5%. The rule can also cover qualifying editorial online content that is periodically updated and comparable in substance to a printed periodical.

There are clear exclusions. The reduced rate does not apply to technical or bibliographic databases, publications that are primarily music or video content, prohibited erotic or violent publications, or publications where paid advertising makes up more than four-fifths of the content.

Books and non-periodical information publications

From 1 January 2026, the 5% rate also applies to printed and electronic books and qualifying non-periodical information publications, such as textbooks, workbooks, encyclopaedias, dictionaries, reference books, brochures, maps, sheet music and certain children’s books.

Calendars, notebooks and similar stationery-like printed materials are excluded. Publications where advertising exceeds four-fifths of the content, or where music or video is the dominant content, are also excluded.

The full conditions and examples are set out in VMI’s guidance on the 5% VAT rate.

When does 0% VAT apply?

The 0% VAT rate applies only to listed transactions and should never be used simply because the buyer is based abroad. The supplier must be able to prove that the transaction meets the legal conditions.

The most common examples include:

• exports of goods outside the European Union;

• intra-EU supplies of goods to a VAT-registered business in another EU Member State, where the required conditions and evidence are met;

• certain supplies and services connected with international transport, exports, ships and aircraft;

• specified supplies to diplomatic or international bodies; and

• other transactions expressly covered by Chapter VI of the Lithuanian VAT Law.

For an intra-EU supply of goods, a valid customer VAT number and reliable proof that the goods were transported to another Member State are critical. For exports, customs evidence is normally essential. If the business cannot substantiate the movement of goods or other conditions, VMI may challenge the 0% rate and assess standard-rate VAT.

The detailed categories are available in VMI’s 0% VAT guidance.

0% VAT is not the same as VAT exemption

Businesses often use the terms “zero-rated” and “VAT-exempt” interchangeably, but they have different consequences.

A 0% transaction is still a taxable supply. VAT is charged at 0%, and, subject to the general input-VAT deduction rules, the supplier can normally retain the right to deduct VAT on related business costs.

A VAT-exempt transaction is treated differently. Exemptions commonly apply to particular financial, insurance, healthcare, education, real-estate or cultural transactions, subject to detailed rules. Input VAT recovery may be restricted for costs related to exempt activities.

This distinction is particularly relevant for companies with mixed taxable and exempt income. Before issuing an invoice at 0% or without VAT, the business should identify the legal basis and confirm the input-VAT consequences.

VAT rate is only one part of the analysis

Finding the correct rate does not by itself answer every VAT question. Businesses should also consider:

1. Whether the company must register for VAT. Registration can arise not only from local turnover, but also from particular EU acquisitions, cross-border supplies or services received from foreign providers.

2. Where the supply takes place for VAT purposes. This is especially important for consulting, digital, advertising and other cross-border services.

3. Who accounts for the VAT. In many B2B cross-border service transactions, the customer accounts for VAT under reverse charge rather than the Lithuanian supplier charging Lithuanian VAT.

4. Whether the invoice wording and reporting are correct. A reverse-charge supply, 0% intra-EU supply and VAT-exempt supply require different treatment in the invoice and VAT reporting.

5. Whether supporting evidence is retained. Customer VAT numbers, transport documents, contracts, booking records, reimbursement evidence and supplier/customer status can determine whether the intended treatment is defensible.

Practical examples

Example 1: Lithuanian consultancy company billing a Lithuanian client. A standard consulting service supplied in Lithuania will normally be subject to 21% VAT if the supplier is VAT-registered.

Example 2: Hotel stay in Lithuania. Qualifying accommodation supplied from 1 January 2026 is generally subject to 12% VAT. A separately sold spa treatment may be subject to 21%.

Example 3: Online book sale. A qualifying e-book sold in Lithuania can fall under the 5% rate from 1 January 2026. An advertising-heavy digital product or a video-dominant product may not qualify.

Example 4: Goods sent from Lithuania to a VAT-registered business in Germany. The supply may qualify for 0% VAT if the conditions for an intra-EU supply are met, including a valid VAT number and proof of transport. It is not enough that the customer simply has a foreign address.

Final thoughts

The Lithuanian VAT system combines a 21% standard rate with limited 12%, 5% and 0% rates. Reduced rates are exception-based, so the business must verify its precise entitlement rather than applying a rate based on an industry label.

For international founders, VAT becomes more complex when services or goods cross borders. The customer’s status, VAT number, transport evidence, place of supply and reverse-charge rules can be as important as the percentage shown on the invoice.

If you are planning company registration in Lithuania or need help managing invoices, declarations and cross-border VAT obligations, BalticIncorp can assist with VAT registration and Lithuanian accounting arrangements.