Self-Employed Tax in Lithuania (2026): Individual Activity and Sodra
A Lithuanian self-employed person under individual activity (individuali veikla) can deduct 30% of revenue as flat-rate expenses, then pays income tax on the remainder -- with a tax credit that keeps the effective rate around 5-15% up to about EUR 42,500, then 20%. Sodra is 19.5% on 90% of taxable income. Verify with VMI (vmi.lt).
Income tax under individual activity
Individual-activity income can be reduced either by actual documented expenses or by a flat 30% deduction, whichever you choose. The remaining taxable income is then taxed with a tax credit (mokescio kreditas) that lowers the effective rate substantially for smaller incomes -- roughly 5% at low levels, rising toward 15% and then the full 20% as income approaches about EUR 42,500. Above that level the standard progressive rates apply. The exact credit formula changes; confirm the current version with VMI.
Social contributions
Self-employed Sodra is 19.5% (plus an optional 3% for pension accumulation) charged on 90% of taxable income, not on the full revenue. A minimum monthly health contribution (PSD) applies even in months with little income. Because the base is only 90% of an already expense-reduced figure, the effective Sodra burden on revenue is lower than for employees. Confirm the current bases and minimums with Sodra.
Business certificate alternative
For certain small activities Lithuania also offers a business certificate (verslo liudijimas): a fixed periodic fee set by the municipality instead of percentage-based income tax, suitable for low-turnover trades. Choosing between individual activity and a business certificate depends on your turnover, activity type and expenses. Consult a Lithuanian accountant and verify with VMI.
FAQ
How are the self-employed taxed in Lithuania?
Under individual activity you deduct 30% flat expenses (or actual costs), then pay income tax with a credit that gives an effective rate of about 5-15% up to roughly EUR 42,500 and 20% above. Sodra is 19.5% on 90% of taxable income. Verify with VMI.
Do the self-employed pay Sodra on all their income?
No. Self-employed Sodra (19.5%, plus optional 3%) is charged on 90% of taxable income, not on gross revenue, with a minimum health contribution each month. Confirm the current bases with Sodra.
What is a business certificate?
Verslo liudijimas is a fixed municipal fee for certain small trades, paid instead of percentage income tax. It suits low-turnover activities; check eligibility and the fee with VMI and your municipality.
⚠️ Informational estimate, not tax advice. Payroll software may differ in edge cases. Verify with a professional.