What taxes does an MB pay in 2026?

An MB (small partnership) in 2026 pays the same profit tax as a UAB plus a few taxes tied to what its members take out. In short: on the MB's taxable profit you pay corporate income tax (CIT) — 17% as standard, 7% for small companies, and 0% for new small MBs in their first 1–2 years; funds a member withdraws for "personal needs" are subject to Sodra contributions (VSD and PSD) and personal income tax (GPM), while distributed profit (dividends) is taxed at 15% GPM. Below we break it all down with a real example and a comparison to a UAB.

This article covers the MB's profit tax, how a member's withdrawals are taxed in Sodra, GPM, dividends, and how an MB differs from a UAB in practice. Every figure here is indicative (2026) and should be verified with the State Tax Inspectorate (VMI) and the Sodra and Centre of Registers pages before any financial decision. If you are still weighing which legal form to choose, start with the broader guide on how to start a business in Lithuania in 2026; here we focus specifically on MB taxes.

An MB's profit and an MB member's money are two different things: the first is taxed at the company level, the second at the member level — and that is exactly where the confusion usually starts.

MB profit tax: 17%, 7% for small firms, 0% for new ones

For profit tax (CIT) purposes, an MB is treated like any other limited-liability legal entity, so the rates match those of a UAB:

• 17% — the standard profit tax rate (raised in 2026 from the previous 16%);
• 7% — the reduced rate for small companies with fewer than 10 employees and annual income not exceeding EUR 300,000 (raised in 2026 from 6%);
• 0% — for the first tax period (in practice the first 1–2 years) for newly established small MBs, provided the same conditions are met: fewer than 10 employees, income up to EUR 300,000, and the company is not part of a group of related companies.

It is important to understand that profit tax is calculated not on turnover but on taxable profit — that is, income minus allowable business costs. So tidy bookkeeping and documented expenses reduce the tax directly. Additionally, in 2026 a temporary defence levy may apply to businesses — check its applicability and amount with the VMI before planning your budget, as this area keeps changing.

A member's "personal needs" funds: Sodra (VSD and PSD)

The biggest practical feature of an MB is how the member takes money out. An MB member working without an employment contract usually draws funds for "personal needs" — money taken from the MB as an advance during the year. For tax purposes such a member is treated as a self-employed person, so these funds are subject to Sodra contributions — VSD (state social insurance) and PSD (compulsory health insurance).

A key 2026 change matters here: from July 2026 the Sodra contribution base for self-employed people rises to 90% of taxable income (previously 50%). In practice, on the same withdrawn amount the base that Sodra applies grows substantially, and so does the contribution. On top of that, even in months when the member takes nothing out or the MB runs at a loss, a minimum PSD contribution of about 80.48 EUR per month may still be due to keep health insurance in place.

We describe the exact withdrawal procedure, bookkeeping, and taxation timing in a separate guide on how an MB member can take money out — it is worth reading before your first payout, because mistakes here cost the most.

A member's income and GPM: how it is declared

Beyond Sodra contributions, income a member receives from the MB is also subject to personal income tax (GPM). Funds drawn for "personal needs" are declared as the member's income and taxed under progressive personal income rates (the so-called income basket) — meaning higher annual income is taxed at a higher rate only on the portion above the threshold, not on the whole sum.

Because the progressive GPM logic is the same as when calculating salary taxes, we explain it separately — how the brackets, the tax-free amount (NPD) and Sodra work is covered in the article on salary taxes in 2026 (GPM, Sodra, NPD). Exact GPM rates and annual thresholds change, so always check current values with the VMI.

Dividends from an MB: 15% GPM

The second way for a member to benefit is distributed profit (dividends), paid from the profit remaining after profit tax once the annual financial statements are approved. Dividends are taxed at 15% GPM — exactly the same as UAB dividends.

In practice, MB members more often take benefit as "personal needs" funds during the year rather than as year-end dividends, so it is important not to mix up the two routes: their taxation differs. Which option is better depends on the level of profit, the share of costs, and Sodra contributions — there is no universal answer, so it is worth calculating for your specific situation.

VAT: when an MB must register

Profit tax and Sodra are not everything — you also have to watch value-added tax (PVM/VAT) separately. An MB must register as a VAT payer once its income over the last 12 months exceeds EUR 45,000 (the 2026 threshold is unchanged). The standard VAT rate is 21%, while certain goods and services carry reduced rates of 12% (e.g. accommodation, passenger transport, catering, culture) and 5% (books, medicines).

Note: when selling to individuals in other EU countries, a EUR 10,000 distance-selling threshold applies, and for a business established abroad but not registered in Lithuania a VAT obligation can arise from the very first transaction. We explain how all of this works step by step in the article VAT: what it is and how it works.

How an MB differs from a UAB in practice

Tax rates (profit tax, the 15% GPM on dividends) are essentially the same for an MB and a UAB, so the choice usually comes down not to rates but to differences in setup and management:

• Share capital. An MB has no minimum share capital (it is nominal), whereas a UAB must have EUR 1,000 in share capital, of which at least 25%, i.e. EUR 250, must be paid in before registration (the rest within 12 months).
• Members / shareholders. Only natural persons can found an MB, at most 10 of them. A UAB's shareholders can be both natural and legal persons — up to 249.
• Taking money out. An MB member flexibly draws "personal needs" funds, while a UAB participant usually receives benefit as salary (with employment-type taxes) or dividends.

Precisely because of the simpler setup and more flexible way of taking money out, MBs are often chosen by small service businesses and a handful of partners. We present a detailed picture of UAB taxes separately, so you can compare — see what taxes a UAB pays in 2026.

Example: how much tax a small MB pays

Suppose an MB meets the small-company conditions (fewer than 10 employees, income well below EUR 300,000) and, after costs, earns EUR 10,000 in taxable profit. If this is no longer its first period of activity, the reduced 7% profit tax applies:

• Profit tax: EUR 10,000 × 7% = EUR 700;
• Left after CIT: EUR 10,000 − EUR 700 = EUR 9,300;
• If the whole remainder is distributed as dividends: EUR 9,300 × 15% GPM = EUR 1,395;
• To the member from this profit: EUR 9,300 − EUR 1,395 = EUR 7,905.

If the MB were newly established and met the 0% conditions, the first-period profit tax would be EUR 0, leaving the full EUR 10,000 before dividends. An important caveat: this example covers only profit tax and dividends. If the member takes part of the benefit as "personal needs" funds, that amount is additionally taxed with Sodra (VSD, PSD) and GPM, so the overall picture changes. To model how the numbers shift with income, the salary calculator conveniently shows the GPM and Sodra contribution logic.

Setup and annual obligations

An MB is relatively cheap and quick to establish: electronic registration at the Centre of Registers costs about EUR 30, name reservation (JAR-5) about EUR 16 (valid for up to 6 months), and registration in practice takes about 3 business days (often 5–10 in reality). A notary is usually not needed for an MB with standard articles.

Once established, you must observe the annual deadlines: the annual financial statements are filed with the Centre of Registers by 30 June (for the calendar year), and the profit tax return with VMI by 15 June. It is worth marking these dates in your calendar right away, as delays bring trouble.

Check it: calculator and official sources

The fastest way to sense how much actually stays "in hand" from different income levels is to use the salary calculator: it shows the GPM and Sodra contribution share and helps model scenarios before you decide on a payout method. The most authoritative sources for verifying current rates and thresholds:

• VMI — profit tax, GPM, VAT, declaration deadlines;
• Sodra — VSD and PSD contributions for the self-employed;
• Centre of Registers — setup, capital, and annual reporting requirements.

Disclaimer: all figures in this article are indicative (2026) and may change; this is not tax or legal advice. Before making decisions, always verify the latest amounts with the VMI, Sodra, or the Centre of Registers, or consult an accountant or tax adviser.

We help small businesses understand their taxes and automate bookkeeping and reporting so you do not have to calculate everything by hand. Start with the free salary calculator, and for a clear plan for your MB, book a consultation.