What taxes does a UAB pay in 2026?

In 2026 a UAB pays four main groups of taxes: corporate income tax on its profit, dividend tax when profit is paid out to owners, payroll taxes on the people it employs, and VAT once turnover crosses the threshold. The standard corporate income tax rose to 17% in 2026, but small companies pay 7%, and new small UABs pay just 0% for their first two years. Your exact tax mix depends on how much you earn, how you take the money out, and whether you are VAT-registered.

This article walks through each UAB tax in turn — corporate income tax (CIT), dividends, payroll taxes and VAT (value added tax) — with the specific 2026 rates and one worked example. All figures here are indicative (2026) and, before you make decisions, worth confirming with the official sources: VMI, „Sodra" or Registrų centras. If you are only considering setting up, start with the practical guide on how to start a business in Lithuania in 2026.

A UAB's profit is taxed twice: first by corporate tax at company level, then by dividend tax at the individual level — so plan in advance how you will take the money out.

Corporate income tax (CIT): 17%, 7% or 0%?

Corporate income tax (CIT) is calculated on the company's taxable profit — revenue minus deductible expenses. It is this figure, not total turnover, that drives the tax. In 2026 there are three rates:

• Standard rate — 17% (it was 16% in 2025). This applies to larger companies that do not fit the "small company" conditions.
• Small companies — 7% (was 6%). The reduced rate applies when the company meets the headcount and revenue criteria.
• New small UABs — 0% for the first two years. The zero rate applies if the company has fewer than 10 employees, annual revenue does not exceed EUR 300,000, and it is not part of a group.

The zero-rate relief is one of the strongest incentives to set up a UAB at the very start of an activity — for the first two years the entire profit can stay free of CIT. The exact conditions and pitfalls are covered in detail in the article on zero corporate tax for the first two years. Whether you count as a "small" or "standard" company depends on headcount and revenue, so it is always worth confirming your specific case with VMI.

Dividends: 15% personal income tax on distributed profit

Once a UAB's profit has been taxed by CIT, the remainder stays in the company. To move that money to yourself as an owner, you pay out dividends, and these are taxed at 15% personal income tax (GPM). In other words, the same profit passes through two taxes: first CIT at company level, then GPM at the individual level. That is exactly why the real overall burden is almost always higher than it looks if you only glance at the corporate rate.

For this reason many owner-managers face a practical dilemma: take a salary, dividends, or a mix of the two. A salary reduces taxable profit but triggers payroll taxes; dividends do not reduce profit but are taxed at a flat rate. Which route is better for you depends on the size of your profit and your costs — see the comparison and the logic in salary or dividends: how to pay yourself.

Payroll taxes: GPM and „Sodra"

If a UAB has employees (often including the owner-manager on an employment contract), employment taxes are paid on salaries: GPM (personal income tax) and „Sodra" contributions — VSD (state social insurance) and PSD (compulsory health insurance). Part of these is withheld from the employee's pay, and the employer adds another part on top, so the cost of a job to the company is always higher than the "paper" salary.

Salaries are subject to progressive GPM: a larger share of annual income (the so-called income "basket") can be taxed at a higher rate, while part of the income is covered by the tax-exempt amount (NPD). Because the exact progressive rates and NPD depend on the income level and change over time, we will not pin them down here — run the actual numbers with the salary calculator, and find the full mechanics in the guide on payroll taxes 2026: GPM, „Sodra", NPD. Always confirm the precise „Sodra" contribution amounts with „Sodra".

VAT: 21% standard rate and the EUR 45,000 threshold

VAT (value added tax) is a consumption tax that a company adds to the price of the goods or services it sells and later pays to the state. In 2026 the following rates apply:

• Standard VAT rate — 21%.
• Reduced 12% — for example accommodation, passenger transport, catering and cultural services (from 2026).
• Reduced 5% — for books and medicines.

A UAB must register for VAT once its income over the last 12 months exceeds EUR 45,000 (this threshold is unchanged in 2026). Once you cross it, you must start charging output VAT and filing returns. Note: this EUR 45,000 threshold applies to a business established in Lithuania — for a foreign (non-established) business there is no threshold and the obligation arises from the first transaction, while businesses selling remotely to EU consumers should watch the EUR 10,000 EU distance-selling threshold. How all of this works is explained in VAT: what it is and how it works, and exactly when you must register is covered in when to register for VAT: the EUR 45,000 threshold. You can calculate a VAT amount quickly with the VAT calculator.

Example: how much tax a small UAB pays

Suppose a small UAB earns EUR 10,000 of taxable profit in a year (the figure is chosen for illustration only). How would the taxes look in two cases?

• If the company is new and meets the zero-rate conditions (fewer than 10 employees, revenue up to EUR 300,000, not part of a group): for the first two years CIT = 0%, so there is no corporate tax. Paying out the whole profit as dividends, GPM at 15% on EUR 10,000 = EUR 1,500, leaving the owner EUR 8,500.
• If the 7% small-company rate applies: CIT = 7% × EUR 10,000 = EUR 700. That leaves EUR 9,300 of profit in the company. Paying it out as dividends, GPM at 15% × EUR 9,300 = EUR 1,395. The owner keeps EUR 7,905, and total tax paid is EUR 2,095 — about 21% of the profit.

This example ignores salaries, VAT and other circumstances — it only shows the double profit + dividend logic. The real burden depends on your profit, your cost share and how you take the money out, so it is worth modelling your specific scenario separately.

UAB or MB: how does the tax burden differ?

A UAB is not the only option. An MB (small partnership) is often more attractive for a small business: it has no minimum share capital requirement, whereas a UAB needs EUR 1,000, of which at least 25% (EUR 250) must be paid in before registration and the rest within 12 months. Governance and the range of members also differ: MB members can only be natural persons (up to 10), while a UAB's shareholders can be both natural and legal persons (up to 249). For how an MB is taxed and when it is the better fit, read what taxes an MB pays in 2026.

Setup costs and filing deadlines

When registering a UAB electronically at Registrų centras, the state fee is about EUR 30, and reserving the name (JAR-5) costs about EUR 16 (valid for up to 6 months). If registration requires a notary, their services cost about EUR 85–338 depending on the capital. Registration at Registrų centras takes about 3 business days (in practice often 5–10). After that, file your reports on time each year:

• CIT return to VMI — by 15 June.
• Annual financial statements to Registrų centras — by 30 June (for the calendar year).

It is also worth knowing that Lithuania applies a so-called defence levy and other smaller charges — check their exact amounts and applicability with VMI and Registrų centras, as they depend on the activity and can change.

Check your own numbers

Before you plan a budget, calculate the specific figures yourself. Model payroll taxes and the take-home amount with the salary calculator, and the VAT portion with the VAT calculator. Confirm the official rates, contributions and deadlines with VMI and „Sodra" — they are the final and most reliable source.

Disclaimer: all figures in this article are indicative (2026) and are not tax or legal advice. Tax rates, thresholds and deadlines can change, and your situation may be subject to individual conditions — before making decisions, check with VMI, „Sodra" or consult an accountant.

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