First-year Sodra relief for individual activity

Yes — if you are starting individual activity (individuali veikla) in Lithuania in 2026, you may qualify for first-year "Sodra" relief, sometimes called a "business holiday": at the very start you pay lower state social insurance (VSD) contributions than usual. Two things matter most: first, the relief reduces only the VSD part (not all of "Sodra", and not your taxes), and its exact size and duration must be checked with "Sodra", because they depend on your situation; second, lower contributions at the start also mean weaker social guarantees — you accrue your pension more slowly and sickness or maternity benefits can be smaller.

In this article we explain how the first-year VSD relief works, what it covers and what it does not, how it relates to the "Sodra" contribution base that rises from July 2026, and what it costs you later. All rates, thresholds and amounts here are indicative (2026) — always verify the conditions that apply to you with "Sodra" and VMI, as they are updated every year.

First-year VSD relief is not a gift but a deferred cost: you pay less today, but you also accrue less. Make the decision looking not only at the start, but at your future guarantees.

What is first-year "Sodra" relief (the "business holiday")?

When an individual registers individual activity under a certificate for the first time, they may qualify for starter VSD relief — during the initial period the state social insurance (VSD) contributions are calculated lower than usual. The idea is simple: the state wants a new business to survive its first, hardest months, when income is still low, so the social-insurance burden is lighter at the start.

It is important to understand that this is not a fixed "zero" contribution for everyone, nor a relief that cancels all of "Sodra". How much VSD actually drops, and for how long the relief applies, depends on the rules and on your circumstances, so be sure to check the exact size and duration with "Sodra". We cover the general logic of "Sodra" contributions for the self-employed in detail in how much "Sodra" to pay in 2026.

It is also worth distinguishing this relief from other forms' taxes. For example, with a business certificate (verslo liudijimas) VSD is calculated quite differently — 8.72% or 11.72% of the minimum monthly wage (MMA) base, which for 2026 "Sodra" calculations is EUR 1,153 — and that is not the same starter relief. The contribution logic for individual activity under a certificate differs, so decide on the form first and only then on the relief.

Who qualifies and when it applies

The relief is aimed specifically at first-time starters — those registering individual activity for the first time (or after a longer break). It is tied to the moment you start, not to a specific profession or income level.

• Form. The relief is usually linked to individual activity under a certificate — not to a business certificate (verslo liudijimas) and not to a legal-entity (MB, UAB) status.
• Newness. It matters that this is a new activity; if you carried it out before, the conditions may differ.
• Registration. You register the activity with VMI, while social insurance is administered by "Sodra".

Because the specific conditions (who, how much, and for how long) are not universal and can change, check them with "Sodra" before you start. For the bigger picture of starting out — from choosing a form to registration — see the guide on how to start a business in Lithuania in 2026.

VSD and PSD: what the relief covers and what it does not

"Sodra" contributions consist of two main parts, and they should not be confused:

• VSD (state social insurance) — pension, sickness, maternity and other cover. It is the VSD part that the first-year relief eases.
• PSD (compulsory health insurance) — health cover. PSD is usually paid separately, and it has a minimum monthly contribution of about 80.48 EUR/month; this part typically remains due even when VSD is reduced.

In other words, even with first-year relief you do not become fully free of "Sodra" obligations — you will likely still pay at least the PSD minimum. That is exactly why it pays to know in advance which part is eased and which is not, so no unplanned monthly contributions catch you out. Check your exact VSD and PSD combination with "Sodra".

How the relief relates to the 90% base from July 2026

From July 2026, an important rule changes for individual activity: the "Sodra" contribution base rises to 90% of taxable income (previously 50%). This means contributions are calculated on a larger share of income, so the standard "Sodra" burden for the self-employed grows.

In this context, first-year VSD relief becomes even more meaningful: it softens the start exactly when the overall base is increasing. Still, the relief is temporary, while the 90% base is permanent, so build your long-term plan around the higher base rather than around the first-year relief. For how "Sodra" and personal income tax work on the salary side (useful for comparison), see salary taxes 2026: GPM, "Sodra", NPD.

The downside: weaker guarantees and slower pension accrual

Lower VSD contributions at the start are convenient for cash flow, but they come at a price that shows up later:

• You accrue your pension more slowly. VSD is directly linked to your future pension; paying less means accruing less.
• Smaller benefits. Sickness, maternity/paternity and some other benefits depend on your VSD base — if you fell ill or took childcare leave in the first year, they could be smaller.
• A "deferred" effect. The amount saved at the start is not "gifted" value — it is weaker cover, which you may need exactly when it matters most.

That is why some starters deliberately decline the relief or insure themselves additionally — so as not to lose guarantees. Which option suits you depends on risk, health, family plans and how stable your income is.

When the relief is worth it, and when to decline it

There is no universal answer, but a few pointers help you decide:

• The relief is more often worth it if your income is low and irregular at the start, you already have other social insurance (e.g. you also work under an employment contract), or you simply want to test the idea without a heavy tax burden.
• It is worth declining the relief or insuring yourself additionally if you plan to use sickness or maternity/paternity benefits soon, steady pension accrual matters to you, or your income is stable and sufficient from the outset.

Whatever you choose, decide with numbers: build a few scenarios and compare how much is left "in hand" and what guarantees you get. As always, verify the exact conditions and amounts with "Sodra".

Example: individual activity in the first year

Suppose that in your first year you earn EUR 20,000 in income and apply the 30% expense allowance (you can also choose actual documented expenses). Then:

• Taxable profit: EUR 20,000 − 30% = EUR 14,000.
• GPM (personal income tax): because the profit does not exceed EUR 20,000, the effective GPM rate is about 5%, i.e. roughly EUR 700 for the year.
• "Sodra" base (from July 2026): 90% of EUR 14,000 = EUR 12,600 — VSD and PSD contributions are calculated on this amount.
• PSD: even with relief you will likely pay at least the minimum ~80.48 EUR/month.
• VSD: this is where the first-year relief kicks in — the VSD part is lower at the start; check the exact rate and amount with "Sodra", as it depends on the applicable rules.

This example is only an illustration: the figures are rounded, and your real result depends on your income, your expense choice and the specific relief conditions.

Is individual activity right for you?

Individual activity with first-year VSD relief is often the simplest and cheapest way to start legally — minimal bookkeeping, a mild GPM at the start (effective ~5% up to EUR 20,000 of profit) and an easier "Sodra" beginning. It also lets you choose between the 30% expense allowance and actual documented expenses, so for those with high costs it is often more flexible than a fixed business certificate. Still, it is a natural-person activity with unlimited liability, and as income grows a legal entity may pay off more.

If you are weighing individual activity against an individual enterprise (IĮ) or a small partnership (MB), you will find a comparison with pros and cons in the article on IĮ or MB: is an individual enterprise worth it. Make the decision based on income, cost share and how much you want to separate personal liability.

Check your numbers with a calculator and "Sodra"/VMI

Before registering your activity, run your own numbers: how much is left "in hand" after GPM and "Sodra", how the relief affects cash flow, and how many guarantees you give up. Start with the free salary calculator — it helps you feel the tax logic — and always verify the current conditions with "Sodra" and VMI. Company and activity data are available at the Register of Legal Entities.

Disclaimer: all rates, thresholds and amounts in this article are indicative (2026) and for general understanding only — this is not tax or legal advice. Always check the exact size, duration and conditions of first-year VSD relief with "Sodra" and VMI, or consult an accountant.

Starting individual activity and want an orderly start — with a website, first clients and clear numbers? web1o helps small businesses build a fast website and organise everyday processes. Run your own taxes with the salary calculator and, if you need a concrete plan, book a free consultation.