Lithuania Payroll Outsourcing Alert – Government Announces New Personal Income Tax Rates

Lithuania payroll outsourcing leader issues a statutory alert for Lithuania.

Mercans has alerted its Lithuania payroll outsourcing clients of Personal Income Tax Rates related changes.

  1. Lithuania has increased its marginal personal income tax rate from 27% to 32%. Accordingly, annual income in excess of 104,277.60 EUR for 2020 shall be taxed at the rate of 32% (27% in 2019). The amount of 104,277.60 EUR also serves as a cap for social security contributions. Starting with 2021, 32% income tax rate will be applied to the annual income exceeding 74,484.00 EUR. The annual income in 2020, that does not exceed 104,277.60 EUR is taxable at a rate of 20%. Starting with 2021, 20% income tax rate will be applied to the annual income not exceeding 74,484.00 EUR.


  1. Also, the maximum tax exemption amount has been increased to 350 EUR from 300 EUR. In 2020, the applicable monthly tax-exempt income is calculated based on the following formula: 350 EUR – 0.17 x (Monthly salary – 607 EUR). There is no tax-exemption for monthly salaries exceeding 2,666.00 EUR. If the monthly salary is less or equal to 607 EUR then a tax exemption of 350 EUR applies.


  1. Employee stock options granted after February 1st, 2020 are treated as non-taxable income for purpose of personal income tax if the options are exercised at no cost or for lower than their fair market value at least three years after their grant date.



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Mercans operate globally, ensuring timely and measurable results, and bottom-line savings. Supported by 500+ payroll and HR specialists with in-depth local knowledge, our pioneering human resources consulting services and trailblazing SaaS payroll software, HR Blizz™ & Mesaar™, are already satisfying 5,000+ international clients, regardless of the size of their organization and their industry. Visit


Local Presence. Regional Strategy. Global Success.

We are a borderless people engagement enabler, committed to make your teams happy. Driven by technology and innovation, we pride ourselves in being global people experts with striking local presence. We deliver bespoke human capital management services and innovative global payroll solutions to empower international businesses.

We are your reliable HR function outsourcing partner, delivering innovative HCM solutions, along with cutting-edge human capital management advice, to ensure consistent business growth, regardless of the size and industry of your company. We develop SaaS software and outsource HCM solutions tailored to 5,000+ clients across all continents.

Mercans operate globally, ensuring timely measurable results and bottom-line savings. We employ 500+ payroll and human resources specialists with in-depth local knowledge. Thanks to success-oriented teams striving for excellence and taking care of your organization’s tasks within budget, we have gained the trust of major multinational companies.

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