On 23 December 2008 the Law Amending and Supplementing the Law on Personal Income Tax (the Law on PIT) was adopted. As from 1 January 2009, all income, except for income from dividends which is taxed at the rate of 20%, is subject to personal income tax at the rate of 15% (to 31 December 2008, rates of 15% and 24% applied).
The basic tax-exempt income allowance (allowance) will apply to residents of Lithuania only with respect to income incidental to employment or quasi-employment, and the amount of the applicable allowance will be established taking into account the income of the resident, i.e., with increase of income the applicable allowance will be gradually reduced. No allowance will apply to income exceeding a certain amount. The annual allowance will not exceed LTL 5,640 (~ EUR 1,633), if the annual income of a resident does not exceed LTL 9,600 (~ EUR 2,780). If the annual income of a resident exceeds LTL 9,600 (~ EUR 2,780), the annual allowance applicable to the resident will be reduced.
Certain tax reliefs, including mortgage interest relief, have been removed. Provisions related to tax deductions have also been amended, e.g. the minimum period of ownership of property other than residential property after which the income received from the transfer of such property is qualified as a tax deduction has been extended from three years to ten years. The securities tax exemption has also been amended: in addition to the currently existing exemption conditions (shares are transferred into ownership not earlier than 366 days after their date of acquisition and the resident has not held more than 10% of the shares of the entity for three years), a condition has been established according to which the resident alone or together with related persons may not have held more than 10% of the shares of the entity for three years.