Europe

Lithuania IP Box Regime

Lithuania taxes qualifying net IP profits at a reduced 7% corporate rate (from 2026), limited mainly to patented inventions and qualifying software developed through R&D.

IP Box Regime flag

Regime overview

Status
Active
Type
Preferential
Established
2018
Duration
Indefinite
Highlight
7% rate on qualifying IP profits from 2026
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Tax situation

Default Rates

Eligibility
Any resident
Duration
Indefinite
Income Tax
20% / 25% / 32%
Foreign Income
Taxed
Capital Gains
15-32%
Dividends
15%
Wealth Tax
None
Inheritance Tax
5% / 10%

IP Box Regime

Eligibility
Residency
Duration
Indefinite
Income Tax
7%
Foreign Income
Taxed
Capital Gains
7% / Standard
Dividends
Not applicable
Wealth Tax
None
Inheritance Tax
None

Key benefits

A reduced 7% corporate income tax rate can apply to taxable profits from the commercial exploitation of qualifying IP, materially below Lithuania's standard CIT rate
Qualifying profits can include royalties, exclusive licence payments, infringement compensation, and profits on the sale or other transfer of qualifying IP rights when computed net of related expenses
The benefit is available to Lithuanian taxpayers and Lithuanian permanent establishments that develop the qualifying IP, aligning the incentive with local R&D activity

Requirements and considerations

None

Migration pathways

EU/EEA/Swiss Citizens

Free access

Program details

Lithuania operates a patent-box style incentive that applies a reduced corporate income tax rate to taxable profits earned from certain intellectual property assets developed through R&D. The regime has been assessed under the OECD modified nexus approach in EU Code of Conduct work on IP regimes.

The incentive works as a reduced headline corporate tax rate on qualifying net profits. PwC describes the mechanism as a reduced 5% rate (increased to 6% from 1 January 2025), while Lithuania's 2026 reforms increased the country's reduced corporate income tax rate to 7% from 1 January 2026. In practice, the reduced rate is intended to apply to the net profit stream attributable to the qualifying IP asset (income less related expenses), rather than to gross royalty receipts.

Qualifying assets are restricted. EU and PwC descriptions focus on inventions protected by patents (including supplementary protection certificates) and copyright-protected computer programs; marketing IP such as trademarks is excluded. Eligibility is also tied to substance: the Lithuanian entity or permanent establishment that created the IP should be the one earning the income and bearing the related costs, and taxpayers need documentary evidence and tracking of income and expenses by IP asset.

Operationally, the regime is best suited to businesses that genuinely perform R&D and commercialise patented technology or qualifying software through a Lithuanian company or permanent establishment. Careful modelling is needed because non-qualifying income remains subject to the standard corporate tax rate, and the preferential rate and qualifying definitions have been subject to recent legislative changes.

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Progressive PIT rates from 2026, dividends, corporate tax rates

Ministry of Finance of the Republic of Lithuania·Last checked: 13/01/26

Worldwide taxation of residents

PwC Worldwide Tax Summaries - Lithuania (Individual)·Last checked: 13/01/26

Inheritance tax rates and no net wealth tax

PwC Worldwide Tax Summaries - Lithuania (Individual - Other taxes)·Last checked: 13/01/26

Expert guidance

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