VAT Changes in 2026 — Key Information for Businesses and Residents
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VAT (Value Added Tax) – one of the most important taxes in Lithuania, directly affecting both household spending and business operations. The year 2026 will bring changes relevant to many sectors – from green energy to IT services and small enterprises.
This article explains the VAT amendments under consideration, their implications for the technology sector, how small businesses can prepare, and what tax relief measures may be available for micro‑enterprises.
What VAT changes are being considered for 2026?
According to draft legislation currently under discussion in the Seimas, several key changes are planned:
- VAT registration threshold may be raised from €45,000 to €65,000–€85,000 in annual turnover. This would exempt part of the small business community from the obligation to register as VAT payers.
- Promotion of green energy – the reduced 9% VAT rate is expected to be extended to solar and wind energy, as well as services related to renewable energy equipment.
- Construction sector – potential changes include VAT relief for housing renovation and certain construction services.
- IT sector – preferential VAT rates are being considered for training and digitalization projects.
Further information can be found on the website of the State Tax Inspectorate (VMI) or in the Seimas legislative database.
How Will VAT Changes Affect the Technology Sector?
The technology sector is one of the fastest‑growing industries in Lithuania, which means any VAT amendments have a direct impact. From 2026, tax relief measures may be expanded for digitalization projects and innovation. This could mean:
- Educational technologies (EdTech) may benefit from a reduced VAT rate, encouraging both public institutions and private enterprises to invest in e‑learning platforms.
- Software purchases – VAT deduction rules are expected to be more clearly defined, reducing the risk of disputes with the State Tax Inspectorate (VMI).
- Cloud computing services and IT consulting – VAT rates may be differentiated depending on the nature of the service.
- Start‑ups could gain additional relief if their activities are linked to innovation, research, or technology deployment.
These measures would not only lower business costs but also strengthen Lithuania’s competitiveness in the IT sector. Companies are advised to start analyzing their expenses now and plan how VAT changes will affect their financial strategies.
What Should Small Businesses and Sole Proprietors Know?
VAT changes are relevant not only to large enterprises but also to individuals engaged in sole proprietorship and small businesses.
- VAT registration threshold – planned to increase from €45,000 to €65,000–€85,000 in annual turnover. This means more sole proprietors will be able to operate without the obligation to register as VAT payers.
- Business license holders generally do not incur VAT obligations, but when trading with EU or third‑country partners, additional transaction reporting may be required.
- Small partnerships and other micro‑enterprises will also feel the impact, with VAT administration expected to become simpler.
- International activity – businesses operating in cross‑border markets must monitor not only Lithuanian but also EU VAT directive changes.
For small businesses, these reforms provide greater flexibility, fewer administrative burdens, and reduced compliance costs for those with modest turnover.
How to Prepare for Upcoming VAT Changes
To avoid stress, businesses should take proactive steps in advance:
- Monitor legislative updates – regularly check the websites of the State Tax Inspectorate (VMI) and the Seimas.
- Consult with your accountant – changes may affect invoicing, VAT deductions, or pricing models.
- Update internal processes – VAT amendments could impact contracts, IT systems, and invoice issuance.
- Use business management systems that ensure VAT accounting is aligned with current legislation.
Do Small Businesses Have Different VAT Rates?
Yes, Lithuania applies special VAT rules for small enterprises:
- Reduced VAT rates apply to certain goods and services (e.g., books, medicines, heating).
- “Small enterprise” status is defined by VMI based on employee numbers, turnover, and other criteria.
- Simplified accounting and non‑standard VAT rates may be available for specific activities carried out by small businesses.
FAQ
Will the VAT rate change for solar power plants?
Yes, the reduced VAT rate is expected to be extended to solar power plants, including the installation and maintenance of their equipment. This is part of Lithuania’s green energy promotion policy.
When will the new VAT rates take effect?
They are likely to come into force on January 1, 2026, although the final decision will depend on the Seimas.
Do sole proprietors need to pay VAT if relief measures apply?
No, provided that annual income does not exceed the established threshold. The threshold is planned to be raised to €65,000–€85,000, meaning many small‑scale entrepreneurs will not incur VAT obligations.
How can I check whether a service is subject to a reduced VAT rate?
The easiest way is through the VMI website. You can also consult your accountant or use invoice guidance tools.
Will VAT changes affect only businesses, or households as well?
They will affect households too. For example, when purchasing goods or services subject to reduced VAT, the final price may decrease.
Will small businesses need to recalculate their prices after the changes?
Yes, because changes in VAT rates directly impact invoicing. It is recommended to review pricing strategies and client contracts in advance.
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