Immovable Property Tax in Lithuania
• The legal basis for taxation:
o Law on Immovable Property Tax of the Republic of Lithuania, which came into force from January 1, 2006.
• The tax object:
o The tax object is immovable property (private buildings, premises, engineering structures) located in Lithuania belonging by the right of ownership to natural and legal persons. The tax is imposed on the immovable property belonging to natural persons by the right of ownership, with the exception of the structures intended for dwelling purposes, gardens, garages, homesteads, greenhouses, farms, subsidiary farms, science, religion, and recreation, fish-farming structures as well as engineering structures, where they are not the immovable property used for economic or individual activities.
• The taxpayers:
o Taxpayers are Lithuanian and foreign natural and legal persons for the real property (or its parts) owned by such persons. Legal persons pay the tax not only for the real property owned by them, but also for the real property owned by natural persons, the possession of which is given to legal persons for an indefinite term or a term longer than one month;
• The tax rate:
o The immovable property tax rate for 2006 was 1% of the taxable value of immovable property;
o From 1 January 2007, the tax rate varies in the range of 0.3-1% of the taxable value of immovable property and is set by municipalities taking into consideration one or more of the following criteria: purpose of immovable property, technical maintenance status, categories of taxpayers (size or legal form or social status) or location of immovable property in a territory of the municipality (based on priorities set out in strategic and territorial planning documents).
• The taxable value:
o The taxable value of immovable property is the average market value of the immovable property determined with the help of the method of comparative value and income value by applying mass valuation of the immovable property. The taxable value of certain type of the immovable property (production, industrial, engineering structures) is determined with the help of the recoverable value (cost) method.
o The taxable value of immovable property is determined by the State Enterprise Centre of Registers.
• Requirements for calculation, declaration and payment of the tax
o Legal persons have to pay advance instalments, amounting to ¼ of the tax, on a quarterly basis (until 31 March, 30 June and 30 September).
o Both individuals and legal persons have to file annual immovable property tax return (declaration) to the State Tax Inspectorate and to pay tax (if instalments had been paid, the difference between the tax and instalments paid) not later than on 1 February of the next year.
o Tax payers calculate and declare the tax for the whole year.
§ The immovable property tax is calculated as of the month when the right of ownership to the immovable property is acquired, the immovable property starts to be used for economic or individual activities or the immovable property is taken over by the legal person.
§ The immovable property tax is not calculated as of the month following the month when the right of ownership to the immovable property is transferred, the immovable property is no longer used for economic or individual activities or the immovable property is returned by the legal person, with the exception of the cases when the transfer or conveyance of the immovable property gives rise to the duty to calculate the tax for another person – in such a case, the tax is not calculated as of the same month when the right of ownership is transferred and the property is conveyed or it is no longer used for economic ir individual activities.
• Main exemptions (reliefs):
o State-owned or municipal real property and real property of the state or municipal enterprises and real property of the budgetary institutions;
o Real property of embassies, international governments’ organizations;
o Real property of churches, charitable organizations;
o Real property used for education, science, cultural activities, social, environmental and health care purposes;
o Real property owned by companies registered in the free economics zones, agricultural and insolvent companies;
o The following real property owned by natural persons is exempt from taxation: the property used for agricultural activities, social care, manufacture of cult articles, burial services as well as real property located in the territory of a cemetery.
o The structures, which have not been recognised as suitable for use (unfinished buildings), where they are not actually used.
o Municipalities are entitled to reduce the tax at the expense of their budget or completely exempt from the payment thereof, whereas municipalities receive the real property tax revenues.
