Lithuania Introduces Minimum Salary And Tax Changes For 2020

Employers and employees in Lithuania will need to adapt to an increase in the minimum wage and in income tax in the New Year.

The New Year will bring changes to all employers and employees in Lithuania.

Minimum wage

Firstly, the minimum gross monthly salary will rise from EUR 555 to 607, which corresponds to a 9.4% increase. In turn, the hourly wage will increase from EUR 3.39 to 3.72. It is strongly recommended that employment contracts and other employment related documents that include the EUR 555 salary (or EUR 3.39 hourly wage) are amended by January 2020.

Income tax raise

Secondly, the Parliament of Lithuania has approved the decision to raise personal income tax to the employees receiving gross salaries exceeding around EUR 9223.20 per month. While it was initially decided at the end of 2018 that these employees would be taxed with 27% personal income tax, it has now been decided that from 1 January 2020, personal income tax will increase to 32%. From 1 January 2021, 32% personal income tax will also apply to employees receiving gross monthly salaries of our above EUR 6588. It should be noted that the above salary figures depend on the average monthly salary in the country and will be recalculated automatically as the average monthly salary in Lithuania increases.

Tax on per diems

Lastly, taxation of per diem payments will also change starting in the New Year. In...