Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, Croatia, China, Czech Republic, Denmark, Estonia, Finland, France, Georgia, Germany, Greece, Hungary, Iceland, Ireland, Israel, Italy, Kazakhstan, Kirghizstan, Korea, Latvia, Luxembourg, Macedonia, Malta, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Singapore, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, United States of America and Uzbekistan are so far the countries which have signed double tax treaties with Lithuania.
Many more drafts are waiting to be approved and ratified.
All the treaties follow the OECD and UN model agreements.
Just like Latvia, Lithuania hasn’t signed any Tax Information Exchange Agreements because it’s an EU member and it participates in EU agreements covering exchange of information.
The double tax treaties are important because it regulates the way the incomes and capitals are taxed, usually by stipulating where the taxes are withheld (generally in the country of residence) and can lead with this measure to a growth of the foreign investments.
Besides this, a double tax treaty is also regulating the rates of withholding taxes on dividends, interests and royalties. The rates may vary according to the level of participation at a company’s capital and also depends on the nature of the beneficial and provider.
The last double tax treaty signed by Lithuania is the one with Mexico, ratified in February 2012. This treaty stipulates that the maximum withholding tax for interests and royalties is not exceeding 10%. The Mexicans agreed to credit the amount of money paid as an income tax by a Lithuanian investor which owns shares in a Mexican company, but for an amount not higher than the sum that could have been taxed in Mexico.
Another regulation is regarding the exchange of information between the two countries. The countries must exchange taxpayers’ information necessary to apply the treaty’s regulations.
The usual withholding tax on dividends is 15% in Lithuania but for companies where the foreign participants invested more than 10% of the share capital for more than 12 months the dividends is not taxed at all.
The interests and royalties issued by Lithuanian companies and received by non treaty foreign entities are usually taxed with 10%.
The above rates may be smaller for the treaty countries.