From January 1, 2025, a new investment account scheme has been launched, aiming to create more favorable conditions for individual investors. Under this scheme, income received through such accounts will fall under a special tax regime, allowing deferral of personal income tax payments on investment income—as long as those earnings are reinvested.
Here are theTop 5 key things you need to knowabout the investment account:
- Who can use it?
The investment account scheme applies only to accounts opened in the name of a Lithuanian tax resident and used for their own investments. Joint accounts—such as those shared between spouses—cannot be declared as investment accounts. An existing or newly opened account may be declared as an investment account, whether it is held with a financial institution or a payment service provider in Lithuania or abroad. - What investments are allowed?
Funds in the investment account can only be used to invest in financial instruments listed in the Lithuanian Personal Income Tax Law, including: -
- Transferable securities traded on exchanges;
- Money market instruments traded on exchanges;
- Units or shares of collective investment undertakings;
- Derivative financial instruments linked to the aforementioned products;
- Peer-to-peer lending and/or crowdfunding;
- Savings notes issued by Lithuania or other countries.
IMPORTANT:The tax deferral regime cannot be applied to income from deposits, dividends, or investments in cryptocurrencies, even if received through an investment account.
- What if I use the account for everyday
expenses?
An account used to receive income (e.g., salary, self-employment income) and cover daily expensescannotbe declared as an investment account. All payments into an investment account are treated as capital contributions used for investment, while withdrawals are considered payouts that may trigger a tax obligation. It is therefore recommended to open anew, separate accountsolely for investment purposes. - How is it taxed and reported?
This scheme is designed forlong-term investing. If no withdrawals are made from the account during the tax year, the total amount of funds contributed needs to be reported as a single sum. However, if funds are withdrawn, each contribution and withdrawal must be reported separately. Income tax (GPM) is appliedonly ifthe total withdrawn amount exceeds the cumulative contributions at the time of withdrawal. The applicable GPM rate is15%, or20%for the portion of income exceeding120 times the average salary (VDU)—which in 2025 amounts to€253,065.60. - When and how to declare the account?
There isno immediate action required. If you decide to use an existing or new account for investment purposes, you will need to declare it as an investment account to the State Tax Inspectorate (VMI)only in 2026, when filing your income declaration for 2025. You may continue investing without using this scheme and still benefit from the existing €500 annual tax exemption on investment income.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
