Controlled Foreign Company tax rules in Lithuania
Controlled Foreign Company rules in Lithuania are governed by the Law of Corporate Income Tax (20 December 2001 No. IX-675 Vilnius).
CFC regulation applies to the Lithuanian residents that are investing in the foreign companies. Therefore, when Lithuanian resident (natural person or a legal entity) directly or indirectly holds more than 50% of the foreign company Lithuanian CFC rules apply and Lithuanian investors have to pay tax in Lithuania just because they are seen as a majority shareholder in the foreign company.
Application of CFC rules
However, CFC rules apply only when natural person or a legal entity:
- Controls the foreign entity on the last day of the tax period, and
- Holds directly or indirectly over 50% of the shares (interests, member shares) in the controlled foreign entity or other rights to a portion of distributable profits or pre- emptive rights to the acquisition thereof, or
- Together with related persons, holds over 50% of the shares (interests, member shares) in the controlled entity or other rights to a portion of distributable profits or pre-emptive rights to the acquisition thereof, and the portion controlled by the controlling natural person or legal entity accounts for at least 10% of the shares (interests, member shares) or other rights to a portion of distributable profits or pre-emptive rights to the acquisition thereof.
CFC taxation specifics
However, pursuant to the Art. 39 of Corporate Income Tax the Income of the Controlled Foreign Corporation will be taxed only when:
- the entity is registered or otherwise organized in the states or zones included in the black list approved by the Minister of Finance of Lithuania 
- the entity is registered or otherwise organized in the states or zones included in the white list approved by the Minister of Finance of Lithuania  but it does not comply with the forms of business organization of a foreign entity included in the list approved by the Minister of Finance because business form is subject to the tax favorable regime in the foreign country.
- The entity is not registered or otherwise organized in the states or zones included in the white nor black list but the corporate income tax imposed by the foreign country on the entity is less than 75% of the 15% Lithuanian corporate income tax rate.
To find out more about CFC rules in Lithuania please contact our solicitors at email@example.com.
T: +370 52 611 000
F: +370 62 611 100
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