Lithuania’s investment account – everything you should know about

Starting January 1, 2025, Lithuania implemented a new investment account as part of amendments to its Personal Income Tax (PIT) law.

This initiative aims to encourage residents to invest their savings in financial instruments instead of holding them in low-yield deposits. Below, we explore the key features of this account and its benefits.

Here is the summary of the features:

Taxation. Taxes will only apply when funds are withdrawn, encouraging long-term investment strategies and enabling investors to grow their capital over time. Capital gains that are not reinvested and are withdrawn from the investment account will be taxed at the same PIT rate currently in effect – 15%/20%. However, the EUR 500 exemption cannot be applied.
Usage of the investment account. To qualify as an investment account under the PIT Law, it must be opened in a financial institution in Lithuania or an EEA/OECD country with a DTT agreement. The account must be held at a financial institution or payment service provider. It must be used solely for specified financial products and declared to the tax administrator. There is no limit on the number of accounts, but each account must be used by only one person.
Wide range of investment options. Investors will now have access to stocks and bonds, investment funds such as mutual funds and exchange-traded funds (ETFs), crowdfunding and peer-to-peer lending opportunities, derivatives like options and futures. There are no limits on how much can be contributed or on the number of accounts a person can hold, giving investors the flexibility to adapt to their financial needs. However, dividends and cryptocurrency are excluded from this list.
Inheritance and gifts. Financial assets received as gifts or inheritance can be added to the account. Beneficiaries must inform the State Tax Inspectorate (STI) to ensure compliance.
Declaration requirements. Specific rules regarding withdrawals and declarations are expected to be clarified soon. The investment account must be declared to the STI along with the annual income return. For the 2025 tax period, the return is due by May 1, 2026. Investments made before 2025 can benefit from deferred taxation under the new rules. However, investors must notify the STI by December 31, 2025, to ensure a smooth transition to the new system.

What is the new investment account?

The new investment account introduces a new way to manage and tax personal investments. Currently, investment income in Lithuania is taxed annually, even if profits are reinvested. Under the new framework, taxes are deferred until funds are withdrawn from the account, allowing individuals to grow their investments without the yearly tax burden.

For those actively trading financial instruments, this account offers flexibility to buy and sell investments in response to market changes. The investment account allows users to aggregate results from various investment transactions, meaning profits and losses can be summed with the option to carry them over to subsequent years.

Usage of the investment account

To qualify as an investment account, it must meet PIT Law requirements. It can be opened in financial institutions in Lithuania, EEA/OECD states, or DTT-partner countries. The account must be held at a financial institution or payment service provider and used solely for specified financial products.

There is no limit on the number of investment accounts one can have.

To recognize an account that meets these criteria as an investment account, the individual must declare it to the tax administrator in accordance with the procedures established by the STI.

Under the taxation regime for income generated from the investment account, only the individual who has declared the newly opened or existing account as an investment account to the tax administrator can use it. Multiple individuals, whether related by kinship or not, cannot report the use of the same investment account to the tax administrator.

The ability to use this taxation regime is linked to a specific individual. Therefore, all transactions related to this account, such as depositing funds, withdrawing funds, and others, must be carried out by that individual.

Wide range of investment options

Stocks and bonds. Investors can purchase shares in companies and government or corporate bonds, enabling them to participate in the equity market and fixed-income securities.
Investment funds. This includes mutual funds and ETFs, which provide diversified investment opportunities across various asset classes, managed by professional fund managers.
Crowdfunding and peer-to-peer lending. Investors have the chance to engage in crowdfunding projects or lend money directly to individuals or businesses through peer-to-peer lending platforms, often yielding attractive returns.
Derivatives. The investment account also facilitates trading in derivatives such as options and futures, allowing investors to hedge risks or speculate on price movements of underlying assets.

There are no limits on contributions or account numbers, offering investors flexibility. However, dividends and cryptocurrency income are excluded from this account. Also, dividend taxation rules remain unchanged despite the new investment account.

Inheritance and gifts

Considering that individuals with an investment account may inherit or receive stocks or other financial products as gifts, these assets can be considered acquired through the investment account.

Individuals must inform the STI about such acquisitions and attribute any income generated from these products to their investment account.

Declaration requirements

The investment account must be declared in accordance with procedures established by the STI – a detailed clarification on taxation must be provided by the end of the year. Additionally, the STI has provided a FAQ in Lithuanian.

The investment account must be declared with the annual income return. For 2025, the deadline is May 1, 2026. Financial instruments acquired by December 31, 2024, can be transferred to the investment account, indicating their acquisition value. This option can be used until December 31, 2025.

Conclusion

The investment account represents a significant shift in Lithuania’s approach to personal investments. By combining favorable tax treatment with flexible features, it aims to create a stronger culture of investing among residents.

This initiative helps individuals grow wealth while boosting the economy by directing savings into investments. As implementation nears, investors and institutions must prepare for new opportunities and responsibilities.

The coming years will reveal how this reform shapes Lithuania’s financial landscape, but the potential for positive change is substantial.

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