Payroll & Employment Guide Lithuania

Employment contracts in Lithuania must be documented in writing and outline key employment terms, such as wages, working hours, benefits, termination policies, and similar.

Notice periods: From 1 to 3 months.

Termination of employment: Mutual agreement, employee-initiated, or employer-initiated termination.

Employers in Lithuania are required to provide mandatory employment benefits in accordance with the country’s labour law. Many of them also offer extra perks to stay competitive in the job market. Understanding both of them is essential to attracting and retaining talent.

• Mandatory benefits: Health, pension, and unemployment insurance.
• Common perks: Meal vouchers, transport reimbursements.
• Leave policies: Paid annual leave, sick leave, maternity/paternity leave.

Lithuania has a structured tax system where employers are responsible for withholding personal income tax and social security contributions from their employees’ salaries. Additional tax regulations may apply to self-employment, royalty income, and VAT.

Personal income tax rate: 20% or 32%, depending on the amount of income.

VAT: 21%

Tax allowances: Insurance, gifts and prizes, education and training, and public transport allowances.

Additional tax reliefs: Benefits and compensations, charitable donations, gifts, and others.

Employers in Lithuania must submit salary payments as agreed upon in employment contracts, in accordance with the minimum wage requirements set by labour laws. Salaries are typically paid on a monthly basis, unless otherwise specified in the contract.

Salary payment deadline: By the end of the month.

Taxes and contributions payment deadline: By the 15th of the following month.

Payroll declarations deadline: By the 15th of the following month.

Payroll currency: EUR

Lithuania’s labour laws are governed by the country’s Labour Code, which outlines all the aspects of employment, including contract types, minimum wages, working hours, probation periods, termination rules, and employer obligations. Employers must understand and comply with all these regulations to remain compliant.

Total employment cost:

• Employer’s social insurance contributions: 31.18%

Minimum wage: EUR 1038 per month

Probation period: Up to 3 months

Foreign citizens seeking to work in Lithuania must obtain the necessary work permits and visas. The process, permit type, and costs are different depending on the applicant’s nationality, job role, and length of stay.

Types of permits: EU Blue card

Process length: Around 1 month

Process cost: 1200€

Using EOR services in Lithuania, you can legally employ individuals from the country without setting up legal entities there. The EOR will take over all the legal responsibilities as an official employer, including:

• Legal employment and contracts
• Payroll processing
• Tax withholding
• Benefits administration
• Onboarding/offboarding employees

PEO services provide HR and administrative support, while you remain the legal employer for your team in Lithuania. PEO services can be of benefit for employers who already have legal entities in Lithuania but need support to manage their workforce operations, including:

• HR and workforce administration
• Payroll and benefits management
• Compliance and local labour law guidance
• Employment contracts assistance

Native Teams provides a payroll calculator adapted to Lithuania’s labour laws. Using our calculator, you can easily estimate net/gross salaries, employer/employee contributions, and other mandatory deductions in the country.