Many beginning investors focus only on growing their capital and forget that investing also comes with certain financial obligations. Typically, investors have to pay personal income tax on their profit as well as various brokerage, management and other fees related to the administration of their investments. It is important to understand the tax structure even before you start investing, as this helps you forecast the actual return on your investments and consciously choose the most suitable instruments. In this article, we will therefore take a closer look at the main investment‑related taxes.

Investment taxes – why is it important to know about them before you start investing?

Before you start investing, it is important to understand which taxes will apply to your investments, as they directly affect your final return. If you properly take into account all possible taxes, you will:

avoid unpleasant surprises when your investment results turn out to be lower than expected;

compare different investment instruments more objectively;

plan your overall investment strategy more easily, including how you will declare your profit.

When choosing an investment platform, transparency remains one of the most important aspects. Investing with Profitus is much simpler because we inform you about all applicable fees in advance. A transparent and clear fee structure allows you to assess the real return and make an informed decision.

Main investment taxes in Lithuania

The main investment‑related taxes in Lithuania are personal income tax (GPM), dividend tax, capital gains tax and various brokerage fees. Let us look at each of them in a little more detail.

Personal income tax (GPM) on investment profit

Personal income tax (GPM) is the main tax levied on an individual’s income, including profit from investment activities (for example from the sale of securities, dividends, cryptocurrencies, etc.). GPM is paid on the investment profit earned in the previous calendar year. The tax return must usually be filed and the tax paid by 1 May for the preceding year.

The three main types of income on which GPM is paid are capital gains, dividends and interest. These types of income are particularly relevant when we talk about long‑term capital growth through different financial instruments. Investing in shares remains the most popular choice, and in this case taxes become a key factor determining the real profitability of your investments. Let us take a closer look at these three main income types:

Capital gains – this is the profit you earn by selling investments at a higher price than you bought them for. For example, if you buy shares for EUR 1,000 and sell them for EUR 1,500, your profit is EUR 500. You must pay 15% GPM on this amount. It is important to note, however, that a tax allowance applies – if your total capital gains of this type do not exceed EUR 500 in a year, no GPM is payable.

Dividends – this is the part of a company’s profit paid out to its shareholders. Dividends are also taxed at a rate of 15%, but in this case the EUR 500 allowance does not apply.

Interest – this is the income you earn from keeping money in a time deposit or investing in bonds. If you earn interest from European countries, including Lithuania, you must pay 15% GPM.

It is important to mention that if you receive income from other countries, a double taxation avoidance agreement may sometimes apply. This means that Lithuania allows you to credit part of the tax already paid abroad.

Dividend tax

Dividend tax is personal income tax applied to the profit that an individual receives from companies as a shareholder. Dividends are usually paid once a year. If they are paid by a Lithuanian company, it will in most cases withhold and pay the 15% income tax itself. In that case, you do not need to declare or pay this tax additionally. If you receive dividends from foreign companies, you must declare them and pay 15% GPM by 1 May. As already mentioned, if income tax has already been withheld by a foreign company, Lithuania may credit the tax paid there so that the same income is not taxed twice. However, it is important to check whether there is a double taxation avoidance treaty between Lithuania and the other country.

Capital gains tax

Capital gains are the profit you earn when you sell an asset or investment for more than you paid for it. The profit is calculated by subtracting the purchase price and any brokerage, purchase or sale fees from the selling price. Capital gains tax is due when the asset or investment is sold and a real profit is realised. It is declared and paid together with your annual income tax return. As already mentioned, a 15% rate applies here. However, if your total capital gains in a calendar year do not exceed EUR 500, no tax is payable.

It is important to note that if you incur losses on capital transactions during the year (for example, if you sell shares for less than you bought them), you can carry these losses forward for up to five years. This means that future capital gains can be reduced by those past losses. However, losses can only be offset against the same type of income – capital gains against capital gains, not against dividends.

Capital gains are not taxed if you sell your primary residence in which you have been officially registered as living for at least two years (or for a shorter period, if the proceeds are used within one year to purchase another home).

ETF, investment fund and brokerage fees

When you invest in ETFs or other investment funds, you have to pay not only GPM but also various brokerage and management fees that reduce your final return. These charges are not paid to the state – they are deducted by financial intermediaries or fund managers.

The main types of fees are:

Fund management fee. This is an annual fee charged by the fund manager for administering, overseeing and managing the fund’s investments.

Brokerage fees. These are paid by the investor for buying or selling a fund or ETF or for the administration of the investment account.

Fee on fund distributions. If the fund pays dividends, they are taxed at 15% GPM. If the fund does not pay out dividends but reinvests them, the tax is payable only when the profit is realised.

The fund management fee is usually deducted automatically, so the investor does not need to take any action. Brokerage fees are charged on each transaction. As already mentioned, GPM must be paid each year by 1 May.

How to calculate and declare investment taxes?

Download the annual statements from your bank or investment platform. They should contain information about income from sales, brokerage fees paid, dividends received and similar items.

Calculate your capital gains. To do this, subtract the purchase price and fees from the sale amount. If the total annual amount is less than EUR 500, this profit is not taxed. If it is higher, you must pay 15% GPM.

Dividends are always taxed at 15% GPM, regardless of the amount. Remember that if income tax has already been withheld abroad, this amount can usually be credited in Lithuania so that dividends are not taxed twice.

Fill in and submit your tax return via the Electronic Declaration System of the State Tax Inspectorate (VMI) at https://deklaravimas.vmi.lt/. Use form GPM308 – the annual income tax return. VMI pre‑fills part of the data automatically, but foreign income may need to be entered manually.

The return for the previous year must be filed and the tax paid by 1 May.