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HMRC internal manual

Double Taxation Relief Manual

Lithuania: Dividends


In accordance with the agreement Lithuania is entitled to the following withholding taxes:

(a) 5 per cent of the gross amount of the dividends if the beneficial owner is a company which controls directly at least 25 per cent of the voting power in the company paying the dividends;

(b) 15 per cent of the gross amount of the dividends in all other cases.

However, the EC Parent-Subsidiary Directive applies to Lithuania from 1 January 2005. This bars the imposition of withholding taxes on dividends paid by a company resident in one Member State of the Community to a company resident in another Member State, where the company receiving the dividends holds a minimum of 20 per cent (from 1 January 2005)of the capital of the company paying the dividend. The level of control required to gain exemption will be 15% from 1 January 2007 and 10% from 1 January 2009.

The withholding tax qualifies for credit as a direct tax (see INTM164010(c)). The requirements are that the recipient should be a resident of the United Kingdom, the beneficial owner of the dividend and that the dividend is not effectively connected (see INTM153110 fifth sub- paragraph) with a business carried on by the recipient through apermanent establishment in Lithuania.

Where the recipient of the dividend is a United Kingdom company controlling directly or indirectly at least 10 per cent of the voting power in the Lithuanian company paying the dividend, credit is also due for the underlying tax (see INTM164010(d)) (Article24(2)(b)).