Lithuania’s Parliament has adopted the 2026 Budget, introducing VAT rate changes effective 1 January 2026, including replacing the 9% reduced rate with a 12% rate for sectors such as accommodation, transport, culture, and catering, while the standard rate remains at 21%.
At the same time, VAT on district heating, hot water, and firewood will increase to 21%, while VAT on medicines, books, and non-periodical publications will be reduced to 5%
Lithuania’s 2026 Budget Raises Reduced VAT to 12% and Reforms Multiple Sector Rates from January 1, 2026
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Lithuania
Author: Nikolina Basić
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Fiscal subject related
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Content accuracy validation date:
12.12.2025
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The Lithuanian Parliament (Seimas) has adopted the 2026 Budget, which includes an increase in the reduced Value Added Tax (VAT) rate for several sectors, effective January 1, 2026.
Reduced Rate Rises from 9% to 12%:
- The current reduced VAT rate of 9% will be abolished and replaced with a new 12% reduced rate for key services. The standard VAT rate of 21% will remain unchanged.
Services affected by the VAT increase from 9% to 12% include:
- Accommodation services (hotels, guesthouses).
- Passenger transport services on designated routes.
- Admission to art and cultural institutions and events (museums, concerts, theatre).
- Catering services and takeaway food.
In a more substantial increase for households and businesses, the VAT rate on district heating, hot water, and firewood will rise dramatically from the reduced 9% rate to the standard 21% VAT rate. The government has stated it is prepared to adjust compensation limits to mitigate the impact on lower-income households.
In a measure aimed at promoting education and public health, the VAT rate on medicine, books, and non-periodical publications will be lowered from the current 9% to a new 5% reduced rate.
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