Business Certificate Revenue Cap Rises to €50,000: Tax Treatment of Excess Revenue Clarified

The State Tax Inspectorate (VMI) has updated its official commentary on Article 6, Parts 4 and 5 of the Law on Personal Income Tax (GPMĮ) and published a revised guidance memorandum for business certificate holders. These changes align with Law Amendment No. XV-343, which increases the maximum annual income limit eligible for fixed municipal PIT from €45,000 to €50,000, effective January 1, 2026.

Revenue earned within the €50,000 ceiling remains covered by the fixed lump-sum PIT paid at the time of certificate issuance. Any amount exceeding €50,000 is reclassified as income from individual activities under an activity certificate (individuali veikla pagal pažymą). The excess is taxed under standard rules: a 20% statutory PIT rate, minus deductible business expenses, with the tax credit (mokesčio kreditas) applicable to taxable income up to €42,500, or progressive rates where thresholds are met.

Under official guidance letter No. (18.18-31-1Mr) R-1768, VMI confirmed that the prepaid fixed PIT is credited against the final tax obligation. The portion of the fixed tax proportional to the remaining certificate validity period—calculated from the day the €50,000 cap is exceeded—is directly offset against the final PIT due on the excess revenue.

Entrepreneurs operating under a business certificate must maintain a chronological income register to identify the exact day the threshold is crossed. Registering an individual activity certificate mid-year is not required. The excess revenue must be reported on the annual tax return (Form GPM311) by May 1 of the following calendar year. Taxpayers may apply the statutory 30% deemed expense deduction without expense receipts, or opt to deduct documented actual expenses.

For residential rental business certificates, the €50,000 cap also applies. Income exceeding €50,000 is treated as ordinary property rental income, subject to a 15% rate if aggregate non-employment income does not exceed 12 Average National Wages (VDU), and progressive rates (20%, 25%, or 32%) beyond that threshold.

The €4,500 ceiling per tax year for providing services or selling goods to legal entities (that do not operate in the same sector) remains unchanged.