Per Diem Rules in Lithuania Change on October 1, 2026: Single-Day Allowances Abolished and Reductions Restricted

On July 1, 2026, the Government of the Republic of Lithuania adopted Resolution No. 518, amending Resolution No. 526 of April 29, 2004, on the reimbursement of per diem and other business travel expenses. The new rules take effect on October 1, 2026, establishing stricter conditions for travel expense accounting and per diem reductions for businesses operating in Lithuania.

Under the amended Clause 2.2 of the Per Diem Regulations, tax-exempt per diems for business trips within Lithuania will only be payable if the trip lasts longer than one business day. Consequently, tax-free per diems for single-day trips across Lithuania are eliminated. Any allowance granted by an employer for a single-day domestic trip after October 1, 2026, cannot be classified as a tax-exempt per diem; it will be treated as employment income and subject to standard personal income tax (GPM) and social security contributions (VSD and PSD).

Another significant operational change is introduced in Clause 2.1: if the first and/or the final day of a business trip lasts less than 4 hours (including actual travel time to and from the destination), the per diem rate for that specific day is set at exactly 20 percent of the standard rate. Accounting departments will be required to record the exact departure and return times to determine whether edge days qualify for 20 percent or 100 percent of the per diem allowance.

The amendment also clarifies previously disputed rules regarding the reduction of per diems. In the absence of a collective agreement, an employer may unilaterally reduce per diem rates through internal regulations only for business trips lasting at least 7 calendar days, and by no more than down to 65 percent of the maximum statutory rate. For business trips shorter than 7 days, unilateral reductions without a collective agreement are prohibited, meaning the employer must pay 100 percent of the applicable per diem.

Where a collective agreement is in place, per diems may still be reduced, but the minimum threshold remains 50 percent of the maximum statutory rate. Stipulating lower per diem rates directly in individual employment contracts remains legally invalid. Furthermore, employers are legally required to inform employees of any reduced per diem rates in writing or against signature prior to the commencement of the business trip.

Companies must update their internal travel policies, staff regulations, and payroll calculation systems before October 1, 2026, to ensure compliance with the new time-tracking and rate-reduction thresholds.