STI Updates Commentary on CIT Deductions for Business Trips and Per Diems

The State Tax Inspectorate (STI) has published an updated official commentary on Article 21(3) of the Law on Corporate Income Tax (CIT). The update aligns tax administrative practices with amendments to Government Resolution No. 526, which took effect on 1 October 2026, clarifying the deductibility of daily allowances (per diems).

The primary change concerns domestic travel within Lithuania. Daily allowances for domestic trips are now considered allowable tax deductions only if the trip lasts longer than one day. For single-day domestic business trips, per diems are no longer legally payable. Should an employer choose to pay a daily allowance for a one-day trip within Lithuania, the amount cannot be deducted as a travel expense under Article 21(3) of the CIT Law; instead, it is classified as employment income subject to personal income tax (PIT) and state social insurance (SODRA) contributions.

The commentary also clarifies multi-day assignments where an employee returns home or to their permanent workplace daily. If the employer does not arrange and cover accommodation at the assignment location, each day is treated as a separate single-day business trip for CIT purposes. Consequently, per diems cannot be paid or claimed as deductible corporate expenses for those days.

Furthermore, the tax authority highlights the 20% limitation rule applicable to multi-day trips. Under the Per Diem Payment Rules, if the first or last day of a business trip lasts less than 4 hours (including travel time), the per diem recognized for tax deduction purposes is limited to 20% of the established full-day rate.

Direct travel costs incurred during single-day trips—such as fuel expenses within approved mileage rates, public transit tickets, and parking fees—remain fully deductible, provided they are supported by valid commercial receipts or invoices. Corporate travel documentation and orders must record precise departure and arrival times.