Individual activity Lithuania 2026 means that a resident earning self-employed income must register before starting, calculate personal income tax on profit, handle compulsory health and social insurance contributions, and file the annual income tax return by 1 May of the following year. The key 2026 point in the official VMI guidance is the income-tax formula: from 1 January 2026, taxable individual activity profit is calculated using the “income minus expenses, multiplied by 20%, minus credit” model, with the credit depending on annual profit.
For many freelancers, the difficult part is not opening the activity certificate. The harder part is understanding how registration, invoices, expenses, accounting and the annual return fit together. This guide turns the official VMI rules into a practical checklist for people who want a durable, year-round reference.
Individual activity by certificate must be registered with VMI no later than one working day before the activity starts. A person carrying out such activity pays personal income tax, handles PSD and VSD contributions, keeps income and expense records, and files the annual income tax return by 1 May of the following year.
- Registration: before starting, no later than one working day before the activity begins.
- Main taxes: personal income tax, PSD and VSD contributions.
- Expenses: choose actual documented expenses or 30% of income without documents.
- Annual deadline: file the income tax return by 1 May of the following year.
- Income tax payment code: 1441.
What is individual activity by certificate?
Individual activity by certificate is a form of self-employment where a resident carries out economic activity in their own name and at their own risk. It is commonly used by freelancers, consultants, creators, small service providers and people selling work or services directly to clients.
It is not the same as an employment contract. There is usually no employer withholding income tax for you, issuing all documents or tracking your annual result. You are responsible for registration, invoices, income and expense records, the annual return and tax payments.
Here is the practical point: the activity must genuinely be independent. If the relationship looks like employment in substance, simply having a certificate does not automatically solve the legal or tax question.
How do you register individual activity in Lithuania?
VMI states that individual activity by certificate must be registered before the activity starts, no later than one working day before the start date. The clearest route is the online request through Mano VMI.
The path described by VMI is: Services → Individual activity by certificate → Ordering or changing individual activity by certificate. After opening the form, select “Fill in” and submit the request.
VMI also allows requests through a service office or by consultation phone, but those options require prior appointment or identity authentication. For most people, the electronic route is the least confusing.
What taxes must be paid?
According to VMI, individual activity by certificate involves three main tax or contribution areas: personal income tax, compulsory health insurance contributions and state social insurance contributions. In short, VMI explains the personal income tax side, while Sodra provides information on PSD and VSD.
Personal income tax is calculated on the taxable result of the activity: income reduced by allowable expenses. That is why the expense method matters. It is not just a bookkeeping preference; it changes the tax base.
There is one more layer: VAT may become relevant in certain situations. VMI separately points readers to information on cases where a person may need to register as a VAT payer or pay VAT. This is especially worth checking if you use platforms, buy services from foreign providers or sell across borders.
How is income tax calculated from 2026?
VMI separates the rules up to the end of 2025 from the rules starting on 1 January 2026. Until 31 December 2025, the formula is “income minus expenses, multiplied by 15%, minus credit”. If annual profit does not exceed EUR 20,000, the effective tax amount is 5% of profit. Above EUR 20,000, the amount rises from 5% to 15%, and once profit reaches EUR 35,000 the 15% rate applies.
From 1 January 2026, VMI states a new formula: income minus expenses, multiplied by 20%, minus credit. The credit applies when annual individual activity profit does not exceed EUR 42,500.
If annual profit does not exceed EUR 20,000, VMI explains that the effective personal income tax amount is 5% of profit. If profit is between EUR 20,000 and EUR 42,500, the tax amount increases gradually from 5% to 20%. If profit exceeds EUR 42,500, these income amounts, together with other annual income, are taxed at 20%, 25% or 32% depending on the total income level.
| Period | VMI formula | Practical meaning |
|---|---|---|
| Until 2025-12-31 | (Income – expenses) x 15% – credit | The effective burden starts at 5% for lower profit and rises to 15%. |
| From 2026-01-01 | (Income – expenses) x 20% – credit | The credit applies up to EUR 42,500 of profit; higher income may fall under 20%, 25% or 32% rates. |
Which expenses can be deducted?
VMI allows two expense methods. You can deduct actual expenses supported by documents, or you can deduct 30% of income without keeping expense documents for tax calculation purposes.
The 30% method is simpler. It can suit freelancers with low costs. Actual expenses may be better if the activity needs equipment, software, premises, transport or other real business costs.
But this is where care matters: not every document-supported cost automatically reduces taxable income. VMI groups expenses into fully allowable deductions, limited allowable deductions and non-deductible expenses. Larger or unusual costs should be checked before you rely on them.
When must income tax be declared and paid?
The annual income tax return must be submitted by 1 May of the following year. VMI stresses that the return must be filed even if no individual activity income was received.
Personal income tax on individual activity income must be paid by the same annual return deadline. VMI also states that a person may pay income tax in advance during the year, for example monthly, quarterly, half-yearly or on another convenient schedule.
The payment code for individual activity personal income tax is 1441. VMI collection account details should be checked directly on VMI before payment.
What does this mean in practice?
Suppose Lina starts offering design services in Lithuania in 2026. Before working with her first client, she submits the request through Mano VMI and registers individual activity by certificate. For each client, she issues an invoice and records income and expenses.
During the year she receives EUR 18,000 of income. She can compare the 30% expense method with actual documented expenses. If her real costs are low, the 30% method may be simpler. If she buys a computer, paid software and other work tools, actual expenses may be worth calculating.
After the year ends, Lina files the annual income tax return by 1 May 2027, calculates tax under the 2026 rules and pays the amount using payment code 1441. She checks PSD and VSD contributions separately under Sodra guidance.
What should you do step by step?
- Check whether your work is genuinely independent and suitable for individual activity.
- Submit the request through Mano VMI no later than one working day before starting.
- Keep the VMI confirmation and note the activity type.
- Issue accounting documents from the first sale or service.
- Keep an income and expense journal or use i.APS.
- Compare actual expenses with the 30% method before filing.
- Check PSD and VSD contribution rules with Sodra.
- File the annual return and pay personal income tax by 1 May of the following year.
What common mistakes should you avoid?
The first mistake is starting work and registering later. VMI says the request must be submitted no later than one working day before the activity begins.
The second mistake is treating every receipt as an allowable deduction. A document is necessary for actual expenses, but the cost must also be related to the activity and fall within the deductible rules.
The third mistake is forgetting the annual return when income was zero. VMI says the annual income tax return still has to be submitted.
Sources: this guide is based on VMI pages about individual activity by certificate, taxes payable, deductible expenses, activity duties and the income tax deadline.
FAQ about individual activity Lithuania 2026
Can I start individual activity on the same day?
VMI says the request must be submitted no later than one working day before the activity starts. It is safer to register first and issue the first invoice only after registration is in place.
Do I always need expense documents?
No. If you choose the 30% expense method, you do not need expense documents for that tax calculation. If you choose actual expenses, documents are required.
Do I file a return if I had no income?
Yes. VMI states that the annual income tax return must be filed even if no individual activity income was received.
When do I pay personal income tax?
It is paid by the annual return deadline, 1 May of the following year. Advance payments during the year are possible.
Takeaway: individual activity is flexible, but it is not paperwork-free. Register before starting, keep records from day one, understand the 2026 income-tax logic and do not miss the 1 May annual deadline.