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Minimum wage in Lithuania

Lithuania's payroll structure

Social security in Lithuania

Lithuania's benefits for employees (non-statutory)

Seamless, compliant, reliable payroll in Lithuania

Payroll in Lithuania

Managing payroll in Lithuania requires a clear grasp of local labour laws, tax obligations, and employee entitlements. With a monthly payroll cycle and mandatory contributions to income tax and social security, employers must ensure precise calculations and timely reporting. Salaries must be paid no later than the 10th of the following month, and detailed payslips should be issued to employees showing gross and net pay, hours worked, and deductions.

Lithuania operates a progressive income tax system, applying a 20% rate on annual income up to 114,162 EUR and 32% on income above that threshold. Employers are also responsible for social security contributions of up to 30% on top of the gross salary, which cover pensions, health insurance, and other social guarantees.

Employers must also factor in non-statutory costs like performance-based bonuses, parental leave contributions, and voluntary benefits such as supplemental health coverage or fitness stipends. For growing companies or those unfamiliar with the local regulatory framework, working with a trusted payroll provider in Lithuania can streamline compliance and reduce risk.

A reliable Lithuanian payroll company can manage everything from employment registration to tax filings, freeing internal HR teams to focus on strategic activities. This is particularly beneficial for foreign employers hiring their first staff member in-country or scaling operations without setting up a local entity.

Partnering with a Lithuanian payroll service also ensures confidentiality, legal accuracy, and alignment with rapidly evolving employment regulations. Whether managing a remote team or a local office, outsourcing payroll tasks can save time and protect your business from costly errors.

For employers expanding into the country, staying compliant while delivering a smooth payroll experience can boost retention, safeguard reputation, and support long-term growth. Partnering with an experienced Employer of Record like CXC, which also provides end-to-end payroll solutions in Lithuania, ensures that your workforce is paid accurately and on time, without the need to set up a local entity.

Minimum wage in Lithuania

For employers considering workforce costs in Lithuania, the minimum wage in Lithuania is a key factor when planning compensation strategies. While Lithuania offers a cost-effective hiring environment, minimum wage policies are shaped by economic trends, social dialogue, and government intervention.

What is the minimum wage in Lithuania?

As of 1 January 2025, the gross Lithuania minimum wage per month is 1,038 EUR. This marks a significant increase from the previous rate of 924 EUR per month. In terms of hourly pay, the current minimum wage in Lithuania, per hour, is 6.35 EUR, up from the previous 5.65 EUR.

The government bases changes to the minimum wage on a formula agreed in 2017, which links the minimum wage to between 45% and 50% of the national average wage. While the Tripartite Council—composed of trade unions, employer representatives, and government officials—typically negotiates adjustments, consensus was not reached for 2025. The government ultimately approved the increase, projecting that this change will require approximately 44 million EUR in public funds.

This adjustment reflects rising wage trends across Lithuania. According to Sodra, the national social insurance fund, average wages grew by 9.4% year-on-year in the second quarter of 2024.

Lithuania’s minimum wage after taxes

When considering the country’s minimum wage after tax, the take-home pay is approximately 777 EUR per month. This represents a net increase of 69 EUR compared to the previous year’s net minimum wage of 678 EUR.

Importantly, this after-tax figure now exceeds the projected poverty risk threshold for 2025, estimated at 732 EUR. The Ministry of Social Security and Labour has highlighted this as a positive step in aligning wage policy with social welfare goals.

Employers should also bear in mind that if an employee is working part-time or fewer than 40 hours per week, their actual earnings may be proportionally lower, in accordance with Article 196 of Lithuania’s Labour Code.

Minimum wage in Lithuania per hour for international students

International students working in Lithuania are subject to the same minimum wage in Lithuania per hour as local employees. This means students must be paid no less than 6.35 EUR per hour.

Those holding a Temporary Residence Permit or a national D-type visa are allowed to work up to 40 hours per week, in line with the standard working time limits set by Lithuanian labour law.

Many student jobs—particularly in sectors such as IT or language-specific customer service—often pay above the minimum wage. However, regardless of the job type, employers must ensure compliance with wage laws and provide clear documentation of employment conditions.

Keeping up to date with Lithuania minimum wage increase policies is crucial for international employers looking to attract and retain talent in a compliant and competitive manner.

Lithuania's payroll structure

Managing Lithuania’s payroll processes requires employers to be familiar with the country’s tax regulations, salary payment timelines, and contribution obligations. Lithuania’s payroll system is largely centralised and predictable, making it manageable for businesses with the right tools and local knowledge.

Payroll cycle in Lithuania

Payroll in Lithuania typically follows a monthly cycle. Employers must pay salaries by the 10th day of the following month, unless otherwise stated in the employment contract or collective agreement. Payments are usually made via bank transfer, and employees must be provided with payslips detailing gross and net salary, hours worked, taxes, and contributions.

While not required by law, some employers offer a 13th-month bonus based on performance or company policy. These bonuses are subject to standard tax and contribution rates.

Payroll and income taxes in Lithuania

Lithuania operates a progressive income tax system. As of 2025:

20% applies to annual income up to 114,162 EUR.
32% applies to income exceeding that threshold.

Both employers and employees contribute to social insurance. Employees contribute 6% to health insurance and 3% to social insurance. On the employer side, contributions include:

27.98% to social insurance.
3% to health insurance.
0.2% to state social security funds.

These combined obligations form the core of payroll and income tax Lithuania calculations.

In addition, three main payroll taxes in Lithuania must be withheld: personal income tax, social security contributions, and an unemployment risk fee. These are remitted to the State Tax Inspectorate (VMI) and the State Social Insurance Fund (Sodra).

Overtime pay is compulsory and must be calculated at 1.5 times the employee’s base rate. Lithuania also mandates recordkeeping: payroll data must be retained for up to 50 years.

Best practices when managing payroll in Lithuania

Staying compliant with Lithuania’s payroll framework involves more than meeting deadlines. Employers should:

Use certified payroll software to ensure accurate tax and contribution calculations.
Keep detailed records for each employee, including working hours, leave, and contract terms.
Ensure payslips clearly communicate earnings, deductions, and tax obligations.
Provide training to payroll staff on legislative changes.

Employers must also be aware of additional payroll-related costs, including insurance against workplace accidents and long-term employment liabilities, generally costing around 1.77% of the employee’s salary.

Working with an Employer of Record (EoR) can help streamline compliance, especially when entering the Lithuanian market for the first time. With accurate processing and up-to-date local expertise, companies can focus on growth while staying aligned with Lithuanian employment law.

When hiring employees in Lithuania, employers need to navigate a well-established system of statutory benefits. Social security in Lithuania covers pensions, health insurance, unemployment, and other welfare protections, all of which are largely funded through employer and employee contributions.

Lithuania’s social security contributions

The country’s social insurance scheme applies to most types of income, including employment contracts, board fees, and individual activities. Lithuania’s social security contributions are shared between employer and employee:

Employers contribute between 1.45% and 3.43%, depending on the type of contract. For most standard contracts, the rate is 1.77%. An additional 0.16% is allocated to the Guarantee Fund, and 0.16% to the Long-term Employment Fund.
Employees contribute 19.5%, which includes 6.98% for health insurance in Lithuania. Contributions apply to income up to 126,532 EUR annually. Above this threshold, only the 6.98% health insurance contribution remains.

Other income types have their own contribution rules. For example:

Income from board or supervisory duties is taxed at 15.7% up to the threshold, and 6.98% thereafter.
Independent contractors pay 19.5% on 90% of their gross revenue.
Business certificate holders pay 15.7% based on the minimum salary.
For performers or athletes, contribution bases may be capped at 50% of income or 90,681 EUR annually.

Pensions in Lithuania

The pension structure in Lithuania is built on a three-pillar system:

State pension (first pillar): Mandatory and funded through social security taxes.
Supplementary pension (second pillar): Voluntary for employees, with optional government contributions.
Private pension (third pillar): Voluntary employer contributions, typically ranging from 3% to 8% of gross salary. These contributions may be tax deductible under corporate income tax rules if specific conditions are met.

Health insurance in Lithuania

The public health system in Lithuania is funded by mandatory employee contributions. The 6.98% social security tax rate in Lithuania contribution grants access to services such as general practitioners, hospitalisation, pregnancy care, and rehabilitation. However, not all services are fully covered, prompting some employers to offer private health insurance as a supplement.

Employers are responsible for registering employees with the health insurance fund and deducting monthly contributions during payroll.
Social security in Lithuania for foreign citizens

The social security system’s coverage of foreign citizens depends on the worker’s residency and work permit status. In most cases, foreign nationals working in Lithuania under employment contracts must be enrolled in the local system and contribute at the same rates as Lithuanian nationals.

However, if a social security treaty exists between Lithuania and the employee’s country of origin, exemptions or contribution reductions may apply. For example, EU nationals may be covered under EU coordination rules, avoiding dual contributions.

If a foreign contractor or board member earns income in Lithuania, they may also be liable to pay social security, depending on their residency status and the nature of the income. For clarity, employers should confirm obligations with the State Tax Inspectorate or consult an Employer of Record with local expertise.

Understanding who has to pay social security taxes in Lithuania can be complex—but doing so correctly ensures legal compliance and protects both employer and employee from future liability.

Lithuania's benefits for employees (non-statutory)

In Lithuania, employers are increasingly using non-mandatory benefits to stand out in a competitive hiring landscape. Beyond statutory entitlements, many businesses now offer additional perks aimed at boosting employee satisfaction, wellbeing, and retention. These benefits include private health insurance, gym or sport compensation schemes, and investments in professional development.

Private health insurance in Lithuania

Although Lithuania’s public healthcare system covers basic medical needs, many employers supplement this with private health insurance. These private plans often cover services not fully reimbursed by the state, such as dental work, annual health screenings, physiotherapy, and specialist consultations.

Employers typically contribute part or all of the insurance premiums, either as a standard benefit or as part of a flexible package tailored to the employee’s preferences. Offering private health coverage is especially attractive to employees with families, or those who want faster access to high-quality medical services.

Professional development in Lithuania

Supporting career growth has become a core part of benefit strategies. Lithuanian employers frequently offer financial support for upskilling, language courses, professional certifications, or tuition reimbursement. These programmes not only support employee engagement but also directly benefit the company through improved talent capabilities.

Whether through dedicated learning budgets or partnership deals with training providers, this type of benefit signals long-term investment in employees.

Fitness allowances in Lithuania

Workplace wellness is gaining traction, and many companies now offer fitness allowances to encourage healthy lifestyles. This benefit typically takes the form of gym memberships, fitness class reimbursements, or stipends for personal sports gear.

Some employers use wellness apps or offer group activities such as yoga or team sports as part of broader health initiatives. These efforts foster a more energetic, connected, and resilient workforce.

Sport compensation in Lithuania

In addition to fitness stipends, sport compensation may be provided through targeted subsidies for athletic activities. This benefit can include entry fees for organised sporting events, seasonal passes to facilities, or discounts on sporting equipment.

Companies that prioritise sports and wellness often find that employees experience reduced stress levels, better team bonding, and improved productivity. As a tax-deductible expense, sport compensation can also be an efficient way to offer a meaningful non-monetary benefit.

Voluntary benefits like this help create a compelling employee experience—especially important in Lithuania’s growing tech, finance, and service industries. Employers aiming to build loyal, high-performing teams may find that a well-crafted benefits offering can make all the difference.

Seamless, compliant, reliable payroll in Lithuania

Managing payroll and employee benefits in Lithuania involves more than just ticking compliance boxes—it is about creating compensation packages that meet both legal standards and employee expectations. With evolving labour laws, social security contributions, and growing demand for additional perks like private health insurance or sport compensation, offering a well-rounded benefits package is key to attracting and retaining top talent.

At CXC, we simplify payroll and benefits administration in Lithuania. From social security contributions and income tax calculations to handling annual leave, bonuses, and non-statutory benefits, we manage the local complexities so you can focus on growing your team with confidence.

Interested in expanding your workforce in Lithuania? Explore our Employer of Record (EoR) solutions or speak to our team today.

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