A simple and accurate system for calculating employee salary and taxes.
This is the amount before employee taxes. It is stated in the employment contract, and PSD, VSD, GPM and, where applicable, pension accumulation are calculated based on it.
Example: if the agreed salary is €2,000, this amount is not yet what the employee will receive.
This is the amount after employee taxes. In other words, it is the actual amount paid to the employee.
Example: if the salary “on paper” is €2,000, the employee may receive around €1,270–€1,300 net, depending on NPD, pension accumulation, and other conditions.
The same principle always applies:
net salary < gross salary
Compulsory health insurance. It is deducted from the employee’s gross salary.
Calculation: gross × 6.98%
Example: 2000 × 6,98% = 139,60 €
State social insurance. It is related to pensions, sickness benefits, maternity benefits, and other social guarantees.
Calculation: bruto × 12,52%
Example: 2000 × 12,52% = 250,40 €
Non-taxable income amount. This is an amount that reduces the GPM base. It is not additional money — it is the amount on which GPM does not have to be paid.
Simply put:
- the lower the salary, the higher the NPD
- the higher the salary, the lower the NPD
- from a certain threshold, NPD becomes 0
Personal income tax. It is calculated on taxable income, that is, on the gross amount after applying NPD.
Rates:
• 20% applies up to €83,237.40 per year
• 25% applies from €83,237.40 to €138,729.00
• 32% applies to the portion above €138,729.00
Important: The higher rate applies only to the portion of income that exceeds the threshold.
If the employee participates in the second-pillar pension accumulation scheme, an additional 3% is deducted from the gross salary.
Example: 2000 × 3% = 60 €
If the employee’s insured income is too low, the employer may have to pay an additional contribution on the difference up to the minimum monthly wage (MMA).
Simply put: if the salary is too low, the contribution base may still be raised to the minimum level.
This is the annual income threshold above which VSD no longer applies to part of the income. If an employee earns a very high salary, the calculation of social insurance changes after a certain threshold.
PSD, VSD, and a large portion of social insurance contributions are administered through Sodra.
Link: https://www.sodra.lt
Personal income tax (GPM) is administered by VMI, which provides many explanations regarding NPD, GPM rates, and payroll taxation.
Link: https://www.vmi.lt
The fundamentals of Lithuanian employment relations and payroll are established in the Labour Code and related tax legislation.
VDI: https://www.vdi.lt
e-Seimas (electronic platform of the Seimas of the Republic of Lithuania) https://e-seimas.lrs.lt