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Changes in salary calculation in Lithuania from 1 January 2019

Please be informed, that from 1 January 2019 upon entry into force of the legislative package on tax reform as adopted by the Lithuanian Parliament not only taxes and social security contributions paid by employees and employers will be changed, but the amount of the employee gross remuneration as well.

Since following the reform the employee and employer taxes will be consolidated and the social insurance contributions will be transferred to the employee, the gross salaries of all employees will have to be indexed from 1 January 2019, i.e. all employers, whose social insurance contributions are by law transferred to their employees are required to recalculate their employees’ gross salaries by increasing them by 1,289 and by changing the respective employment contracts with their employees accordingly.

It should be noted, that due to these regulatory changes only the gross (brutto) salary is going to be changed, meanwhile the net (netto) salary for the employee will remain the same or will change insignificantly. Please find an example of how gross salary looks now and how it will look in 2019 after implementation of the changes:

Data: Net salary: EUR 1000
Now in 2019
Full cost of the workplace EUR 1726 EUR 1717
Employer’s social security contribution EUR 410 EUR 21
Gross salary (brutto) EUR 1316 EUR 1696
Tax-exempt amount of income is applied EUR 0 EUR 123
Income tax EUR 197 EUR 315
State social insurance + Compulsory health insurance EUR 118 EUR 331
Net salary (for an employee) EUR 1000 EUR 1051

Taking into account the above forthcoming changes in Lithuanian tax law, every employer in Lithuania has an obligation to amend the employment contracts with all its employees accordingly. Since no individual or group notifications from competent Lithuanian state authorities relating to the changes from 1 January 2019 amendments will be sent, each employer has to independently ensure that all documents will comply with the requirements of the law.

PRIMUS does offer the legal services of its specialists that can prepare the obligatory amendments to the employment contracts and other necessary documents that are required for your further smooth business activities in Lithuania.


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