The new year is generous with tax innovations not only for residents but also for business entities. The amendments that have entered into force include corporate income tax rate corrections, the introduction of immediate depreciation principles, changes in the application of incentives, the harmonisation of tax loss deduction limits, and others.
Corporate income tax rate changes
Specifically speaking about rate changes, the corporate income tax rate increases by one percentage point from this year: the main one will reach 17%, and the reduced one – 7%. Also, the period during which a 0% corporate income tax rate is applied to the profit earned by newly registered small entities has been extended from 1 to 2 years, and the previously valid requirement regarding the limitation of the number of employees has been abolished. These conditions, together with the changed taxation of personal income, have encouraged greater activity in the establishment of small partnerships. As indicated in the 13/01/2026 Verslo žinios publication “Hundreds of new companies are established per day”, at the beginning of this year, the activity in establishing small partnerships is almost twice as high as at the same time last year.
Immediate depreciation: a new incentive for investments
Another important innovation is the immediate fixed asset depreciation incentive. From 1 January 2026, the full acquisition price of acquired fixed assets will be deductible from income in the year when the asset is transferred for use. The incentive applies to the following groups of fixed assets: machinery and equipment, installations (structures, boreholes, etc.), computer hardware and communication tools (computers, their networks and equipment), software, acquired rights, trucks, trailers and semi-trailers, buses – not older than 5 years.
However, if such an asset is used for less than 3 years, the corporate income tax will have to be recalculated applying the usual depreciation (amortisation) standards.
Large-scale project incentive: adjusted conditions
The conditions for applying the large-scale project incentive have also been adjusted. The essential changes are related to the term of applying the incentive (extended until 31 December 2035), the investment amount (the minimum part of private investment increased from 100 million euros to 110 million euros), and the duration of applying the incentive (20 tax periods).
Deduction and transfer of tax losses
In addition to other changes, the rules for limiting tax loss deduction amounts and transferring tax losses between group companies are also being updated. It has been established that the total amount of a company’s deductible losses (incurred by the company itself, taken over during reorganisation or from other group companies) cannot exceed 70 per cent of the profit of that tax period. This means that even with larger accumulated losses, the company will not be able to fully cover its income with them.
Also, the procedure for transferring losses between group companies has been clarified, assessing the actual scope and duration of the companies belonging to the same group, and these conditions are determined according to the last day of the relevant tax period. In short, from next year, the transfer of losses will be allowed only in coming periods, and only those group companies that continuously belonged to the same group for at least two years until the end of the relevant tax period will be able to use this opportunity. This provision limits the possibilities to reduce taxable profit with the incurred losses.
Other important changes
Attention should also be paid to other tax changes. From this year, legal entities will be able, by themselves and without the consent of the tax administrator, to change the depreciation standards of fixed assets if such a decision is economically justified and not related to seeking tax benefit. The changing of standards is formalised by an internal document confirmed by the manager, indicating the group of assets being changed, the previous and newly established standards, and the objective reasons for the change.
Allowable deductions of limited amounts have been supplemented with scholarships for students who study according to the study programmes of the group of study directions of mathematics, life, engineering or technology sciences and, having finished these study programmes, acquire a higher education qualification related to the activity carried out by the company, as well as scholarships for researchers carrying out an R&D project.
In addition to these main mentioned changes, a number of amendments to the rules implementing tax laws have entered into force, which detail the procedure for practical application, therefore taxpayers need to be particularly attentive in order to properly and timely fulfill tax obligations.
What should business do?
For business entities, it is worth evaluating in advance the impact of the changes already in force on the company’s activity, to review the policies of depreciation, investment and loss management, and to ensure that all decisions are properly documented. Such an evaluation will help not only to reduce tax risks but also to timely identify measures allowing for more efficient use of emerging tax opportunities.
Prepared by Jolita Čėsnė, tax law expert and lawyer at the law firm Glimstedt.
