Every November, the same scenario plays out: company executives are immersed in the Christmas sales rush or wrapping up their annual targets, and then, in early January, they receive an unexpected email from their accountant with significantly higher payroll tax bills and new requirements.
The end of 2026 and the beginning of 2027 will bring several particularly significant changes for Lithuanian businesses—ranging from adjustments to the minimum wage to increasingly stringent EU-wide rules on employee compensation.
Let's look at these changes not through the lens of dry legislation, but through a real impact on your company's cash flow.
- Minimum Monthly Wage (MMW) Increase: A Ripple Effect on Your Budget
In accordance with the resolutions of the Government of the Republic of Lithuania regarding the increase in the minimum wage, the rise in the MMW triggers a ripple effect throughout the company’s compensation system: Resolutions of the Government of the Republic of Lithuania In accordance with the resolutions of the Government of the Republic of Lithuania regarding the increase in the minimum wage, the rise in the MMW triggers a ripple effect throughout the company's compensation system:
- Expectations of Skilled Employees: If an unskilled employee receives a higher wage, it is natural for foremen, managers, or specialists to expect a proportional increase in pay to maintain the motivational gap.
- Hourly Rate and Overtime Pay: Pagal LR Darbo kodeksą Under the Labour Code of the Republic of Lithuania, overtime and night work are compensated at no less than 1.5 times the employee's wage rate; therefore, as the base salary rises, these expenses grow the fastest.
- Non-taxable Per Diem Thresholds: The coefficients determining whether business trip per diems become subject to PIT (GPM) and "Sodra" social security contributions are shifting (if the salary does not reach the MMW multiplied by the designated coefficient).
What to do now:
Recalculate your payroll budget together with your financial specialist right away. If labour costs account for 40–60% of your service cost price, it is time to adjust your customer pricing accordingly.
- Preparing for the EU Pay Transparency Directive (2027): An End to "Secret" Salaries"
Although the requirements take effect in 2027, forward-thinking companies are doing their homework early. An official document of the European Parliament and Council – Directive (EU) 2023/970 Direktyva (ES) 2023/970 fundamentally transforms recruitment and compensation policies:
- Prohibited from Asking About Previous Salary: Job interviews will strictly prohibit asking candidates how much they earned in their previous role.
- Mandatory Salary Ranges in Job Postings: Not vague formality ("from €1,000 to €8,000"), but realistic brackets grounded in objective criteria.
- Employee's Right to Know Averages: Any employee will have the right to request information on the average pay in the company broken down by gender for the same work or work of equal value.
What to do now:
Establish structured job levels and salary bands (job grading). If two managers with similar experience earn radically different amounts simply because one "negotiated better", this will soon become a legal and reputational headache.
- Corporate Income Tax (CIT) and Investment Incentives: Are You Overpaying the State?
The end of the year is your final opportunity to legally reduce corporate income tax for the passing year by leveraging state incentives:
- Investment Project Incentive: Have you purchased new machinery, production lines, IT servers, or software? According to the STI (VMI) investment project rules, STI (VMI) investment project rules, you can reduce taxable profit by up to 100%, provided the assets comply with statutory requirements.
- Research and Experimental Development (R&D / MTEP): are you developing a new product or a unique IT solution? Under STI (VMI) R&D tax incentive guidelines, eligible expenses can be deducted threefold.
- Bad Debts: If you have clients who have failed to pay for an extended period and debt recovery is hopeless, finalize the supporting documentation now so these amounts do not have to be recognized as taxable income.
What to do now:
Do not wait for spring when annual financial statements are prepared. At the beginning of December, request a preliminary 11-month trial balance and calculate expected corporate income tax while you still have time for legitimate tax optimization measures.
- Digitalization and E-Invoicing: The End of Manual Work
If your company still prints invoices, archives them in binders, or forwards PDFs via email to be manually keyed into software – your business is wasting hundreds of euros every month.
- Integrated systems, automated bank statement synchronization, and direct data exchange with STI (VMI) i.MAS subsystem are the industry standard today.
- Businesses working with the public sector are already required to submit e-invoices via the Centre of Registers SABIS system,and the trend is clear: digital e-invoicing exchange will soon become mandatory for all B2B transactions.
Want to Step into the New Year Without Surprises?
Accounting should not cause anxiety or deliver unpleasant surprises. A strong financial partner warns you of regulatory shifts before they take effect and delivers solutions that protect your bottom line.
The MESO team helps businesses not only keep clean and compliant accounting records, but also plan taxes strategically, manage payroll risks, and ensure full compliance with the latest regulations.
👉 Contact Meso.lt we will help assess your company's readiness for the 2026/2027 changes.