The Lithuanian parliament, Seimas, on Thursday approved long-debated amendments to the real estate tax law, following public criticism and opposition from several political factions. The government’s initial and revised proposals were modified by the ruling coalition in response to concerns from the public and lawmakers.
The amendments passed with 77 votes in favour, 46 against, and four abstentions.
Most Social Democrats, members of the Nemunas Dawn group, and the Democratic Union “For Lithuania” – the ruling coalition – backed the bill. Opposing it were MPs of the Liberal Movement, the conservatives Homeland Union (TS-LKD), the Lithuanian Farmers and Greens Union, the Christian Family Alliance, and three of the four members of the Mixed Parliamentary Group. Nine conservatives did not participate in the vote.
Key provisions of the reform:
A person’s primary residence will be taxed only if its value exceeds €450,000. For co-owners, the threshold is €900,000.
Additional residential properties will be taxed from a value of €50,000.
Municipalities will set tax rates ranging from 0.1% to 1% on primary residences.
For secondary and subsequent properties, progressive rates will apply:
- 0.2% for property valued at €50,000–€200,000
- 0.4% for €200,000–€400,000
- 0.6% for €400,000–€600,000
- 0.8% for €600,000–€1 million
- 1% for property exceeding €1 million
The final tax rates for high-value properties were lowered from the government’s original proposal of 1% and 2%, following a compromise by the ruling coalition groups.
Abandoned property will be taxed at 1%–5%.
Commercial real estate taxation remains unchanged at 0.5%–3%, as determined by municipalities.
The reform also broadens the definition of a primary residence. In addition to declared homes, it now includes certain non-residential properties such as garden sheds, garages, and auxiliary buildings, even outside resort areas – an earlier limitation that Seimas lawyers opposed.
Currently, residential property is taxed progressively at 0.5%–2%, but only for property valued above €150,000.
Criticism from the opposition
Opposition MP Valius Ąžuolas of the Farmers and Greens said the revised tax would generate less revenue than the current model.
“Currently, the tax brings in about €16 million. With this, we’ll collect maybe €3 million,” he said during the session.
Conservative MP and former Finance Minister Gintarė Skaistė criticised the reform for undermining funding for national defence and local municipalities.
“The original goal was to generate more revenue for the Defence Fund and municipalities,” she said. “Now, there will be less for defence and nothing left for municipalities.”
Skaistė also warned that failing to meet a commitment to the European Commission (EC) to broaden the real estate tax base could jeopardise €87 million in funding from the EU’s Recovery and Resilience Facility under the “NextGenerationEU” plan.
“We’ll not only collect less from the tax itself, but also risk losing significant EU funds,” she said, adding that the version passed was the 10th revision – creating “increasing uncertainty” and eroding public trust.
MP Domas Griškevičius, of the Democratic Union “For Lithuania”, criticised Finance Minister Rimantas Šadžius for being absent during the debate, calling the lack of ministry leadership a failure.
“We needed his presence, his leadership, and unfortunately, it was missing again,” he said, suggesting the real estate tax will likely need to be revisited.
Liberal MP Eugenijus Gentvilas called the process “chaotic”.
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