Payments of the income tax
Resident income tax for the interest paid to the non-Lithuanian residents, must be deducted and paid into the budget of the Republic of Lithuania by “Paskolų klubas”. The rate of the income tax is 15 percent, therefore prior to paying the interest to the investors, “Paskolų klubas” will deduct 15 percent of this amount and will transfer the deduction into the budget. If Lithuania has signed the double taxation avoidance agreement with the certain country and the investor has submitted to “Paskolų klubas” the request regarding the rate specified in the aforementioned agreement, then “Paskolų klubas” would deduct the respective rate. Lithuania has signed the double taxation avoidance agreements with the following countries https://www.vmi.lt/cms/en/tarptautines-dvigubo-apmokestinimo-isvengimo-sutartys. Income tax rate of 0 percent is set with Latvia and Cyprus, and income tax rate of 10 percent are set with other countries.
We would like to note that the income tax that is payable in the investors state of residence can be reduced by the amount of income tax that was paid in Lithuania. If 15 percent were deducted, and according to the double taxation avoidance agreement signed between Lithuania and the other country, the tax rate is set at 10 percent, then the investor can reduce the income tax in his place of residence by 10 percent. In case when “Paskolų klubas” receives the request regarding the application of the lower income tax rate, then the investor can reduce the income tax in the country of his residence by the amount that was paid as an income tax in Lithuania.
We would like to note that when choosing the peer to peer lending platform, it is very important to make sure that the tax legislation of that country was adhered to. Otherwise the investors risk facing the violations of the tax obligations, those could involve the investors themselves. “Paskolų klubas” advices to the investors to thoroughly learn if the peer to peer lending platform does not violate the tax legislation of the resident country prior to investing, due to which they themselves could face the improper payment of the taxes.