Taxes in Belarus vs. Lithuania for IT Companies

Choosing a jurisdiction is one of the key factors in building a stable and profitable IT business. In recent years, entrepreneurs from Belarus have increasingly considered relocating their companies to Lithuania or setting up subsidiaries there. The main reasons are differences in taxation, access to international payment systems, and the regulatory framework for IT activities.

Comparing the tax burden between Belarus and Lithuania allows businesses to evaluate not only direct costs but also indirect consequences, such as administrative workload, access to incentives, accounting requirements, and the efficiency of tax administration. This is particularly relevant for outsourcing, product, and fintech companies, where transparency, predictability, and the ability to work officially with foreign clients are crucial.

This article examines the taxes paid by IT companies in Belarus and Lithuania, how tax regimes and benefits for developers are structured, and the advantages and disadvantages of each system. This will help you make a more informed decision about where to register a new company or whether it makes sense to change your current jurisdiction.

Key Taxes for IT Companies

Belarus

In Belarus, IT companies are subject to general tax regimes as well as special conditions for residents of the High-Tech Park (HTP). Under the general tax regime, a legal entity pays:

• Corporate income tax: the basic rate is 20% of profit. If the company’s annual taxable base exceeds BYN 25 million, a 25% rate applies.
• VAT: standard rate — 20%; for exported IT services — 0%.
• Property and land tax: payable if the company owns such assets.
• Personal income tax (PIT): 13% on employees’ salaries, reducing net wages.
• Social security contributions: up to 29% to the pension fund, 6% to social insurance, and about 0.6% to accident insurance (Belgosstrakh) — totaling roughly 35% of the payroll fund.

HTP residents are exempt from corporate income tax and VAT on exported services, as well as from property and land taxes under certain conditions, which significantly reduces the overall tax burden.

Lithuania

In Lithuania, the following taxes apply to IT companies:

• Corporate income tax: standard rate — 15%; small companies with annual revenue up to €300,000 and up to 10 employees may qualify for a reduced rate of 0% or 5%.
• VAT: standard rate — 21%; for exports outside the EU — 0%.
• Payroll taxes (PIT, social and health contributions): the total burden ranges from 30% to 40% depending on income level, employee age, and other factors.

Quick Comparison

• Belarus: VAT — 20%; corporate tax — 20% or 25% if revenue exceeds the threshold; social contributions — up to 35%.
• Lithuania: corporate tax — 15% with possible full or partial relief for small companies; VAT — 21% (0% for exports); payroll taxes — 30–40%.

Tax Benefits and Regimes for IT

Belarus — High-Tech Park (HTP)

Belarus offers a special tax and legal regime for IT companies — HTP residency. This status allows significant tax savings:

• Corporate income tax — 0%.
• VAT on exported IT services — 0%.
• Social security contributions calculated only from one base value rather than full salary, greatly reducing payments to the Social Protection Fund and accident insurance.

To join the HTP, a company must meet activity requirements, engage in eligible development work, and follow certain organizational and contractual procedures. Residency is available to both large IT companies and startups, including Belarusian companies with foreign founders.

Lithuania — Conditions and Benefits for Accredited IT Companies

Lithuania does not have a unified IT tax regime similar to Belarus’s HTP, but various support mechanisms are available for accredited IT companies and startups:

• Option to reduce corporate tax to 0% (for a limited period) if conditions on staff (up to 10 employees) and revenue (up to €300,000 per year) are met.
• Simplified registration process, plus tax and migration support.
• Benefits for attracting foreign specialists (visas, residence permits, reduced social contributions in certain cases).

Preferential Regimes in Lithuania: Startup Visa, Sandbox, and Investment Zones

• Startup Visa: allows foreign IT business founders to obtain a residence permit in Lithuania without employment requirements and with minimal capital investment.
• FinTech Sandbox: for companies working with AI, blockchain, online payments, and smart contracts; regulatory and tax requirements are relaxed.
• Free Economic Zones (FEZ): provide corporate tax holidays (up to 10 years), property tax benefits, and VAT relief if investment thresholds are met.

Possibility of Applying the Simplified Tax System (STS)

In Belarus, IT companies can use the Simplified Tax System (STS), but it cannot be combined with the HTP regime. This means a company must choose either HTP with maximum benefits or STS with a rate of 5–6% (depending on revenue size and type of activity).

Lithuania has a similar mechanism, the Small Taxpayer Scheme (STS), for small companies with an annual turnover of up to €300,000. It allows paying a reduced corporate tax rate (5% or 0% in the first years) and offers simplified administration.

Thus, both Belarus and Lithuania provide IT companies with tax optimization tools. Still, the Belarusian model via HTP is aimed at domestic development and export, while the Lithuanian model focuses on integration into the European business environment and startup ecosystem. The choice depends on the company’s priorities, such as tax savings, international access, visa conditions, or corporate flexibility.

Payroll Taxation and Social Contributions

Let’s look at the main “salary taxes” in Belarus and Lithuania for IT sector employees.

Payroll Fund in Belarus: PIT, Social Protection Fund, Belgosstrakh

In Belarus, the tax burden on the payroll consists of three mandatory elements:

• Personal Income Tax (PIT): withheld from the employee’s salary at 13%, regardless of whether the company is an HTP resident or a regular organization.
• Social Protection Fund (SPF) contributions: the main social security payment, paid by the employer at 34% of the employee’s gross salary. For HTP residents, a special regime applies: contributions can be calculated based on the national average salary per employee, significantly reducing the burden.
• Belgosstrakh: mandatory accident and occupational disease insurance contributions, ranging from 0.1% to 0.6% depending on the type of activity and working conditions.

Payroll Taxes and Contributions in Lithuania: GPM, Sodra, PSD

In Lithuania, employers must withhold and pay the following:

• GPM (Gyventojų pajamų mokestis): personal income tax for employees — 20% for income up to a certain threshold, and 32% above it. This is withheld from the employee’s salary.
• Sodra: the general term for social security contributions paid by the employer. The main employer rate is 1.77% for social insurance, while the employee pays 28.9% (covering pensions, sick leave, unemployment, etc.).
• PSD (Privalomas sveikatos draudimas): mandatory health insurance contribution at 6.98%, typically included in the employee’s share.

Comparison of Overall Employer Burden

In Belarus, the total payroll burden can be significantly lower when operating through the HTP, thanks to the fixed SPF contribution. For non-HTP companies, the employer’s tax burden exceeds 34–35% from the SPF alone, making this model more expensive.

In Lithuania, contributions are split more evenly between employee and employer, and rates are generally lower in percentage terms. However, the final amount can be higher for high salaries. Lithuania also has a more complex system of deductions and thresholds, so the exact tax burden depends on salary and employee status.

Ultimately, the choice of jurisdiction depends on business priorities: Belarus offers maximum savings via HTP, while Lithuania provides stability and integration into the European system.

VAT and International Settlements

For IT service exports, both Belarus and Lithuania apply a 0% VAT rate, but the confirmation and administration process differs.

In Belarus, when providing services to foreign clients (e.g., software development, support, hosting), a 0% VAT rate applies if the client is not registered in Belarus and the services are consumed outside the country. To use the zero rate, companies must confirm the export by providing a contract, acceptance acts, and other documents, and issue an invoice. Many HTP companies are exempt from VAT obligations altogether, depending on their tax regime.

In Lithuania, when providing IT services outside the EU (e.g., to clients in the US, Canada, UK), the zero VAT rate also applies, and companies must retain proof (contracts, invoices, correspondence). For sales within the EU, reverse charge rules apply (shifting tax liability to the client) if the customer has a valid VAT number.

Possibility of Applying the Simplified Tax System (STS)

In Belarus, IT companies can use the Simplified Tax System (STS), but it cannot be combined with the HTP regime. This means a company must choose either HTP with maximum benefits or STS with a rate of 5–6% (depending on revenue size and type of activity).

Lithuania has a similar mechanism, the Small Taxpayer Scheme (STS), for small companies with an annual turnover of up to €300,000. It allows paying a reduced corporate tax rate (5% or 0% in the first years) and offers simplified administration.

Thus, both Belarus and Lithuania provide IT companies with tax optimization tools. Still, the Belarusian model via HTP is aimed at domestic development and export, while the Lithuanian model focuses on integration into the European business environment and startup ecosystem. The choice depends on the company’s priorities, such as tax savings, international access, visa conditions, or corporate flexibility.

Payroll Taxation and Social Contributions

Payroll Fund in Belarus: PIT, Social Protection Fund, Belgosstrakh

In Belarus, the tax burden on the payroll consists of three mandatory elements:

• Personal Income Tax (PIT): withheld from the employee’s salary at 13%, regardless of whether the company is an HTP resident or a regular organization.
• Social Protection Fund (SPF) contributions: the main social security payment, paid by the employer at 34% of the employee’s gross salary. For HTP residents, a special regime applies: contributions can be calculated based on the national average salary per employee, significantly reducing the burden.
• Belgosstrakh: mandatory accident and occupational disease insurance contributions, ranging from 0.1% to 0.6% depending on the type of activity and working conditions.

Payroll Taxes and Contributions in Lithuania: GPM, Sodra, PSD

In Lithuania, employers must withhold and pay the following:

• GPM (Gyventojų pajamų mokestis): personal income tax for employees — 20% for income up to a certain threshold, and 32% above it. This is withheld from the employee’s salary.
• Sodra: the general term for social security contributions paid by the employer. The main employer rate is 1.77% for social insurance, while the employee pays 28.9% (covering pensions, sick leave, unemployment, etc.).
• PSD (Privalomas sveikatos draudimas): mandatory health insurance contribution at 6.98%, typically included in the employee’s share.

Comparison of Overall Employer Burden

In Belarus, the total payroll burden can be significantly lower when operating through the HTP, thanks to the fixed SPF contribution. For non-HTP companies, the employer’s tax burden exceeds 34–35% from the SPF alone, making this model more expensive.

In Lithuania, contributions are split more evenly between employee and employer, and rates are generally lower in percentage terms. However, the final amount can be higher for high salaries. Lithuania also has a more complex system of deductions and thresholds, so the exact tax burden depends on salary and employee status.

Ultimately, the choice of jurisdiction depends on business priorities: Belarus offers maximum savings via HTP, while Lithuania provides stability and integration into the European system.

VAT and International Settlements

For IT service exports, both Belarus and Lithuania apply a 0% VAT rate, but the confirmation and administration process differs.

In Belarus, when providing services to foreign clients (e.g., software development, support, hosting), a 0% VAT rate applies if the client is not registered in Belarus and the services are consumed outside the country. To apply the zero rate, companies must confirm the export by providing a contract, acceptance acts, and other documents, as well as issue an invoice. Many HTP companies are exempt from VAT obligations altogether, depending on their tax regime.

In Lithuania, when providing IT services outside the EU (e.g., to clients in the US, Canada, UK), the zero VAT rate also applies, and companies must retain proof (contracts, invoices, correspondence). For sales within the EU, reverse charge rules apply (shifting tax liability to the client) if the customer has a valid VAT number.

Tax Reassessment and Additional Charges Risks

In Belarus, additional tax assessments may occur, for example, if the tax authorities do not recognize expenses related to IT development or dispute the application of the zero VAT rate for exports. Disputes may also arise over the classification of staff as freelancers or contractors.

In Lithuania, the main risks include errors in transaction coding (especially for VAT), incorrectly applied benefits, and late filing of reports. However, penalties are generally moderate, and the approach of the tax authorities is more corrective than punitive.

Final thoughts: In terms of tax audits, Lithuania offers a more predictable and digital environment, where automation reduces risks. In Belarus, IT companies face stricter regulatory oversight, especially outside the HTP, and must be prepared for closer scrutiny.

Conclusion

Choosing between Belarus and Lithuania as a jurisdiction for running an IT business depends on multiple factors, such as tax burden level, available incentives, currency flexibility, reporting requirements, and the overall governmental approach to the industry. Belarus offers attractive conditions within the HTP, but outside it, companies encounter higher administrative pressure. Lithuania, on the other hand, provides a stable legal environment, access to European tools, and moderate tax rates, especially when applying a well-planned tax strategy.

If you are considering launching, relocating, or optimizing your IT business, we can assist at every stage:

• Providing consultations on selecting the most suitable jurisdiction.
• Registering a company in Lithuania or Belarus tailored to your business model.
• Offering accounting outsourcing, payroll processing, tax support, and up-to-date consultations.

We work quickly, accurately, and with a deep understanding of the IT sector.