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Lithuania heating VAT cut to 5% proposal

Inflation spike hits 22%; prompts bill to lower taxes on domestic heating to 5%

The Lithuanian Parliament has returned to a February proposal to reduce the VAT rate on domestic heating from 21% to 5%. This would be imposed on natural gas and liquefied petroleum gas. This could come into place from 1 November 2022.

There was discussion about cutting VAT on food, too, but no proposals yet.

Many other EU states are cutting VAT on fuel and food l.

The Baltic state has been badly hit by global supply chain and energy inflation – July 2022 inflation rose to 22% .  This is the highest rate since 2008.

Lithuanian prime minister Ingrida Simontye admitted taxpayers could be on the hook for €500mn-€1bn in energy subsidies next year, despite Lithuania being first in Europe to completely end Russian gas imports.

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