Lithuania Updates Commentary on Thin Capitalization Rules

Lithuania's State Tax Inspectorate has published updated commentary (guidelines) on the application of the thin capitalization rules. The standard limit for thin capitalization in Lithuania is a 4:1 ratio between controlled borrowed capital (debt) and fixed capital (equity). If a company's debt to a controlling party exceeds four times its fixed capital on the last day of the tax period, the interest on the excess portion of the loan is considered a non-deductible expense for corporate incom…