Get up to 20% back. from the paid tuition fee!
Quality education is even easier to achieve. Take advantage of personal income tax (PIT) relief for studies and get back up to 20%. from the paid tuition fee. You can use the discount regardless of whether you are preparing to study several times or how many academic degrees you have already obtained. Generally speaking, this benefit gives you the opportunity to study up to 20%. cheaper.
You can get a part of the tuition fee back by declaring your annual income (the refunded amount will be transferred to your bank account). The annual income declaration must be submitted by May 1 of the calendar year following the tax period for which the declaration is submitted. The annual income declaration and its annexes are submitted through the electronic declaration system of VMI to FM. They can also be delivered to any state tax office in the county.
If you are not yet an income tax payer or do not have the opportunity to use the relief, your parents (adoptive parents), guardians, caretakers and/or spouse can adjust it.
The new relief will be applied when calculating and declaring in 2020. and income of subsequent tax periods.
You took out a loan for studies – get back up to 20%. installments
You can recover GPM for all studies and from the part of the loan returned – you will get GPM back from the loan repayment amount paid in a specific year. For example for studies in 2020 you took a loan of EUR 4960 and you promise to start repaying it only after 5 years – in this case, in 2020. the tuition fee cannot be refunded yet. When you start paying installments for the loan, in the case of the example after 5 years, then you will be able to declare how much of the student loan you have repaid and you will be able to recover GPM from that amount.
What is important to know?
When declaring income and in order to recover GPM from the amount of tuition fees paid, it is relevant how much tuition fees were paid in a specific calendar year.
The total amount of deductible expenses (incurred expenses) cannot exceed 25 percent of the amount calculated from all income received during the tax period after deducting: 1) tax-free income; 2) income received from activities according to the business certificate; 3) permitted deductions.
It is also an important fact that the study scholarship received by the student is not subject to personal income tax (Article 17 d.1, point 33 of the Income Tax Act). Such assessment is applied regardless of whether the student transfers the received scholarship directly to the educational institution or the Foundation does so at his request.
Example 1. Each case is individual and depends on such facts as application/non-application of NPD, declaration of other expenses from which GPM can be recovered, etc. However, on a theoretical level, in order for the student to recover the maximum amount for tuition, 20 percent. after paying the full annual tuition fee (4960 EUR), he should earn 1830 EUR/month. (gross).
In this case, the student’s annual taxable income would be EUR 1830 *12 months. – 2003 (MNPD) = 19,957 EUR. 25 percent the ceiling from this amount would be 19,957*0.25=4989 EUR. EUR 4,989 is the maximum amount of expenses that could be deducted from income and thus reduce the annual GPM. So, if the student paid EUR 4960 for his studies (his expenses), this amount almost perfectly fits into the mentioned maximum limit of EUR 4989.
Then, in his annual declaration, the student can deduct the entire amount of 4960 EUR of tuition fees incurred from his income and thus reduce the GPM tax he pays. This means that he would get back 0.2*4960 Eur= 992 Eur of personal income tax.
Example 2. The student earned EUR 18,000 per year and paid EUR 2*2480 in tuition fees per year (total EUR 4960). According to the MNPD calculator, this student’s MNPD (annual amount of tax-free income) is EUR 2763. The taxable income would be EUR 18,000-2,763 = EUR 15,237. Since the total amount of expenses reducing income tax cannot be higher than 25 percent. of income – it would be equal to EUR 3809. Therefore, the student can declare 3,809 EUR of expenses that reduce income and withdraw GPM from this amount. So in 2020 A student who has paid EUR 4,960 in tuition fees will be able to recover GPM from EUR 3,809. In this way, he will recover 3809 * 0.2 = 761.25 Eur.
In this case, an example is presented when the student’s annual income is too low, so he cannot fully use the benefit.
Example 3. Suppose that the father paid EUR 4960 for his son’s bachelor’s studies in higher education. The installments were paid in two installments: in 2020. February. and 2020 September. After submitting the annual income declaration, the father will be able to deduct from his annual income the amount of contributions paid for his son’s studies, not exceeding 25%. of his taxable income.
Each case is individual, but the preliminary formula is this:
(Revenue received – MNPD) x 0.25 x 0.2
The MNPD calculator can be found HERE
F.A.Q.
Who can take advantage of the discount?
The benefit can only be used by a permanent resident of Lithuania, i.e. i.e. a resident who:
- has a permanent residence in Lithuania during that tax period;
- whose personal, social or economic interests are located in Lithuania rather than abroad during that tax period;
- who stayed in Lithuania for 183 days or more during that tax period, either completely or intermittently.
Who is not eligible for the benefit?
The discount cannot be used by a permanent resident of Lithuania who received during the tax period (calendar year):
- tax-free income alone;
- income solely from activities carried out with a business license;
- income alone, which is taxed at 5 percent. income tax rate.
Can a resident, who has completed his studies but is still paying student loan installments, take advantage of the relief?
Yes, you can. A person who has completed his studies and repays the remaining part of the loan to a credit institution or the Lithuanian State Science and Study Fund in a few more years will be able to reduce his taxable income for the relevant tax period. Article 21 of the General Labor Code 1 d. 3 p.
In other words, students taking out a student loan can start repaying the loan only one year after graduation. The bank transfers the loan funds to the university every semester, but the student can start recovering GPM only in the year when he starts repaying the loan to the bank. The amount to be repaid is calculated from the amount of the loan repaid in a given year. For example, for four years of study (2017-2020), the student paid a total of EUR 17,000 in tuition fees with loan funds. He starts repaying the loan in 2021. and from this year on, they give loans of EUR 2,000 each year. So for 2017-2020 he will not be able to recover anything from GPM. However, from 2021 he will be able to recover 2000*20%=400 EUR every year.
How to take advantage of the discount?
In order to take advantage of the relief, the resident must submit the Annual Income Declaration form and add to it the supplement form “Expenses reducing the resident’s taxable income”.
Do I need to submit proof of payment together with the declaration?
No thank you. However, the originals of the documents confirming the payment of contributions or their copies must be kept for at least 10 years after the submission of the annual income declaration for the reporting tax period. Documents confirming payment are provided upon request by the tax administrator.
What documents can be used to support payment for vocational training or studies?
Documents confirming the payment of fees for professional training or studies:
- documents confirming the payment of contributions, containing the mandatory details of accounting documents;
a free-form document issued by a vocational training provider or higher education institution confirming the receipt of contributions; - if vocational training or studies were paid for with borrowed funds (a loan taken from a credit institution), the original or a copy of the credit institution agreement, documents confirming the repayment of the loan or its part, containing the mandatory requisites of accounting documents;
- a free-form document issued by a credit institution confirming the receipt of a repaid loan or its part;
if a permanent resident of Lithuania is studying partial studies, a document confirming that the results of partial studies are recognized at the higher education institution where the permanent resident of Lithuania is studying basic studies; - if a permanent resident of Lithuania acquires the competence required for obtaining a qualification under the non-formal vocational training program, which is assessed by an assessment institution accredited in accordance with the procedure established by the Government, a document confirming the assessment of competence;
- if a permanent resident of Lithuania, who has acquired all the competencies required to acquire qualifications under non-formal vocational training programs, which have been evaluated by an assessment institution accredited according to the procedure established by the Government, a document confirming the granting of the qualification;
- if a permanent resident of Lithuania studies or studies abroad, relevant documents issued by the competent authority of a foreign state.