EUROMOD country report :Lithuania : 2020-2023

Table of Contents

• 1. Basic Information 6
• 1.1. Basic information about the tax-benefit system 6
•  Commonly used parameters and definitions 7
• 1.2. Social Benefits 10
•  Non-contributory benefits 10
•  Contributory benefits 16
•  Abolished benefits 23
•  Not strictly benefits 23
• 1.3. Social contributions 25
• 1.4. Taxes 27
• 2. Simulation of taxes and benefits in EUROMOD 30
• 2.1. Scope of simulation 30
• 2.2. Main policy changes 38
• 2.3. Order of simulation and interdependencies 39
•  Order of simulation in 2020-2023 39
•  Compensations in 2014-2016 due to the cuts in old age, early retirement, disability pensions made in 2010 and 2011 are simulated in EUROMOD (boa_lt policy) (see Annex 3 for details). In 2017 and 2018 no cuts and compensations applied. The policy boa... 39
•  A switch for full-year adjustment of the unemployment social insurance benefit (bunct_FYA_lt) is introduced for 2017. The rules of the benefit changed as of July 1st, 2017 so not modelled for 2017 by default. The switch enables to account for the mi... 39
•  Newly introduced long-term work payment (bunct01_lt) is modelled starting 2018 after the unemployment social insurance benefit. 39
•  Newly introduced universal child benefits modelled: bchnm_lt is modelled after the benefit for multiple birth families (bchmp_lt). Child benefit (bch00_s) is renamed into additional child benefit. The new universal child benefit is included into all... 39
•  Recalculation of gross wage (wage_adj_lt) was included in the model since year 2019. Due to tax and social insurance contribution reform since January 1st, 2019, all the wages were increased by factor 1.289. The recalculation of gross wage is applie... 39
•  A switch for old-age pension indexation (boa00_lt) is introduced for year 2016-2019, which is calculated according to the pension formula, conversion coefficient applied when recalculating former pension records into the point system. The switch all... 40
•  A switch for tax compliance adjustments (TCA_lt) are introduced for data tax evasion corrections since 2017. Full tax compliance is assumed to be OFF by default and is not modelled in the model for 2019 by default. 40
•  COVID-19 measures are modelled in 2020-2021. Wage compensations, benefits for the self-employed and sickness benefits for childcare during the pandemic are modelled only in combination with the labour market adjustments (LMA). These can be implement... 40
• 2.4. Policy switches 43
• 2.4.1. Minimum wage 43
•  Brief description 43
•  Definitions and eligibility conditions 43
•  Amount 43
• 2.5. Benefits 44
• 2.5.1. Single person benefit (bsg_s) 44
•  Brief description 44
• Since July 1st, 2021, certain groups of pension beneficiaries are entitled to a single person benefit if they are eligible to the state social insurance pensions, social pension or bonuses on low pensions. 44
•  Eligibility conditions 44
•  Income test 44
•  Benefit amount 44
• 2.5.2. Birth grant (bchba_s) 45
•  Brief description 45
•  Definitions 45
•  Eligibility conditions 45
•  Income test 45
• 2.5.3. Universal child benefit (bchnm_s) 45
•  Brief description 45
•  Definitions 45
•  Eligibility conditions 45
•  Income test 45
•  Benefit amount 45
• The benefit level is calculated in relation to the BSA. As of January 1st, 2020, the benefit amount was increased up to 1.54* BSA (60.06 EUR). Different benefit amount level for disabled children was eliminated. Since January 1st, 2021, the amount of ... 45
• 2.5.4. Additional child benefit (bch00_s) 46
•  Brief description 46
•  Definitions 46
•  Eligibility conditions 46
•  Income test 46
•  Benefit amount 47
• 2.5.5. Pregnancy grant (bmaprnc_s) 47
•  Brief description 47
•  Definitions 47
•  Eligibility conditions 47
•  Income test 47
•  Benefit amount 48
• 2.5.6. Maternity leave benefit (bmaprct_s) 48
•  Brief description 48
•  Definitions 48
•  Eligibility conditions 48
• The benefit is paid if women before the first day of maternity leave, had sickness and maternity social insurance record of no less than 12 months over the last 24 months, except of those who previously were in full-time secondary, professional, or hi... 48
•  Income test 48
•  Benefit amount 48
• 2.5.7. Paternity leave benefit (bplct_s) 49
•  Brief description 49
•  Definitions 49
•  Eligibility conditions 49
•  Income test 50
•  Benefit amount 50
• 2.5.8. Childcare benefit (bmact_s) 51
•  Brief description 51
•  Definitions 51
•  Eligibility conditions 51
•  Benefit amount 51
• 2.5.9. Benefit for multiple-birth families (bchmp_s) 53
•  Brief description 53
•  Definitions 53
•  Eligibility conditions 54
•  Benefit amount 54
• 2.5.10. Student‘s childcare benefit (bmaed_s) 54
•  Brief description 54
•  Definitions 54
•  Eligibility conditions 54
•  Benefit amount 55
• 2.5.11. Social assistance benefit (bsa00_s) 55
•  Brief description 55
•  Definitions 55
•  Eligibility conditions 55
•  Means test 56
•  Income test 58
•  Income disregard 59
•  Benefit amount 59
• 2.5.12. Unemployment social insurance benefit (bunct_s) 61
•  Brief description 61
•  Definitions 61
•  Eligibility conditions 62
•  Income test 62
•  Benefit amount 63
• 2.5.13. Long-term work benefit (bunct01_s) 65
•  Eligibility 65
•  Amount 65
• 2.5.14. Compensation for heating costs (xhcht_s) 66
•  Brief description 66
• People struggling to pay their heating bills are offered financial compensations. The compensation is means-tested and depend on family income and assets. 66
•  Eligibility conditions 66
• Heating compensation can be obtained by calculating how much a family or person spends on heating per month. Since January 1st, 2022, the amount SSI used to calculate the compensation for the costs of heating a home has been doubled. It has been estab... 66
• Table 2.5.14.1. SSI amounts for persons who have declared their place of residence or rented a dwelling, 2021-2023 66
•  Income test 66
• Compensation for heating costs of a home is provided regardless of the method of heating, i. y. both for district heating and other fuels (firewood, coal, gas, etc.). The standard of useful floor space is used to calculate the compensation: 66
•  when the place of residence is declared (rented) by one resident - 50 m2; 66
•  when the place of residence is declared (rented) by the family: 38 m2 for the first household member; second - 12 m2; for the third and each subsequent - 10 m2. 66
• The assets test is not applied until 30th of April 2024. However, when calculating income, income from movable and immovable property that must be registered is included e.g., income from the rental or sale of land, housing, car and other property. 66
• Table 2.5.14.2. Normative size of the dwelling, 2021-2023 66
• 2.5.15. Compensation for water costs (xhcwt_s) 67
•  Brief description 67
• Compensations for water costs include compensations for drinking and hot water costs. 67
•  Eligibility conditions 67
• The amount of drinking water consumed is also taken into account; it should be, depending on the number of household members and the way the hot water is prepared, as follows: 67
• When district heating is used to prepare hot water: 67
•  2 m3 for the first person or a single person per month. 67
•  1.5 m3 for a second person per month. 67
•  1 m3 for a third and each subsequent person per month. 67
• When other forms of energy or fuel, such as electricity, firewood, are used to prepare hot water: 67
•  33.5 m3 for the first person or a single person per month. 67
•  2.5 m3 for a second person per month. 67
•  1.5 m3 for a third and each subsequent person per month. 67
• For hot water: 67
•  Income test 67
• Drinking water compensations can be obtained when the costs for cold water and wastewater exceed 2% of personal or family income. Hot water compensations can be obtained when the costs for hot water and its preparation exceed 5% of personal or family ... 67
• 2.6. Social insurance contributions 67
• 2.6.1. Employee social insurance contributions (ils_sicee) 68
• 2.6.2. Employer social insurance contributions (ils_sicer) 68
• 2.6.3. Credited social contributions (ils_sicct) 69
• 2.6.4. Self-employed social contributions (ils_sicse) 72
• 2.6.5. Contributions to the funded pension scheme (tsceepi_s, tscsepi_s) 74
• 2.6.6. Compulsory health insurance contributions for those not otherwise insured (thl_s) 75
• 2.7. Direct taxes 76
• 2.7.1. Personal income tax (tin_s) 76
•  Tax unit 76
•  Exemptions 76
•  Tax allowances 76
•  Tax base 80
•  Tax schedule 80
•  Deductible expenses 81
•  Withholding tax and final tax liability 82
• 2.8. COVID-19-related measures in Lithuania 82
• 2.8.1. Benefits 83
• 2.8.2. Wage compensations 88
• 2.8.3. Other measures not modelled in EUROMOD 90
• 3. Data 92
• 3.1. General description 92
• 3.2. Sample quality and design 93
• 3.3. Non-response and item non-response 93
• 3.4. Weights 93
• 3.5. Data adjustment 94
• 3.6. Imputations and assumptions 94
• 3.7. Time period 94
• 3.8. Gross incomes 95
• 3.9. Merged and imputed variables 95
• 3.10. Updating 96
• 3.11 Best match 97
• 2. Validation 97
• 2.1. Aggregate Validation 97
• 2.2. Components of disposable income 97
• 2.3. Validation of incomes inputted into the simulation 99
• 2.4. Validation of taxes, SIC and benefits 100
• 2.5. Income distribution 104
• 2.6. Income inequality 104
• 2.7. Poverty rates 105
• 2.8. Summary of “health warnings” 106
• Annex 1. Uprating Factors (2020 =100) 107
• Annex 2. Policy Effects in 2022-2023 108
• Annex 3. Validation Tables 111
• Annex 4. Recalculations and Compensations of Pensions 111
• STATISTICAL ANNEX 1. VALIDATION TABLES 113
• Y14_CR_LT_validation.pdf -1
• 1. Basic Information -1
• 1.1. Basic information about the tax-benefit system -1
•  Commonly used parameters and definitions -1
• 1.2. Social Benefits -1
•  Non-contributory benefits -1
•  Contributory benefits -1
•  Abolished benefits -1
•  Not strictly benefits -1
• 1.3. Social contributions -1
• 1.4. Taxes -1
• 2. Simulation of taxes and benefits in EUROMOD -1
• 2.1. Scope of simulation -1
• 2.2. Main policy changes -1
• 2.3. Order of simulation and interdependencies -1
•  Order of simulation in 2020-2023 -1
•  Compensations in 2014-2016 due to the cuts in old age, early retirement, disability pensions made in 2010 and 2011 are simulated in EUROMOD (boa_lt policy) (see Annex 3 for details). In 2017 and 2018 no cuts and compensations applied. The policy boa... -1
•  A switch for full-year adjustment of the unemployment social insurance benefit (bunct_FYA_lt) is introduced for 2017. The rules of the benefit changed as of July 1st, 2017 so not modelled for 2017 by default. The switch enables to account for the mi... -1
•  Newly introduced long-term work payment (bunct01_lt) is modelled starting 2018 after the unemployment social insurance benefit. -1
•  Newly introduced universal child benefits modelled: bchnm_lt is modelled after the benefit for multiple birth families (bchmp_lt). Child benefit (bch00_s) is renamed into additional child benefit. The new universal child benefit is included into all... -1
•  Recalculation of gross wage (wage_adj_lt) was included in the model since year 2019. Due to tax and social insurance contribution reform since January 1st, 2019, all the wages were increased by factor 1.289. The recalculation of gross wage is applie... -1
•  A switch for old-age pension indexation (boa00_lt) is introduced for year 2016-2019, which is calculated according to the pension formula, conversion coefficient applied when recalculating former pension records into the point system. The switch all... -1
•  A switch for tax compliance adjustments (TCA_lt) are introduced for data tax evasion corrections since 2017. Full tax compliance is assumed to be OFF by default and is not modelled in the model for 2019 by default. -1
•  COVID-19 measures are modelled in 2020-2021. Wage compensations, benefits for the self-employed and sickness benefits for childcare during the pandemic are modelled only in combination with the labour market adjustments (LMA). These can be implement... -1
• 2.4. Policy switches -1
• 2.4.1. Minimum wage -1
•  Brief description -1
•  Definitions and eligibility conditions -1
•  Amount -1
• 2.5. Benefits -1
• 2.5.1. Single person benefit (bsg_s) -1
•  Brief description -1
• Since July 1st, 2021, certain groups of pension beneficiaries are entitled to a single person benefit if they are eligible to the state social insurance pensions, social pension or bonuses on low pensions. -1
•  Eligibility conditions -1
•  Income test -1
•  Benefit amount -1
• 2.5.2. Birth grant (bchba_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Income test -1
• 2.5.3. Universal child benefit (bchnm_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Income test -1
•  Benefit amount -1
• The benefit level is calculated in relation to the BSA. As of January 1st, 2020, the benefit amount was increased up to 1.54* BSA (60.06 EUR). Different benefit amount level for disabled children was eliminated. Since January 1st, 2021, the amount of ... -1
• 2.5.4. Additional child benefit (bch00_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Income test -1
•  Benefit amount -1
• 2.5.5. Pregnancy grant (bmaprnc_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Income test -1
•  Benefit amount -1
• 2.5.6. Maternity leave benefit (bmaprct_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
• The benefit is paid if women before the first day of maternity leave, had sickness and maternity social insurance record of no less than 12 months over the last 24 months, except of those who previously were in full-time secondary, professional, or hi... -1
•  Income test -1
•  Benefit amount -1
• 2.5.7. Paternity leave benefit (bplct_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Income test -1
•  Benefit amount -1
• 2.5.8. Childcare benefit (bmact_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Benefit amount -1
• 2.5.9. Benefit for multiple-birth families (bchmp_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Benefit amount -1
• 2.5.10. Student‘s childcare benefit (bmaed_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Benefit amount -1
• 2.5.11. Social assistance benefit (bsa00_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Means test -1
•  Income test -1
•  Income disregard -1
•  Benefit amount -1
• 2.5.12. Unemployment social insurance benefit (bunct_s) -1
•  Brief description -1
•  Definitions -1
•  Eligibility conditions -1
•  Income test -1
•  Benefit amount -1
• 2.5.13. Long-term work benefit (bunct01_s) -1
•  Eligibility -1
•  Amount -1
• 2.5.14. Compensation for heating costs (xhcht_s) -1
•  Brief description -1
• People struggling to pay their heating bills are offered financial compensations. The compensation is means-tested and depend on family income and assets. -1
•  Eligibility conditions -1
• Heating compensation can be obtained by calculating how much a family or person spends on heating per month. Since January 1st, 2022, the amount SSI used to calculate the compensation for the costs of heating a home has been doubled. It has been estab... -1
• Table 2.5.14.1. SSI amounts for persons who have declared their place of residence or rented a dwelling, 2021-2023 -1
•  Income test -1
• Compensation for heating costs of a home is provided regardless of the method of heating, i. y. both for district heating and other fuels (firewood, coal, gas, etc.). The standard of useful floor space is used to calculate the compensation: -1
•  when the place of residence is declared (rented) by one resident - 50 m2; -1
•  when the place of residence is declared (rented) by the family: 38 m2 for the first household member; second - 12 m2; for the third and each subsequent - 10 m2. -1
• The assets test is not applied until 30th of April 2024. However, when calculating income, income from movable and immovable property that must be registered is included e.g., income from the rental or sale of land, housing, car and other property. -1
• Table 2.5.14.2. Normative size of the dwelling, 2021-2023 -1
• 2.5.15. Compensation for water costs (xhcwt_s) -1
•  Brief description -1
• Compensations for water costs include compensations for drinking and hot water costs. -1
•  Eligibility conditions -1
• The amount of drinking water consumed is also taken into account; it should be, depending on the number of household members and the way the hot water is prepared, as follows: -1
• When district heating is used to prepare hot water: -1
•  2 m3 for the first person or a single person per month. -1
•  1.5 m3 for a second person per month. -1
•  1 m3 for a third and each subsequent person per month. -1
• When other forms of energy or fuel, such as electricity, firewood, are used to prepare hot water: -1
•  33.5 m3 for the first person or a single person per month. -1
•  2.5 m3 for a second person per month. -1
•  1.5 m3 for a third and each subsequent person per month. -1
• For hot water: -1
•  Income test -1
• Drinking water compensations can be obtained when the costs for cold water and wastewater exceed 2% of personal or family income. Hot water compensations can be obtained when the costs for hot water and its preparation exceed 5% of personal or family ... -1
• 2.6. Social insurance contributions -1
• 2.6.1. Employee social insurance contributions (ils_sicee) -1
• 2.6.2. Employer social insurance contributions (ils_sicer) -1
• 2.6.3. Credited social contributions (ils_sicct) -1
• 2.6.4. Self-employed social contributions (ils_sicse) -1
• 2.6.5. Contributions to the funded pension scheme (tsceepi_s, tscsepi_s) -1
• 2.6.6. Compulsory health insurance contributions for those not otherwise insured (thl_s) -1
• 2.7. Direct taxes -1
• 2.7.1. Personal income tax (tin_s) -1
•  Tax unit -1
•  Exemptions -1
•  Tax allowances -1
•  Tax base -1
•  Tax schedule -1
•  Deductible expenses -1
•  Withholding tax and final tax liability -1
• 2.8. COVID-19-related measures in Lithuania -1
• 2.8.1. Benefits -1
• 2.8.2. Wage compensations -1
• 2.8.3. Other measures not modelled in EUROMOD -1
• 3. Data -1
• 3.1. General description -1
• 3.2. Sample quality and design -1
• 3.3. Non-response and item non-response -1
• 3.4. Weights -1
• 3.5. Data adjustment -1
• 3.6. Imputations and assumptions -1
• 3.7. Time period -1
• 3.8. Gross incomes -1
• 3.9. Merged and imputed variables -1
• 3.10. Updating -1
• 3.11 Best match -1
• 2. Validation -1
• 2.1. Aggregate Validation -1
• 2.2. Components of disposable income -1
• 2.3. Validation of incomes inputted into the simulation -1
• 2.4. Validation of taxes, SIC and benefits -1
• 2.5. Income distribution -1
• 2.6. Income inequality -1
• 2.7. Poverty rates -1
• 2.8. Summary of “health warnings” -1
• Annex 1. Uprating Factors (2020 =100) -1
• Annex 2. Policy Effects in 2022-2023 -1
• Annex 3. Validation Tables -1
• Annex 4. Recalculations and Compensations of Pensions -1