Rural Affairs Committee proposes taxing farmers' income

The Parliament's Committee on Climate Change proposes to tax the annual share of farmers' income up to 60 average wages (about €140,000) at a personal income tax (PIT) rate of 15%, and above 60 GNI at 20%.

This was approved by the committee on Wednesday after discussing amendments to the Personal Income Tax Law, with six in favour and two abstentions. The amendments will be discussed later by the main – Budget and Finance Committee. 

Agriculture Minister Ignas Hofmanas has said that most of the people involved in agriculture have the status of farmers and are taxed as sole traders.

Ig. Hofmann said farmers cannot be taxed in the same way as employees because „they have to give almost half of their profits to taxes“. In addition, farmers, who are subject to value-added tax, pay social security taxes on their taxable income – on the profits they earn.

The government proposes to increase the progressivity of the GPT by introducing a new 25% rate in addition to the 20% and 32% rates, including individual activities, and taxing all types of income except dividends and royalties (which would remain at 15%). 

It is proposed that annual income up to 36 VDU (about €83,000) would be taxed at 20 per cent, with some exceptions, between 36 and 60 VDU (about €138,000) at 25 per cent and above 60 VDU at 32 per cent.

Now, the annual profit of a sole proprietorship up to €20,000 is taxed at 5 per cent. The rate of GPT is 5 per cent, above €20,000 – increasing until it reaches a fixed rate of 15 per cent (for profits of €35,000), and above €35,000 – 15 per cent.

Finance deputy minister Kristupas Vaitiekūnas told the committee that it plans to raise around €50 million extra from the changes to the GPT in 2026, and €217 million in 2027 –