Lithuanian MPs approve zero VAT on district heating for 2 more seasons

VILNIUS – The Lithuanian parliament on Tuesday voted in favor of keeping the current zero VAT rate on district heating for two more heating seasons to help mitigate a surge in heating bills, a measure that is estimated to cost the state over 110 million euros. 

The amendments to the Law on Value Added Tax were passed in a vote of 94 to three with 29 abstentions. 

The Finance Ministry estimates that the state will lose around 54 million euros in budget funds in the 2022-2023 heating season and a further 57 million euros in the 2023-2024 heating season, provided that prices remain at the same level as in the first half of 2023. 

District heating and firewood used for heating are subject to a reduced VAT rate of nine percent. However, budget funds were used to cover the 9 percent VAT rate between January 1 and April 30 this year.