Lithuania temporarily cuts VAT on district heating to zero

VILNIUS – The Lithuanian parliament on Thursday approved a temporary zero VAT rate on district heating for households. 

The amendments to the Law on Value Added Tax passed with 112 votes in favor, none against and nine abstentions.  

The Finance Ministry estimates that the state will lose 23.3 million euros in budget revenue because of the measure. 

The new legislation allows the state to use budget funds to cover the 9 percent VAT rate on heating for households to help mitigate a surge in heating bills.

The zero rate applies to heating bills from January 1 to the end of the current heating season. 

Currently, the reduced VAT rate of 9 percent applies to district heating and firewood for heating, but electricity and gas for heating are subject the standard VAT rate of 21 percent.