Lithuania to end preferential VAT rate on heating

Lithuania is ending the preferential VAT rate for centrally supplied heat and hot water. The rate will return to the standard 21 percent from the 9 percent rate that was implemented in 2022 to mitigate the impact of the energy crisis.

This change effectively increases the final cost of heat for consumers by approximately 11 percentage points, even if the base production price remains unchanged. For example, a monthly heating bill of 80 euros could rise to approximately 88–90 euros due to the tax adjustment alone.

Algirdas Sysas, Chairman of the Seimas Budget and Finance Committee, has criticized proposals to reinstate the VAT relief, arguing that state support should be targeted specifically at those facing energy poverty rather than being a universal subsidy. He noted that the state is currently operating with a significant budget deficit. Meanwhile, Valdas Lukoševičius, president of the Lithuanian Association of Heat Suppliers, predicts that heating costs could rise by 15–20 percent this winter due to fluctuations in fuel and natural gas prices.