Dropshipping and taxes in Lithuania: form of activity, VAT, IOSS and customs duties

Taxes are the topic that dropshipping beginners most often put off until later. And later it turns out that part of the margin goes to VAT, customs duty or taxes that were not in the price. Searches such as “dropshipping mokesčiai”, “prekyba internetu VMI” or “dropshipping Lietuvoje mokesčiai” show that these questions matter to many people.

This part of the guide covers the main things you need to know before starting: the form of activity, VAT, the OSS and IOSS schemes, and customs duties. It is not individual advice, so for your specific situation we recommend consulting an accountant.

Form of activity

Beginners most often choose self-employment under a registration certificate. As volumes grow, some set up a small partnership (mažoji bendrija) or a private limited company (uždaroji akcinė bendrovė). The choice determines income tax, social insurance contributions and accounting requirements.

Which form suits you is explained in the ACS.lt article “Self-employment: registration certificate or business certificate”, and you can work out your income tax with the personal income tax (GPM) calculator.

VAT: when you become a VAT payer

In Lithuania, registering for VAT is mandatory when the consideration received for goods and services over the last 12 months exceeds 45 000 € (Article 71 of the Law on VAT). The obligation to register can also arise earlier – for example, when acquisitions of goods from other EU countries exceed 14 000 € in a year. So before starting it is worth checking your situation with the State Tax Inspectorate (VMI) or with an accountant.

Selling to buyers in other EU countries: OSS

If you sell to buyers in other EU countries and the goods are shipped from one EU country to another, the VAT of the buyer’s country applies once the common EU distance selling threshold is exceeded. So that you do not have to register in every country, you can use the One-Stop Shop (OSS): VAT is declared and paid in Lithuania, and VMI distributes it to the other countries.

Goods from non-EU countries: IOSS and customs duty

When goods are shipped to the buyer directly from a non-EU country, for example China, import rules apply:

• VAT. For parcels with a value of up to 150 €, VAT can be paid at the time of sale through the Import One-Stop Shop (IOSS). If IOSS is not used, the import VAT and the intermediary’s fees are usually paid by the buyer on delivery – a poor buying experience.
• Customs duty. From 1 July 2026, each type of goods in a parcel worth up to 150 € is subject to a temporary 3 € customs duty. Identical goods are treated as one type, different goods as separate types.

Consumer rights and documents

When selling to consumers online, the distance selling rules apply: the buyer has the right to withdraw from the contract within 14 days, and the shop must clearly state the seller’s details, prices including taxes, and the delivery and returns terms. This is mandatory for a dropshipping shop too, even if the supplier ships the goods.

Accounting

Dropshipping accounting is more complicated than it looks: income comes in through payment systems, expenses go to foreign suppliers, and some amounts are in foreign currency. From day one, keep all invoices and maintain a journal of income and expenses.

Frequently asked questions