Vilnius, January 21, 2026 — Lithuania’s Competition Council has warned that proposed amendments to the Value Added Tax (VAT) Law could create unequal competitive conditions in the market and has urged lawmakers to further assess the measures from competition and state aid perspectives.
In an opinion submitted to the Seimas, the Competition Council said the drafters of the proposed VAT amendments should evaluate whether the anticipated regulatory impact would be acceptable and proportionate to the stated objectives. The authority also recommended that decision-makers notify the European Commission of the planned tax reliefs to avoid the risk of unlawful state aid.
One draft amendment proposes applying a reduced 5% VAT rate to fresh fruit, vegetables and berries sold in Lithuania. In a letter addressed to the Seimas Committee on Rural Affairs, the Competition Council noted that the reduced rate would not apply to processed products, such as frozen fruit and vegetables. As a result, businesses trading in processed products could be placed at a disadvantage compared with those benefiting from the VAT relief.
Another proposed amendment would introduce a reduced VAT rate for organic products and for products made under the national food quality system when used in food preparation in state- and municipality-funded institutions, such as education, healthcare and social care facilities. According to the Competition Council, private businesses providing similar services, including healthcare providers, would not be eligible for the reduced VAT rate when purchasing food products, potentially increasing their costs and worsening their operating conditions.
The authority also raised concerns that limiting the reduced VAT rate to products certified under the national system could create an additional barrier for suppliers offering food products of equivalent quality without such certification. In its view, this provision could privilege local producers over others and lead to differing competitive conditions.
While supporting the aim of the VAT amendments to contribute to improved public health, the Competition Council said a comprehensive assessment was needed to determine whether the chosen measures were optimal and whether their expected benefits would outweigh any negative impact on competition.
The Competition Council further reminded lawmakers that competition is an integral principle of EU tax law and suggested that the Ministry of Finance and the Ministry of Justice could provide additional assessments in this regard.
Given that the planned VAT reliefs could benefit only certain businesses or activities, the authority reiterated its recommendation that the measures be notified to the European Commission to mitigate the risk of unlawful state aid.
