On 27 October 2026, tax analyst Aistė Gervelė published a detailed cost simulation for Lithuanian SMEs following the government’s announcement that the minimum monthly wage (MMA) will rise to €924 from 1 January 2027, a 7.5% increase over the 2026 level. The analysis breaks down the resulting employer social security contribution burden — including the 31.98% combined rate for pension, health, unemployment, and accident insurance — for companies with 5, 10, and 20 employees. The study incorporates the planned reduction of the non-taxable income threshold and changes to the solidarity tax ceiling, providing a comprehensive view of labor cost inflation.
Key Takeaways
- Per-Employee Cost Surge: For a single minimum-wage employee, total employer cost rises from €1,150 to €1,237 per month, a €87 increase. For a 10-person firm, the aggregate monthly burden grows by €870, translating to over €10,400 annually.
- Solidarity Tax Threshold Adjustment: The solidarity tax (additional 5% on income above €114,000 annually) will capture more employees as wages rise. The analysis shows that at the new MMA, an employee’s gross annual income reaches €11,088, still below the threshold, but combined with typical bonuses, many cross the line, adding 5% on excess.
- Cash Flow and Pricing Implications: The report warns that SMEs in labor-intensive sectors (retail, hospitality, construction) may face 3–4% margin compression unless they adjust pricing or productivity. It recommends early modeling of payroll budgets and exploration of available hiring subsidies for youth and long-term unemployed.
Disclaimer: This article is compiled and summarized by the AI based on publicly available information and is for general information purposes only. It does not constitute any form of formal tax advice, legal opinion, or basis for performance. Please consult a qualified professional tax advisor or legal counsel for tax advice.
Source: Read Official Announcement