Drivers will be required to disclose whether a private car will be used for business activities
From 2026 A 10% security contribution tax will come into effect in Lithuania, applicable to all non-life insurance contracts, except for compulsory motor third party liability insurance (MTPL) contracts concluded by natural persons. However, this exception is not absolute and has significant practical and legal limitations.
Why is this important for private car drivers?
From 2026 All natural persons, when concluding MTPL insurance contracts, will have to clearly confirm that their car is not used for economic activities and has not been transferred for use to a legal entity under a loan agreement or on another basis. Priešingu atveju, šiai sutarčiai bus taikomas 10 % saugumo įnašo mokestis, o klaidingas patvirtinimas gali tapti pagrindu draudimo išmokos išieškojimui.
How do insurers adapt MTPL products?
Insurance companies in Lithuania have already begun technical and legal preparations. From 2025-11-06, the company “Lietuvos draudimas” is introducing a new risk feature in private TPVCAPD contracts:
“The economic activity is carried out and/or the vehicle is used by a legal entity under a loan agreement”
Some insurance companies formulate this characteristic as “Loan or other similar economic activity”. Others are not yet disclosing the final terms, but are moving in the same direction and have already made significant changes to their IT systems. One thing is clear – the individual will be required to confirm that the vehicle is not used for economic activities and/or has not been transferred for use to a legal entity.
Definition of economic activity
According to current practice, economic activity is considered to be any production, commercial, financial, professional or other analogous activity related to:
- production, distribution, trade of goods;
- provision of services;
- execution of works.
It is important to note that it is not considered an economic activity when natural persons purchase goods or services to meet their personal or household needs.
It is also presumed that a vehicle is used for economic activities when:
- the owner operates under a business license, individual activity certificate or has a patent;
- the vehicle is used for the performance of the activities of a lawyer, notary or other licensed professional activity.
Practical changes in the process of concluding contracts for the Practical changes in the process of concluding contracts for the MTPL
It is likely that insurance companies will include an additional provision in the terms and conditions of MTPL contracts concluded by private individuals:
“The insurance risk has been assessed and the premium calculated on the condition that the vehicle is not used for economic activities and/or is not transferred to a legal entity for use under a loan agreement or on another basis.”
In addition, brokers and insurance company agents will be obliged to ask the client before concluding a contract: “Will the vehicle be used only for personal purposes, or also for business (economic activities) purposes?” Is there a loan agreement with a legal entity?
When concluding a contract online, the client will have to choose the appropriate answers themselves, so it is important to carefully consider where you put the check mark.
“If the insurance contract clearly stipulates that the insurance risk has been assessed and the premium calculated on the condition that the vehicle is not used for economic activities and is not transferred to a legal entity for use under a loan agreement or on another basis, and the policyholder confirms this condition, then, in my opinion, in the event of a payment, the insurer will have grounds to demand the return of the amounts paid if it turns out that this condition was violated. Although there is no practice in this specific aspect yet, I recommend that policyholders assess the possible nature of the vehicle’s use very responsibly and not limit themselves to a formal response, as this may lead to significant financial consequences.”– Marius Jundulas, insurance market expert
Important
Although the law formally provides for a relief for individuals due to the security deposit not being applied to MTPL contracts, this exemption is applicable only if the car is used exclusively for personal purposes. Otherwise, false declaration may lead to both tax and civil liability consequences.
It is recommended that both insurers and clients ensure maximum clarity and quality of disclosure of information even before concluding a MTPL contract.
✅ We remind you:
You can quickly compare and purchase mandatory civil liability insurance on the Man ramu insurance platform.
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