Lithuania has applied a 'creative' approach to raise the necessary funds for enhancing its defense and security. Starting from the New Year, a special 10% defense tax will be introduced, which will lead to an increase in the cost of all popular forms of insurance and will operate similarly to VAT.
This tax will apply to all types of insurance policies issued from January 1, 2026 (except for life insurance). This includes home insurance, KASKO, travel insurance, and health insurance. An exception will also be made for mandatory driver insurance, crop insurance, and health insurance for livestock.
This means that if currently home insurance costs Lithuanians 100 euros, it will be 110 euros, and KASKO, which costs 200 euros, will cost 220 euros. And this is in the best case, as the final amount of insurance premiums will depend on the decisions of specific insurance companies.
The revenue generated will be directed to the State Defense Fund.
