Prior to engaging in a business activity, local or foreign businessmen who want to open a company in Lithuania have to decide on the legal entity that is most suitable for their investment plans. The following types of businesses are the most popular in Lithuania:
- the sole proprietorships;
- the public limited liability companies;
- the private limited liability companies;
- the general partnerships;
- the limited partnerships.
Below, our experts in company formation in Lithuania explain the steps required to open a company and the services you can request from us. Our consultants can provide the necessary support when starting a business in Lithuania as a foreigner.
|Types of companies
Private/public limited liability company
Minimum share capital
for LTD Company and Paid-In Requirement
|EUR 2,500/ Payment required prior establishment.
Minimum number of
shareholders for Limited Company
|Time frame for the incorporation
|Corporate tax rate
|15% from profits; If certain conditions are met, then might be reduced to 5% for first two years of activity.
|Dividend tax rate
|Are Shelf Companies Available?
|Do you supply a Registered Address/Virtual Office?
|Local Director Required
|Annual Meeting Required
|Theoretically possible to get, practically might be very hard unless residency permit is issued.
|Is Accounting/Annual Return Required?
|Any Tax incentives
|Corporate income tax might be reduced to 5%.
|Corporate bank account requirements
– identity documents;
– documents attesting residency in Lithuania (temporary or otherwise);
– incorporation documents of the Lithuanian legal entity;
– registration certificate (issued by the Register of Legal Entities).
Documents for company registration
– the company’s incorporation papers (articles of association, partnership agreement, etc.);
– minutes of the founding meeting;
– the documentation attesting the corporate bank account has been set up;
– reservation of company name;
– proof of depositing the minimum capital (where required);
– proof of registered address (a mandatory part in the process of Lithuania company formation).
Visa requirements for businessmen
Foreign businessmen must complete visa formalities before their arrival and meet the requirements of the visa they want to obtain.
|Foreign investment programs available in Lithuania
|7 Free Economic Zones, investments in financial services, manufacturing, wholesale, etc.
|Institution in charge with the registration
Lithuania company formation process is completed through the State Enterprise Centre of Registers.
|Tax identification number for businesses
Companies must have a tax identification number, established by the Ministry of Finance.
|Institution in charge with the tax registration procedures
The State Tax Inspectorate (working under the Ministry of Finance).
|Possibility to hire foreign workforce (yes/no)
|Obligation to be present for the incorporation formalities (yes/no)
|Duration of the corporate bank account setup
|Minimum 1 week, maximum 4.
|Minimum salary in Lithuania
EUR 840 per month.
|How to obtain legal representation
Our consultants can provide Lithuania company formation services through the power of attorney.
|Institution in charge with immigration formalities
Migration Department (working under the Ministry of Interior of the Republic of Lithuania).
|Shelf company type available
Shelf companies can be incorporated under any legal entity regulated by the Lithuanian law, but the most common option is the limited liability company.
|Minimum requirements for appointing directors
|The director must be of minimum legal age, not have declared bankruptcy, have a clean criminal record.
Types of Lithuanian entities
Incorporating a Lithuanian private limited liability company (UAB) can be rewarding for small and medium businesses as it grants high profits with small incorporation requirements. For example, for a Lithuanian UAB the minimum share capital is approximately EUR 2,500, divided into shares with nominal value and non-transferable.
The liability of its members is limited by their contribution to the company’s capital. The maximum number of shareholders allowed in a Lithuanian UAB is 249. The management is assured by the general meeting of the shareholders and a director appointed by it. The UAB can have an availability period, stated in the articles of association, but it is not mandatory.
A type of entity that is designed for large companies is the Lithuanian public limited company (the Lithuanian AB), which can be incorporated based on a capital of EUR 40,000. The Lithuanian AB does not have a maximum number of shareholders that can incorporate de company. A difference from the UAB is that the shares of the AB can be registered on the Lithuanian Stock Market.
Just like in a private limited liability company, the liability of its members is limited by the contribution to the capital. Just like in the case of Cypriot businesses, the management is assured by the general meeting of the shareholders, but is mandatory to also appoint a board of directors, in charge with taking the daily decisions. Our team of specialists in company registration in Lithuania can help you start any type of company in this country.
The simplest form for a Lithuanian business is the sole proprietorship, which is formed by a single entrepreneur. The main advantages of the Lithuanian sole proprietorship are that it is not necessary to submit a minimum share capital and the whole profits can be claimed by the owner. The main disadvantage of incorporating a Lithuanian sole proprietorship is that the liability of the entity is owned by this investor so in case of bankruptcy, his/her assets can be claimed to cover the debts.
Other forms of small businesses in Lithuania – other form of business where the liability of the owners is unlimited is the Lithuanian general partnerships, which are formed by at least two individuals joined together by the same objectives under a single name (usually a combination of the general partners’ names). Just like in the case of the sole proprietorship, in case of bankruptcy the personal assets of the members are not protected. Our experts in company registration in Lithuania can help you set up any type of company and can guide you through the entire process.
Another type of partnership that is available for incorporation in this country is the limited partnership, that needs for its registration a general partner and a silent partner. The general partner must know that he or she will become fully liable for the company’s debts (meaning, with his or her personal assets), but the person will also be entitled to full managerial rights and decisions. At the opposite side is the silent partner, who must bring a contribution and his/her liability depends on that contribution.
Foreign companies also have several types of business forms available for registration. These are: the subsidiary, which is an independent structure from the parent company and it can be set up as a limited liability company, the branch office, which will carry out the exact activities of the foreign company and will depend on it, and the representative office which, can act as a liaison channel between the parent company and clients and partners in Lithuania.
Our specialists in company registration in Lithuania can help you choose the right type of entity based on the activities you want to undertake here. We can also advise on the types of licenses needed to start a business in this country.
Below, you can find a short presentation on the requirements for company registration in Lithuania:
Company formation in Lithuania
In the beginning of the process for company incorporation in Lithuania, the company’s representatives must open a bank account and deposit the minimum share capital in it, operation which requires one day and which has as a result the issuing of a deposit certificate. Then, the trading name that investors want has to be verified (to see if it is available or not) and if there aren’t any issues, then it will be reserved.
The procedure is the same as in many other countries from Europe, such as Italy, and applies also when you want to start a business in the Netherlands. The articles of association are the main documents sitting at the base of each legal entity (that has a corporate structure) so it’s necessary to draft one and notarize it in front of a public notary. The notarized articles of association along with the certificate proving the bank deposit and the name reservation must be deposit at the Company Register.
At the same time, the managing board must submit the registration for Lithuanian State Tax Inspectorate (the Lithuanian Revenue Authority) for corporate tax, VAT, and State Social Insurance Fund Board (SODRA). After that, a settlement bank account must be opened and a company seal must be obtained in order to perform daily activities. This is the last step prior to being able to start your business operations in Lithuania.
What are the documents necessary for company registration in Lithuania?
The documents an investor should prepare when registering a local company will differ based on the legal entity that he or she has decided to register in this country; however, all corporate entities, such as the private and the public limited company, will require the same papers.
For these company types, investors will have to prepare a file for registration, containing the following:
- – the application for company registration;
- – the articles of association;
- – any license that may be required (this can vary and it is not always a compulsory document);
- – the minutes of the statutory meeting where the investors have decided on the registration of the company;
- – the founding act of the compan;
- – the list of shareholders who have contributed at the incorporation of the company.
Company registration fees in Lithuania
Foreign investors who want to open companies in Lithuania must also consider the fees related to the registration of the business. Among the costs which must be taken into account are the bank account opening fee, which depends on the bank, the company name reservation and registration fees which are fixed and must be paid at the moment of the reservation, respectively when filing out the documents with the Trade Register.
The preparation and notarization of the articles of association must also be taken into consideration when opening a company in Lithuania. Another cost which must be calculated is the rental contract for the legal address of the company, as it is mandatory for local companies to have registered addresses in the country.
Company formation services in Lithuania
Some of the main services on company formation in Lithuania that can be provided by our specialists are presented here; for a full list, you can address to our team, who can offer you the following services when starting a business in Lithuania as a foreigner:
- – the preparation of the incorporation documents;
- – bank account opening;
- – submitting the required company documents with the Trade Register;
- – tax and VAT registration;
- – employment and social security registration.
On demand, we offer virtual office packages. The virtual office address can be used as a legal address for the company. These are usually cheaper than renting office space. Accounting services are also available for those in need of bookkeeping and payroll.
Registration for tax purposes in Lithuania
When you will open a Lithuanian company, you will have certain tax obligations. One of them is to register for VAT. The obligation to be registered is imposed when the turnover in a financial year is above EUR 45,000; the procedure can be done in person with the local tax institutions or online, by completing the necessary forms – the Form FR 0388 in this case.
Our team of consultants in company registration in Lithuania can help you in the process of registering for VAT and can also provide information on the accounting procedures and obligations that you must follow, once the company becomes operational. You can always refer to our team if you need advice on the corporate taxes charged to Lithuanian businesses.
When starting a business in Lithuania as a foreigner, you will be required to pay the same business taxes charged to Lithuanian residents.
Economic overview of Lithuania
Lithuania, a country located in the Northern Europe, has one of the most attractive investment markets for foreign businessmen. The country is a member state of NATO, EU and it is also a part of the Schengen Agreement, and this can provide multiple advantages.
The main advantages of doing business in Lithuania are:
- – the well-trained workforce at low costs;
- – excellent infrastructure (in 2011, Lithuania was placed on the first place in the top of the internet download speed and second in the top of the Internet upload speed);
- – the richness of the natural resources (especially oil and natural gas);
- – special economic measures taken for the technology investors.
Given that foreign investors who want to open a Lithuanian company will generally need to find out information on the local economy, we have prepared below a short presentation on some of the important aspects of the Lithuanian market. For more details, our specialists in company formation in Lithuania can be contacted:
- • the annual gross domestic product (GDP) growth is of 3,2% (maintained between 2015 to 2019);
- • the total value of the foreign direct investments in Lithuaniafor 2018 was of EUR 61,3 billion;
- • between 2010-2018, the United States of America (USA) and the United Kingdom (UK) were the main investors of the country, accounting for 15% of the total investments and 12%, respectively;
- • in 2017, the country had 80 greenfield investments (referring to foreign investments projects where investors start the project from ground up), considerably higher compared to other countries in the region, such as Latvia (29 projects) and Estonia (16 projects);
- • Lithuania also has free economic zones – for instance the Kaunas FEZ, where the corporate tax is charged at a rate of 0% for the first 10 years of activity, while in the following 6 years, it is charged at 7,5%, this representing only 50% of the standard rate charged in the country, of 15%.
Governmental plan for investments in Lithuania by 2025
According to the press release issued by the Ministry of Economy and Innovation of the Republic of Lithuania, the local government is planning to attract on the local market more investments, that will be able to create more than 20,000 new jobs in the following five years.
This means that those who want to open a company in Lithuania can benefit from multiple business opportunities, as the investment plan takes into consideration multiple industries, such as the services sector, the manufacturing sector, the ICT industry, the financial industry sector or the life sciences sector.
Currently, the plan is to attract investors from both the neighboring countries, but also from the countries that are important investors in the local economy, such as the USA or UK. In order to be able to achieve this plan, the local authorities want to implement various reforms in key economic sectors, to create better conditions.
Thus, the regulatory framework for investments is set to include better rules, the education system as well, but also the manner in which the country can gain foreign talent workforce is of importance. The local authorities also want to improve the rules on immigration, with the purpose of retaining the immigrants which can increase the quality of the society.
For full information on our company formation services in Lithuania, please contact us. CompanyFormationLithuania.com is a part of Bridgewest.eu, an international network which has affiliated partners throughout the world, including French lawyersand lawyers from Lithuania,who can provide local legal assistance to foreign investors.