Lithuania is the largest country among the Baltic states, which is why it attracts a great number of investors interested in starting companies here. Speaking about companies, one of the most successful types of structures here is the holding company which is a business form which gathers and manages the assets of other companies.
The creation of a holding company in Lithuania is also available for foreign investors and companies coming to this country. Below, our company formation agents in Lithuania present the characteristics of holding companies. For advice on how to set up this entity, you can always contact our team via e-mail or by phone.
Requirements to open a holding company in Lithuania
The Lithuania holding company can take one of the following forms: that of the private limited liability company (UAB) or that of the public limited liability company (AB). No matter type of structure chosen for the holding company, the following requirements must be met upon incorporation:
- at least one shareholder must be appointed upon the registration of any type of business form;
- a minimum share capital is required – EUR 2,500 in the case of a UAB and EUR 25,000 in the case of the AB;
- the UAB must have at least one manager, while the AB must have at least 3 managers – in both cases a supervisory council is optional;
- audit requirements are mandatory for the AB, while for the UAB these are mandatory only if a certain annual income is registered.
Our company registration consultants in Lithuania can help foreign investors who want to set up holding companies under any of the business entities. Our team can also explain the tax system applied to this entity, as well as the tax formalities that have to be completed throughout the financial year.
Taxation of holding companies in Lithuania
One of the main reasons for creating holding companies is the tax benefits these structures offer. It should be noted that Lithuania does not have a holding regime, however the tax authorities here provide the following facilities for the shareholders of such entities:
- • no capital duties for holding companies buying shares in other companies;
- • a participation exemption regime is available in the case of distribution of dividends;
- • the transfer of shares is exempt from taxation in the case of holding companies, provided certain requirements are met;
- • the holding company will be subject to the corporate income tax which has a rate of 15%.
If you want to know more on the tax advantages you can obtain as the owner of a holding company in Lithuania, our consultants have prepared a more detailed list in the following section. If you need further assistance, our team of specialists in company formation in Lithuania remains at your service. With regards to taxes, the following apply:
- • the basic corporate tax rate is of 15% on the profit of the company;
- • dividends obtained from domestic shareholding can be taxed at a rate of 15%, but exemptions apply for corporate shareholders in the case in which they own at least 15% of the company’s shares and if the shareholding was maintained for at least 12 months (the same applies for foreign shareholding);
- • the taxation of capital gains is charged at a rate of 15%, when the shareholders are corporate entities (this applies for both domestic shareholdings and foreign shareholdings);
- • where the taxation of capital gains is done for shareholders who are natural persons, there is a EUR 3,000 threshold tax exemption, while anything above is taxed with the standard tax rate of 15% (differences can appear between domestic and foreign shareholders in certain situations);
- • the company can also benefit from the provisions of the double tax treaties signed here – currently, there are 53 such documents.
Please mind that the holding company in Lithuania is not charged with the capital duty charged on cash contributions, nor does it applies for the contributions of shares in foreign subsidiaries. Our team of consultants in company registration in Lithuaniacan present additional information on other tax advantages one can obtain through this structure.
Below, you can watch a short video on holding companies in Lithuania:
How can an investor relocate to Lithuania for business purposes?
The procedure to relocate for the purpose of opening a company in Lithuania will differ based on the nationality of the foreign investor. For this purpose, the local legislation distinguishes very clearly between investors who are nationals of any of the member states of the European Union (EU) and the European Economic Area (EEA) and those who arrive from third party countries, which are defined as any other jurisdictions outside the EU and the EEA.
Businessmen arriving here for setting up a holding company or any other type of company will benefit from very simple rules if they are citizens of EU or the EEA, because Lithuania is a member state of the EU, which grants full freedom on the movement of persons who are nationals of these states.
In this particular case, there aren’t special rules to comply with, one can simply arrive here and start the process of company formation in Lithuania just like any other local investor. Certain legal obligations will appear once the person has been living in Lithuania for more than 90 days (this implies that the foreigner needs to apply for a residence permit).
For any other foreign investor, unless exemptions are clearly stipulated in particular cases, a visa is necessary. More specifically, a visa issued for business purposes. Here, there are various options, and they generally vary based on the financial capabilities of the investor. Thus, a businessman who simply wants to register a company here, without taking the responsibility of investing a minimum amount, can apply for the Schengen C visa.
This is a general visa that can be issued in Lithuania for more purposes (visiting the country, reuniting with family members and so on) and one can also use it for business related purposes. However, for those who want to invest a large capital in Lithuania, which can be the case when setting up a holding company, there is the possibility to apply for the Golden Visa program.
This program is advantageous because it offers right to residency in Lithuania, but in order to be able to participate in the visa program, the foreign investor must invest at least EUR 50,000. Investors also have the possibility to bring their close family members to live with them in Lithuania, as they will be covered under this visa program.
Although the investor will not automatically receive the right to permanent residency, as specific rules have to be fulfilled for this, the foreigner will benefit from a wide range of rights, similar with the ones of Lithuanian citizens. You can explore the migration rules applicable here with the Migration Department, working under the Ministry of the Interior of the Republic of Lithuania. Our team is also available to provide you with assistance on such rules.
For full information on the advantages of holding companies or assistance in setting up such company, please contact our Lithuanian company formation advisors. You can refer to our consultants for advice and assistance on any other company types that can be registered here following the law regulating the incorporation of companies.