Lithuania is a very appealing investment destination for foreign investors from both the EU and outside it. It has a legislation which favors foreign direct investments and an easy company registration procedure – these 2 being just a few of the appealing factors for starting a business in Lithuania.
Speaking about the company registration procedure, one of the most important steps when starting a business here is obtaining business permits and licenses in Lithuania in order be able to operate. Below, our company formation agents in Lithuania offer information about the main types of business licenses and permits needed to open a company.
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Business license and permit types in Lithuania
There are two main categories of business licenses and permits to be obtained when opening a company in Lithuania. The first one is related to ordinary documents, such as the business license issued upon company incorporation, while the other category is related to the licenses required for specific activities. The following business licenses must be obtained by certain companies in Lithuania:
- the catering license for companies operating in the food manufacturing industry;
- the construction license which is required for construction companies in Lithuania;
- the license for selling and manufacturing tobacco and alcoholic products;
- the pharmaceutical license used by companies producing and marketing pharmaceutical products;
- the business permit required to manufacture and sell oil-based products;
- the transportation license employed by local transporting companies.
It must be noted that separate licenses are required for the transport of goods and passengers.
How to obtain business licenses and permits in Lithuania
The Civil Code is the main law stipulating that all Lithuanian companies need to obtain one or more business permits before starting any economic activity. In order to obtain any business license in Lithuania, a company must:
- prepare the necessary documents related to its activities;
- prove certain qualifications, where the case requires;
- file the business licensing application only after the company is registered.
How can Lithuanian companies acquire business licenses?
After completing the process of company formation in Lithuania, a business can have many other obligations to complete, depending on the particularities of its case. For the issuance of a business license in Lithuania, investors must also initiate several steps.
Please mind that in Lithuania businesses can apply for the issuance of a business license by using the online system offered by the State Tax Inspectorate. Another option is to directly address the institution and book an appointment at one of the offices working in the region where the business is registered.
Depending on the license the business requires, different procedures can apply and the company can be imposed with different minimum requirements. In the list below, investors who want to open a company in Lithuania can find out few important matters:
- in general, a business license requested through the State Tax Inspectorate can be issued in a period of 4 days from the date of the application;
- the shortest amount of time needed for the issuance of a business license is 1 day, in the case of those who need a trade license in Lithuania;
- companies that need a manufacturing business license can wait minimum 5 days in order to obtain the document;
- companies developing gaming and gambling activities must expect a decision on the issuance of a license for a period of approximately 30 days;
- companies involved in cryptocurrency operations are also required to apply for a license, a mandatory requirement imposed starting with 2020.
Do self-employed persons need a business license in Lithuania?
Self-employed persons must also complete mandatory steps for the issuance of a business license in Lithuania, in accordance with the activity they want to carry out. Although for self-employed the process of Lithuania company formation is simpler, given that the sole trader (the entity under which self-employment can take place) is a basic structure, there are still many registration obligations to fulfill.
These are similar to the ones applicable to the incorporation of corporate structures, such as the limited liability company or the joint stock company and licensing obligations are imposed in all cases. For self-employed, the authorization requirements are divided into 2 main categories, as presented below:
- they can register under an individual activity certificate;
- they can apply for a business license in Lithuania, if the legislation specifically requires having a license for a business activity that the sole trader will carry out.
In other words, individuals must opt for the 2nd situation if the activity they want to develop can be conducted only after obtaining a suitable license. Our team of specialists can present the full list of activities that obligate individuals and companies to hold a valid license.
We also mention that there is a difference between the 2 types of authorizations in financial terms. For instance, an individual who will opt to open a Lithuanian company under an individual activity certificate will be taxed at a rate of 5% for the income of the business, provided that the income is below EUR 20,000.
In the case in which the annual income exceeds EUR 20,000, the tax rate will increase to 15%. For those who will operate under a business license, the income threshold is limited to EUR 45,000 per year.
There are also several restrictions concerning the amount of money that can be received by the company from other businesses that engage in commercial activities, other than the ones listed under the business license held by the licensee. Considering these, we invite you to find out more about these regulations from our consultants.
Those who will obtain a business license in Lithuania can start operating in approximately 4 days after they have applied for this document. It must be noted that the license has a validity of 1 calendar year, while the trade license in Lithuania has a validity of minimum 1 year.
What are the regulations for gambling companies in Lithuania?
Local and foreign investors interested in opening a company in Lithuania operating in the gambling industry are required to comply with many stringent rules, regulated by the Ministry of Finance and applied by the Gaming Control Authority.
When applying for a license in this industry, the company may be required to obtain one or more licenses, depending on the activities that will be developed by the company. The law in Lithuania distinguishes between the following types of gaming licenses:
- licenses for Category A machine gaming;
- licenses for Category B machine gaming;
- licenses for betting operations;
- licenses for bingo activities.
These licenses are necessary for physical places of business. For companies that are also interested in developing online gaming activities, through a web platform, a different type of license must be obtained.
You can request in-depth information concerning the application procedure and the documents the company’s representatives need to prepare from our team of consultants in company registration in Lithuania.
What documents must a Lithuanian gaming company prepare?
A company that wants to obtain a gaming license (or more gaming licenses) should prepare a basic set of documents. First, it is necessary to fill out an application form for the necessary gaming license.
Then, investors must prepare the company’s registration documents (statutory documents and other certificates issued by the Lithuanian state authorities), as well as information on the capital of the company. Please be aware of the fact that the capital requirements vary depending on the type of gaming activities the company will develop here.
Further on, investors have to present information concerning the management structure of the company. Here, one needs to present details of the company’s founders, the supervisory board, the board of directors, etc. Besides these, it is mandatory to present documents that attest to the way in which the shareholders have obtained the funds that were used for setting up the business.
For full information on how to apply for business licenses and permits, please contact our company registration consultants in Lithuania.