The most common form of a business presence in Lithuania is a limited liability company – Uždaroji akcinė bendrovė (UAB).
The minimum share capital required to establish a limited liability company is EUR 2’500 which shall be paid prior to company registration with the Legal Entity Register.
Limited Liability Company (UAB) may be founded by natural persons as well as legal persons (companies).
A limited liability company can change the type of economic activity without changing the incorporation documents. Certain types of businesses (oil trade, pharmaceuticals, alcohol and tobacco, gambling and lottery, financial services, etc.) require a license to operate.
The public limited company is called Akcinė bendrovė (AB). The minimum share capital required to establish a public limited liability company (AB) is EUR 25’000.
Paylar can open you a dedicated account where a shared capital for a new company can be accumulated.
The remote incorporation procedure is quite straightforward:
1. Order a service package of your choice directly on our website or through one of our Business development managers (see the full list here).
2. Choose a company name, and check its availability online.
3. Issue a written authorization (Power of Attorney) to one of our incorporation specialists at your local notary office. We shall email you the template in English or Russian languages, depending on your country of residence.
4. Print and sign the Deed of Incorporation or the Incorporation Agreement (depending on the number of shareholders). Then send the documents (The Deed of Incorporation and the power of attorney) to Paylar by a courier service. Based on the documents provided, we shall open a deposit account for accumulating the shared capital.
5. Replenish a deposit (savings/accumulative) account with a designated shared capital (minimum 2’500 euro).
6. Once the shared capital is formed, we shall prepare all the necessary documents and set up a company for you, in your name, and nominate a director, if he/she is another person than you.
7. The company is set up, we can then proceed to the opening of a business payment account with Paylar.
To successfully operate a business in Lithuania, you will also need:
• A physical address of the company (virtual office rent is available);
• An accounting and reporting service;
• A payment account to send and receive payments worldwide.
1. Is a Member of the European Union and NATO since 2004
2. Has Euro (€) as its currency since 2015Is a member of the Organisation for Economic Co-operation and Development (OECD) since 2018
3. Ranks 11 out of 190 countries evaluated by Ease of Doing Business
4. Ranks 16 out of 162 countries evaluated by Economic Freedom of the World
5. Enjoys to be 38th out of 180 countries evaluated by the Corruption Perception Index
Lithuania’s e-infrastructure is EU-leading. In fact, it is amongst the best worldwide. Lithuania is ranked first globally for fulfilling business needs for ICT, and is a regional leader for bandwidth and fiber-optic infrastructure. Combine this with its convenient time zone for broad international service coverage, and Lithuania is an excellent location for international IT and service operations.
Lithuania’s physical infrastructure gives investors a broad range of reliable, fast, and high-quality logistics options for streamlining their operations. By sea, air, road and rail, key markets in Northern Europe, Western Europe and Asia are easily and affordably accessible.
• Klaipėda ice-free seaport is the largest port in the Baltic states, handling up to 47 million tons of cargo annually.
• Rail cargo services directly connect Lithuania to Russia, Belarus, Latvia, Poland, Germany, Ukraine, Italy, Scandinavia, Turkey, Kazakhstan, and China.3 international airports, all offering access to key European locations in 2-3 hours.
The taxable profit of Lithuanian entities is taxed at a rate of 15%. The taxable profit of the entities whose average number of employees does not exceed 10 and whose income over the taxable period does not exceed the maximum of EUR 300 thousand is taxed at a rate of 0% in the first taxable period and 5 % in the other taxable periods. If more than 50% of the entity’s income during the taxable period comes from agricultural activities, including cooperative societies (cooperatives) income from the sale of their members’ agricultural products, the taxable profit is taxed at 5% corporate tax rate.The taxable income of a Lithuanian entity is income earned in the Republic of Lithuania and abroad.
The taxable profit of a Lithuanian entity is calculated by deducting the non-taxable income and deductible expenses. The annual corporate profit tax return accompanied by financial accounts shall be filed after the end of the taxable period and before the fifteenth day of the sixth month of the next tax period.
The corporate profit tax is not imposed on dividends received from an entity in which the entity receiving the dividends has been holding a number of shares entitling it to more than 10% of the total amount of votes for at least 12 subsequent months including the moment of dividend distribution (rule not applied on offshore jurisdictions).
The standard VAT rate is 21 %. The reduced VAT rates are as follows: 0 %, 5 %, and 9 %.
0 % VAT rate commonly is applicable to goods exported from the territory of European Community; goods transported from Lithuania and supplied to VAT payer registered in one of the member states; new cars supplied into other member states; certain transactions related with international trade (e.g. supplied goods delivered to free zone or warehouse and appropriate customs procedures executed); etc.
9 % VAT rate is applicable to books and other irregular informational publications, newspapers, magazines and other periodical publications, with the exception of erotic and (or) of a violent nature or professional ethics neglecting publications as well as printed production where paid advertising takes more than 4/5 of the total area of the publicati0n. 9 % VAT rate is also applicable to the heating energy and hot water for residential premises until 31 December 2016, to the accommodation services defined in the legislation and services related to the transport of passengers and their luggage by regular routes approved by the Ministry of Transport or municipalities.
5% VAT rate applied to pharmaceuticals and medicine support devices, for the compensation in accordance with the budget and technical assistance means and their repair to the persons with disabilities.
The taxable period is one month. Under certain circumstances, the taxable period maybe 6 calendar months or a period of other duration.
Minimal wages in Lithuania in Q1, 2021 is – 642 euro/month and the minimal hourly rate is – 3,93 euro/hour.
Labour compensation taxes are structured into:
• Income tax – from 20% to 27%
• Health insurance contributions – 6.98%
• Pension and social insurance tax – 12.52%
• Social insurance tax- 1.77%
As an example, GROSS salary of €2’500 will result in €981.86 overall taxes and a NET salary of €1518.14.
Hired freelance professional work is taxed ~26%, depending on the type of activity and net profit of the freelance activity.
• Notarised Power of Attorney issued to one of our incorporation specialists;
• Signed Deed of Incorporation.
• Notarised Power of Attorney issued to one of our incorporation specialists;
• Signed Deed of Incorporation;
• Document proving a presence of an opened and replenished company formation account;
• Permission to register a company’s physical address;
• Articles of Association prepared to suit your business needs*;
*Additional charges may apply for complex shareholder and management structures.
For EEA – resident companies
For companies from the rest of the world
We can offer a choice of addresses for your company in the capital city of Vilnius, Lithuania. These are proper addresses for a company, in recognizable office buildings.
The minimal registered address rent is €300/year and includes receiving of mail (not limited), informing by e-mail (once a day), UPS, DHL, FEDEX or other urgent parcels – informing on receipt) taking at our office on workdays (work hours) or forwarding of mail (once a month) for an additional postage charge.
Additional address packages include:
• Personal mailbox at entrance-hall on the ground floor;
• Answering incoming call in the name of your company;
• Name of the company at the entrance of the building;
• Full business address package list is available upon request.
Doing business through a company in Lithuania requires in-house or outsourced accounting. Our partner accountants can facilitate professional accounting and reporting services to suit your business needs.
By combining the Paylar payment account for business and our professional accounting, our clients can focus more on their business rather than worry about bookkeeping or timely reporting to the authorities.
Benefits of outsourced accounting:
• A complete range of accounting services – from payroll calculation to document submission to the respective authorities.
• Tax compliance services – ensure that tax accounting and reporting is performed according to all local tax requirements
• Professional advice – our expert partners are always ready to answer your accounting and tax-related questions and provide professional and personal advice.
• Paperless operation – the use of advanced IT systems enables our clients to eliminate the use of paper in the process.
The cost of our accounting services in Lithuania depends on the number of employees and the amount of monthly processed documents.
Depending on the type of your business, location, staff, and works required, the specific quotation shall be prepared upon request.
The basic accounting package starts at €150/month.