Lithuania is a small Baltic country with a progressive approach to business. The jurisdiction is popular due to its low tax rates and affordable market entry. Company registration in Lithuania is ideal for startups, as well as small and medium-sized businesses.
The jurisdiction ranks quite high, securing the 9th place in the International Tax Competitiveness Index and the 11th place in the Ease of Doing Business Ranking.
Lithuania is often chosen for registering companies in the fields of trade, cryptocurrency, IT business, e-commerce, outsourcing, and consulting services.
Advantages of Company Registration in Lithuania
Registering a company in Lithuania offers many advantages. Let’s take a closer look at some of them.
- Low cost of registration and maintenance. In Lithuania, a company can be established for a relatively small amount of money compared to other European jurisdictions. This makes Lithuania a good option for small companies and startups that are still gaining stability.
- Low tax rates. The standard corporate income tax rate is 16%, one of the lowest in the EU. It is also possible to apply a 0-6% rate under certain conditions.
- Simple registration process. You can register a company in Lithuania fairly quickly. This process usually takes up to 3 weeks. The entire procedure can be done remotely, without the founder or director being present in the country.
- No language barrier. This advantage is more noticeable for clients from post-Soviet countries. People in Lithuania speak English and Russian, which makes it easier to communicate and handle daily tasks without language difficulties.
- Favorable location. Lithuania is situated at the crossroads of Western and Eastern Europe, allowing for successful trade between these regions. Additionally, its proximity to Scandinavian countries opens up trade routes with developed northern nations.
- Residence permits. Based on business registration, it is possible to obtain a residence permit, allowing legal residence in the country and visa-free travel within Schengen countries.
Forms of Company Registration in Lithuania
Company registration, operations, and forms in Lithuania are regulated by the Civil Code of the Republic of Lithuania, the Law on Enterprises of the Republic of Lithuania, the Law on Companies of the Republic of Lithuania, and other legal acts.
The legislation provides for the following forms of company registration in Lithuania:
- Limited Liability Company or Closed Joint-Stock Company (Uždaroji Akcinė Bendrovė – UAB). This is the most popular form of company registration in Lithuania. Its advantage lies in the simplicity of management and limited liability. The founder can be a foreigner, and the total number of founders must not exceed 250 people. The required share capital for registering a UAB is at least 2,500 EUR.
- Small Partnership (Mažoji Bendrija – MB). This is also a popular form of business registration in Lithuania. It is characterized by favorable taxation but has significant limitations. The number of employees must not exceed 10, and founders can only be individuals. The income threshold is up to 300,000 EUR per year. The minimum share capital requirement is 1 EUR.
- Public Joint-Stock Company (Akcinė Bendrovė – AB). Suitable for large businesses aimed at issuing shares. There are no restrictions on the number of founders. The minimum share capital requirement is 40,000 EUR.
- General Partnership (Tikroji ūkinė bendrija – TUB). In a general partnership, partners pool their assets and efforts under conditions of mutual trust and equal joint management of the partnership. The number of founders can range from 2 to 20 people. All partners bear unlimited joint liability. Registration of share capital is not required.
- Limited Partnership (Komanditinė ūkinė bendrija – KŪB). This form overlaps with the general partnership but has distinctions. The number of partners can range from 2 to 20 people. In a limited partnership, there are two types of partners: 1) general partners, who bear full personal liability for the partnership’s obligations if the partnership’s assets are insufficient, and 2) limited partners, who limit their liability to their contributions and are not responsible for the partnership’s debts but have no voting rights in managing the partnership.
Taxes for Companies in Lithuania
Lithuania has a relatively business-friendly tax system. The 16% tax rate is considered low compared to other European jurisdictions, and the opportunity to apply a profit tax rate from 0% to 6% is a good incentive for new small businesses, making this jurisdiction ideal for entering the European market.
The 16% rate applies to Limited Liability Companies, i.e., closed joint-stock companies. In some cases, a 0% rate can be applied if your business involves large investment projects, agriculture, is located in a Special Economic Zone (SEZ), or under other circumstances provided by law.
A rate between 0% and 6% can be applied to small partnerships with income up to 300,000 EUR per year. The 0% rate is used only in the first tax year of the company’s activity, provided the number of employees does not exceed 10 people. Subsequent periods are taxed at a 6% rate with the same employment requirement.
The standard VAT rate is 21%. Reduced rates of 9%, 5%, and 0% apply if the company engages in VAT-exempt activities. The VAT registration threshold is 45,000 EUR per year.
Withholding tax rates are as follows: a) dividends – 16%, b) interest – 10%, c) royalties – 10%. Under certain conditions, all of these withholding taxes can be exempt from taxation.
Bank Account for a Company in Lithuania
Opening a bank account in Lithuania is generally only possible by proving real economic presence in the country, which implies having a physical office, local counterparties, and employees. Additional criteria may include a website with a .lt domain and a local landline phone number.
In Lithuania, there are both large network banks, such as SEB and Citadele, as well as local Lithuanian banks, such as Šiaulių Bankas and Medicinos Bank.
Lithuanian banks guarantee deposits up to 100,000 EUR.
Typically, accounts for Lithuanian companies are opened in payment systems such as Paysera, Vialet, Wise, Payoneer, and others. Each payment system has its own features, different entry thresholds, fees, conditions, etc. We will help you navigate and choose the best solution for your new company.
Process of the Company Registration in Lithuania
The company registration process in Lithuania is not complicated and takes relatively little time. Usually, two approaches are used: company registration by power of attorney and company registration in the name of a Lithuanian citizen with subsequent remote transfer to the client.
The first option requires more paperwork, while the second is simpler but slightly more expensive.
Both options take about 2-3 weeks for full company registration in Lithuania.
The steps are as follows:
- Preparation of documents
- Reservation of the company name
- Opening a depository account
- Company registration
For registration, we will need passport scans of the founders and director, documents confirming the addresses of these individuals, and their contact information.
Tax table
| Type of tax | % |
|---|---|
| Corporate tax | 0/6/16% |
| VAT | 0/5/9/21% |
| Dividend tax | 0/16% |
| Interest tax | 0/10% |
| Royalty tax | 0/10% |
Price table
| Service | EUR |
|---|---|
| Company registration | 1000 |
| Contact person | 250 |
| Legal address for 1 year | 250 |
| VAT registration | 250 |
| Bank account opening in a traditional bank | 500 |
| Bank account opening in a payment system | 250 |
| Accounting services | 100 |
You can view the full list of jurisdictions where we offer registration at this link.
If you are considering company registration in Lithuania to enter the European market and expand your business opportunities, leave a request on our website or contact us in any way convenient for you.
Company registration in Lithuania is your key to entering the European market!
