Lithuania is one of the Baltic countries that open diverse opportunities for starting and doing business both locally and globally. The country is a member of the EU and the OECD. It has implemented all relevant European standards for doing business. However, many businessmen find that working in this jurisdiction is more convenient than in other European countries for many reasons attributed to Lithuania.
Advantages of Jurisdiction
Establishing a company in Lithuania is associated with the following benefits that any foreign entrepreneur can potentially benefit from:
Stable political and economic environment
Advantageous geographical location
Equal opportunities for local residents and foreign businessmen
Facilitation in the establishment of legal entities with the possibility of organizing all registration actions remotely
Clear and transparent legal framework
Sufficient security and privacy
One of the lowest tax rates in the EU and favorable taxation in general
Availability of incentives in certain sectors of the economy
There are also many other specific benefits attributed to each particular area of a business arrangement. Smart Startup UK's lawyers will be happy to advise you in detail on this matter, taking into account the specifics of running your particular business.
Basic forms of legal and business presence
If you want to buy a company in Lithuania, create a new one or formalize an entrepreneurial presence in another way, the following options are available for this purpose:
Private limited liability company - a company that is considered one of the most convenient and popular among domestic and foreign businessmen due to the flexibility of its creation and operation. This legal entity must have at least one founder (shareholder), and the maximum number of participants is limited to 250. The minimum value of the authorized capital of this type of legal entity must be at least 2500 Euro. None of the members shall be liable for the sums contributed to the enterprise. The reporting requirements are simple and easy to fulfill in this case.
Public limited liability company – a legal entity suitable for medium and large enterprises that intend to carry out external financing. At least one shareholder is required to establish this legal entity. The minimum amount of the authorized capital for this company is 40,000 Euro. The financial liability of each shareholder does not exceed the amount of shares held by such shareholder. In this case, a more complex management structure is needed - a board of directors. Stricter accounting and reporting requirements also apply.
General partnership – a variant of joint operation in the field of entrepreneurship, where all partners (2-20) have unlimited liability for the results of joint transactions. This business agreement is based on the agreement in which the partners describe their rights and obligations regarding doing business together. It should be noted that in the case of potential failures, even the personal property of the partners may be subpoenaed.
Limited Partnership – A variant of joint venture that may be carried on by (i) two general partners who are fully liable for all partnership debts, and (ii) at least one partner who shall not be liable for the obligations of the partnership in excess of the contributed value. The total number of members must not exceed 20. The obligations and rights related to the partnership are governed by the relevant agreement.
Branch – an opportunity for a foreign enterprise to carry out the same types of business activities as in the country of origin. This option is suitable for those foreign entrepreneurs who intend to test local business opportunities before making more valuable investments in the country. Responsibility for the results of a branch's activity always rests with a foreign parent company.
Representational Office – an option for conducting market research and promotional activities by a foreign legal entity without the possibility of carrying out any type of operations in Lithuania. Official representation is required in the country before starting its activities. Payment of the relevant fees is also mandatory.
Registration Requirements and Steps
If a businessman wants to open a company in Lithuania, you should go through the following approximate stages of creating a legal entity:
Determination of business opportunities and types of economic activities to be carried out through a local enterprise. Preparation of a business plan.
Collection of details of founders, beneficiaries and prospective managers. Among all other details, it is necessary to collect passport and residence data for individuals and data for the incorporation of legal entities.
Enterprise trade name formulation, verification and retention.
Search and arrangement of official address of registration of a legal entity.
Preparation and formalization of registration and licensed documents.
Formation of authorized capital for the future company and payment of all related incorporation fees.
Submission of a completed set of necessary documents to the registrar.
Receive confirmation of incorporation when the application is approved.
Submission of an application for tax and labor registration.
Find a bank and arrange to open a corporate account there.
Submission of applications and granting of licenses to carry out certain economic transactions, such as banking or finance.
Each registration procedure varies depending on the specific aspects of a business case. The lawyers of "Smart Startup UK" will be happy to discuss with you in detail the approximate procedure to be followed in your case, develop and implement the incorporation plan, formalize all the necessary documents and negotiate with authorized government authorities.
Legal and Regulatory Aspects
Lithuania has provided a flexible and favorable legal environment for doing business and provides equal opportunities for entrepreneurship to both local residents and foreign businessmen. The legislation is made according to the most common European business standards. A foreign businessman does not need a local partner to start doing business in Lithuania - a local legal entity can be 100% owned by a foreigner. The main government bodies that foreign entrepreneurs are likely to deal with are the State Enterprise Register Center and the Bank of Lithuania. The most important laws that must apply to legal entities in Lithuania are the Companies Act, the Partnership Act and the Financial Institutions Act.
Tax system of Lithuania
If you want to establish a company in Lithuania, this incorporation decision should be evaluated together with the following tax aspects:
Corporate Income Tax (CIT) rate – 15%
Personal income tax (PIT) – 32%
VAT rate – 21%
Value added tax rate – 21%
Withholding tax rates (applicable to foreigners) – (i) dividends – (a) standard – 15% (b) 0% – if the parent company holds at least 10% of the shares for a minimum of 12 consecutive months (ii) interest - (a) standard - 10% (b) 0% - if the recipient is from the EEA or from a country that has a tax treaty with Lithuania (b) 0% - on the interest on government securities issued for international financial markets, accumulated and paid on deposits, as well as on subordinated loans that meet the criteria set by the Bank of Lithuania (iii) royalties – 10%
Tax rates on capital gains – (i) corporate – same as ordinary CIT tax rate (ii) personal – 20%
Smart Startup UK specialists can advise you on setting up a company in Lithuania and any other country that may be suitable for your business. This assistance can cover not only standard registration procedures, but also choosing the most favorable tax regime, opening a bank account, formalizing relations with employees and solving other issues. Contact us to discuss in detail any questions that interest you.
CREATE A COMPANY
Obtaining E-residency
Verification and reservation of the company name in the register of legal entities (Juridinių įinų registras)
Registration of a company in the form of AB / UAB, including state fees
Constitutive document (Įregistravimo documentas)
Statute (Įmonės statutai)
Company registration in Sodra
Statutory documents of the company
Company stamp
Opening a corporate bank account in the payment system
Assistance in opening a corporate bank account in: Šiauliu Bankas, Nordea
Apostilled and translated company documents
Obtaining a VAT number at the State Tax Inspectorate (Valstybinė tõkus inspekcija)
Free consultation
Help with online trading and opening an account at viva.com for online trading
Accounting services - 12 months
Annual renewal (payable from the second year)
*Within 30 days
IMPORTANT! We can provide you with the initial share capital (if the amount is over EUR 5,000) for the registration of your company in the form of a loan from our company.
Please, if you are interested, make an inquiry to us.
What is the procedure!
1. You submit a request for company registration using the request form.
2. We check if the registration company name is free and eligible for registration.
3. Choose a bank that suits your company's needs from a list of Smart Startup UK partner banks provided.
4. We send you a proforma payment invoice to pay to our bank account + the initial capital amount of your company.
5. You receive all necessary company documents for verification.
6. You receive details of your newly opened bank account.
7. In the specified period (for Lithuania it is 30 days), you receive all the services included in the package.
8. You can manage through our platform all the services included in the package, as our team works 24/7 and you can get help from us within up to 30 minutes. We have built an internal ticketing system for our customers through which we process your every support request.
All services like management, accounting, request to open bank accounts, licensing, filing tax returns, paying taxes and more are done through your account on our platform, it makes it easy managing your business!
