Lithuania Company Formation

Low corporate taxes and incorporation costs combine to make Lithuania company formation an attractive option for entrepreneurs conducting businesses within Europe and internationally. Lithuania is the largest of the Baltic states, and has a stable political and economic environment. The following information will help you determine whether Lithuania company formation is the optimum corporate solution to fulfil your business objectives:

Lithuania is an open and growing economy, with the government giving priority to business friendly policies. The first three quarters of 2008 saw a GDP rise of 5%. The Economist Intelligence Unit (EIU) list the full 2008 GDP figure to 3.7%, with the forecast of 2009 and 2010 to decline to negative figures, as a result of the global economic downturn.

In terms of the ease of doing business, the World Bank positively ranked Lithuania at 26th out of 181 countries in the 2010 Doing Business Survey. Within the twenty five countries categorized as Eastern Europe/Central Asia in the survey, Lithuania ranked third easiest place to do business.

Lithuania is strategically located close to large potential markets. According to the Lithuanian Development Agency (LDA), the European Union sees Lithuania as a key transport hub linking the EU with the East. The EU views Lithuania's North-South highway and it's major rail routes as being among the ten most important transport links in Europe.

Both a Private Limited Liability Company (UAB) and a Public Limited Liability Company (AB) require one shareholder. The shareholders of AB or UAB may be Lithuanian or foreign individuals or legal entities. While foreign citizens employed in a company must obtain temporary residence permits, there are no restrictions or special encumbrances set forth in respect to foreign shareholders under the Law on Companies of the Republic of Lithuania, foreign individuals can participate in the management of Lithuanian companies.

For a Private Limited Liability Company (UAB) the minimum share capital is Euro 2,900 (US$3,700), while for a Public Limited Liability Company (AB), the minimum share capital is Euro 43,450 (US$55,400).

Lithuania also ranks highly on the 2008 quality of life survey carried out by International Living. The survey scored over 190 countries based on nine elements including economy, cost of living, infrastructure and more. Lithuania ranked 22nd in this index.

Lithuania company formation allows entrepreneurs to benefit from a network of double taxation treaties with more than 40 countries including France, Germany, Singapore, the US and the UK.

The 2008 standard rate of corporate tax in Lithuania is low, at 15%. Companies with a turnover of less than Euro 144,810 (US$185,000), and employ less than ten people, pay a lower rate of 13%. Income from a dividend paid by one company to another in Lithuania is exempt from tax. Tax for capital gains, classed as income, is paid at 15%.

The Heritage Foundation’s 2010 Index of Economic Freedom  ranks Lithuania 29th out of 257 countries, its economy being classified as 'mostly free' to 'moderately free'. Consequently, international entrepreneurs conduct activities from Lithuania with few major restrictions.

Lithuania offers equal protection and opportunities for both local and foreign businesses, with equal access to all sectors of the economy.

Healy Consultants can open a corporate bank account to support Lithuania company formation. Healy Consultants works with internationally recognised banks such as HSBC, Standard Chartered and Citibank to provide corporate bank account services.

Lithuania ranks as the 52nd least corrupt country, according to the 2009 Corruption Perceptions Index by Transparency International. The survey covered 180 countries making Lithuania in the top 35%.

An Agricultural Company (ZUB) requires 2-20 shareholders, while a Cooperative Society (KB) requires 5 or more shareholders.

In its 2010 World Competitiveness Yearbook, the Switzerland-based IMD ranked Lithuania as the world’s 43rd most competitive economy, out of 57 countries.

While the World Bank ranked Lithuania as 28th overall in it's 2009 Doing Business Survey, the criteria related to opening a business had a much lower ranking of 74. Combined with a ranking of 88 for the criteria of 'protecting investors', it illustrates there are some challenges for Lithuania company formation.

One option for Lithuania company formation is an open joint-stock company (THE AB). However this form of company requires a minimum of 5 shareholders and a minimum capital of US$37,000.

The standard Value Added Tax (VAT) in Lithuania is 18%.

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