DOING BUSINESS IN LITHUANIA IN 2021
Low corporate taxes and incorporation costs combine to make Lithuania company registration 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.
|Compare different Lithuania entities||Tax resident LLC||Free zone LLC||Payment institution||LLP||Branch office|
|Also known as||Uždaroji Akcine Bendrove||Uždaroji Akcine Bendrove||Mokėjimo įstaigos||Komanditine Ukine Bendrija||Filialas|
|Best use of company?||All products/ svcs||Close client deal now||Financial services||Professional services||Specific projects|
|How soon to invoice Clients?||2 weeks||3 weeks||6 months||3 weeks||4 weeks|
|How soon can you hire staff?||2 weeks||3 weeks||3 weeks||3 weeks||4 weeks|
|How soon can you sign a lease agreement?||1 week||1 week||1 week||1 week||1 week|
|How long to supply corporate bank a/c?||6 weeks||6 weeks||6 months||6 weeks||6 weeks|
|How long to supply co. reg / tax numbers?||2 weeks||3 weeks||3 weeks||3 weeks||4 weeks|
|Corporate tax rate on annual net profits?||15%||0%||15%||0%||15%|
|Limited liability entity?||Yes||Yes||Yes||Yes||No|
|Government grants available?||Yes||Yes||Yes||Yes||Yes|
|Govt approval required for foreign owners?||No||No||No||No||No|
|Res. director/partner/ legal rep. required?||No||No||No||No||Yes|
|Minimum paid up share capital?||€2,500||€2,500||€125,000||€1||€1|
|Can bid for Government contracts?||Yes||Yes||Yes||Yes||Yes|
|Corporate bank account location?||Swedbank||Luminor||Šiaulių bankas||SEB||Citadele|
|Can secure trade finance?||Yes||Yes||Yes||Yes||Yes|
|VAT payable on sales to local customers?||21%||0%||21%||21%||21%|
|Average total business set up costs?||€10,925||Request a proposal||Request a proposal||Request a proposal||€11,600|
|Average total engagement period?||2 months||3 months||7 months||3 months||4 months|
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Advantages of Lithuania company registration
- Lithuanian business registration rules are liberal, requiring only i) one shareholder of any nationality ii) one director of any nationality and iii) a low €2,500 of paid-up share capital;
- Lithuania is the perfect logistics gateway between Russia and the EU;
- Labor costs and secondary costs such as office space are amongst the lowest in Europe. For example, the average commercial rent per meter square in large cities is around US$16/month, and the average monthly salary for skilled labor is US$668;
- Lithuania’s corporate tax rate of 15% is one of the lowest in the EU. Furthermore, a 6-year tax holiday is available to companies established in Lithuanian Free Economic Zones, with a reduced tax rate of 7.5% applying for the subsequent 10 years;
- Lithuania has signed double taxation avoidance agreements with 50 countries including Canada, China, Austria and the United Kingdom;
- Lithuania joined the European currency union in January 2015 and the national currency is now the Euro. This removes the currency exchange risk when trading with other Eurozone countries, thereby reducing barriers to trade and increasing the attractiveness of registering a company in Lithuania;
- Lithuanian companies incorporated in the free economic zones are entitled to enjoy from the exclusive economic, legal and strategic incentives provided in these zones. These companies benefit through their i) access to the dynamic East European and Asian consumer markets; ii) full-exemption on dividends and real estate taxes; and iii) full exemption on corporate taxation during the first 6-years of their operation.
Disadvantages of Lithuania company registration
- The Value Added Tax (VAT) in Lithuania is 21%, reducing the attractiveness of products sold in the country compared to other Eastern European economies;
- Only 30% of Lithuanians speak English. Consequently, it is difficult for foreign entrepreneurs to grow their business in Lithuania, as communication is limited;
- The total cost of company registration is increased by the requirement that all company documents are translated into Lithuanian before filing with the companies registry;
- Lithuania is almost completely land locked, limiting trading by sea;
- Businesses in Lithuania are prone to suffer from bribery and extortion largely due to the prevalence of red tapes and inefficient bureaucratic system in the country. This has an impact in the overall incorporation and functioning of small and medium enterprises (SMEs) in Lithuania by i) delaying the public service facilities and ii) undermining the presence of a free and fair competitive economy due to the prevalence of its shadow economy.
- Time to incorporate: Three weeks
- Cost to set up: €10,925
- Minimum capital: €2,500
- Physical office required: No
- Shareholders: 1
- Directors: 1
- Company secretary: No
- Resident director: No
- Corporate tax rate: 15%
- Corporate tax base: Worldwide
- Shelf companies: Available
- Main company type: UAB company
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Frequently asked questions
What is the minimum share capital for registering a Lithuanian company?An investment of at least €2,500 is required to register a company in Lithuania. This was reduced from the equivalent of €2,900 upon Lithuania’s adoption of the Euro in January 2015. While this applies to the private limited company (UAB) structure, €40,000 is required to register an AB public limited company. Only 25% of the share capital contribution needs to be fully-paid-up at incorporation, but investors will be liable for the full amount in the event that the company requires it.
What kind of company should I register to do business in Lithuania?Healy Consultants recommends registering a Lithuanian UAB for most of our Clients. However, your needs may vary with your business and we can work to register a Lithuanian AB or branch. For more information on the types of business entities available in Lithuania, visit this page.
Can I register a company in Lithuania using documents written in English?No. Although you may draft your documents in English, these must all be translated into Lithuanian by a certified translator. The Lithuanian versions of the documents are then submitted to the companies registry and are treated as the official version of the documents.
How long does it take to register a business in Lithuania?Lithuanian company registration takes three days once submitted to the companies registry. However, Healy Consultants has found that the process takes three weeks in order to collect and translate all of the necessary documents for submission to the registrar.
Useful links for Lithuania
Government and public authority websites:
- Lithuania Tax Authority
- Lithuania Company Registrar
- Central Bank of Lithuania
- Lithuania Stock Exchange
- Investment Authority
- Chamber of Commerce
- Lithuania airport
- Visiting Lithuania
- Government of Lithuania
- Lithuania Business Confederation
- Lithuania Gateway
- Lithuania Yellow pages
- Lithuania KPMG – Tax Card 2019
- Lithuania Doing Business – Economy Profile 2020
- PWC: Business Guide Lithuania
- Doing Business in Lithuania; Tax Guide
- Lithuania Law on Companies