DOING BUSINESS IN LITHUANIA IN 2023
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? | €11,025 | 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.
