Advantages of Establishing a Company in Lithuania
Lithuania is the largest, as well as the most populous state among the Baltic countries. It is located on the Baltic Sea coast, a member of the Schengen Treaty and a member of the World Trade Organization. During these years, Lithuania reached certain heights by attracting foreign capital to the economy of the country, mostly at the expense of cheap labour, a stable developing economy, low inflation, etc. The opening of the company in Lithuania gives the possibility not only to be sure of the economic stability of the country, but also to enter the European market in the absence of restrictions on the export of goods on the territory of the EU.
Good investment and trade opportunities in Lithuania in recent years have attracted an increasing number of foreign enterprises and foreigners who choose Lithuania as a stable state, with relatively simple and safe investment policies. Attracting investment to Lithuania is one of the most important strategic goals of the State, therefore in order to ensure the most effective implementation of the mentioned goal Lithuania constantly improves its image and its attractiveness among investors not only within the country, but also in relations with foreign States or individuals residing in foreign States. In order to maximize the number and volume of investments in Lithuania, the State system of support for foreign investors wishing to settle in Lithuania and carry out their activities has even been developed.
According to the provisions of Lithuanian legislation, investment in business in Lithuania is a legal ground for the immigration of an alien to Lithuania. By allowing foreigners to come and live in Lithuania on the basis of legal activity, i.e. through business investment, the State seeks to attract capital, more efficient working methods and new ideas. Foreigners have the right to join the management of the already established legal entity in Lithuania (to become shareholders of the enterprise) or to establish a new legal entity. For the establishment of an enterprise or the creation of a business in Lithuania there are simple conditions: the business can be created in just a few days, and with the use of an electronic signature, the registration of an enterprise in Lithuania becomes very easy along with substantial time and cost savings.
Characteristics of company formation
There are four main legal forms of companies in Lithuania, namely:
- Open Limited Company (AB), equivalent to a joint-stock company (JSC);
- A Closed Limited Liability Company (UAB), analogous to a Limited Liability Company (LTD);
- Full Partnership (TUB) or Limited Partnership (UB);
- Branch or representation.
The most common form of companies among local and foreign citizens in Lithuania is the Closed Limited Liability Company (UAB). In accordance with Lithuanian legislation, Lithuanian UAB form company must have a registered fixed capital in the amount of not less than EUR 2,500. The minimum registered capital of the Lithuanian enterprise must be formed on the temporary settlement account of the enterprise in the bank, and at least 25% of it must be paid at the time of registration of the company. Capital can be paid by transferring money from any bank, including from abroad. Once funds are received into a temporary account, they are frozen until the company is registered.
- Lithuania has one of the lowest profit taxes of 15%, which is a significant advantage over other European countries.
- Lithuania has acceded to 47 Double Taxation Treaties and in order to use them, there is no need for a special procedure of recognition of the company as a tax resident of Lithuania.
- Lithuanian companies have a high reputation on the market as they are not offshore companies. This advantage makes it possible to be a reliable business partner, but also with certain tax benefits.
- Obtaining dividends from a legal entity is not taxable and is the net profit of the Lithuanian enterprise.
- All enterprises registered in Lithuania and having accounts with local banks do not have exchange control, this allows free movement of funds.
- Lithuanian company has the right to receive VAT number and to use VAT reverse order when working with partners from European Union.
- The opening of a company in Lithuania gives the right to obtain a Residence Permit, which in turn allows free movement in Schengen countries and unlimited number of days of residence in Lithuania.
Company in Lithuania UAB is a team of specialists who will help to open a company and develop business in Lithuania.