Establishing a company in a foreign country is not an easy task. Behind the initial paperwork and establishment of hierarchy and work processes lies the administrative side of business activity – the annual report.
The tax system in Lithuania clearly separates business into multiple categories, presenting specific reporting requirements for each category. Annual financial statements and a management report are separate reporting documents. The obligation to prepare and submit them depends on the entity’s legal form, size, status and applicable statutory exemptions.
Criteria for an annual report
The obligation to prepare a management report depends on the applicable reporting legislation and the company’s category. Medium-sized and large ABs and UABs generally must prepare one. Micro and small companies that are not public-interest entities may omit it if they disclose the information required for the exemption in the prescribed place. A UAB is not exempt merely because it is privately owned.
Contents of an annual report
Typically, an annual report should contain the following sections:
- Objective description of the current state of the company, overview of its activity and development, clear indication of business risks and gray areas that the business encounters.
- Analysis of financial and non-financial business outcomes, information related to environment protection and staff circulation.
- Information on the acquisition and disposal of the company’s own shares, where required by law.
- Information about company branches.
- Report on events that affected business activity throughout the taxation period.
- Full report on planned business growth and ongoing research.
- Report on risk management, risk mitigation strategies, credit and price risk management and control of other factors that could negatively impact business activity and (or) financial outcomes.
- Information about the responsibilities and, if applicable, other positions/duties that high profile staff members have, including their contact information.
Criteria for a financial report
ABs, UABs, small partnerships (MBs), cooperatives, agricultural companies and state or municipal enterprises must submit annual financial statements under the applicable legislation. Individual enterprises (Iฤฎ), general partnerships (TลชB) and limited partnerships (KลชB) submit them where required by law or their founding documents. Lithuanian branches of foreign entities submit the foreign entity’s financial statements in accordance with the applicable branch disclosure requirements.
Contents of a financial report
As briefly noted above, the composition of a financial report depends on the size of the company and operational capacity. Company size is assessed using balance-sheet total assets, annual net sales revenue and the average annual number of employees. At least two of the three indicators determine the category. A change of category generally requires the relevant thresholds to be exceeded or no longer exceeded for two consecutive financial years.
Micro companies are companies for which at least two indicators do not exceed: annual net sales revenue of EUR 900,000; total assets of EUR 450,000; and an average annual workforce of 10 employees. Eligible micro companies choosing the statutory exemptions may prepare a short balance sheet and a short profit and loss statement, with the required supplementary disclosures. The exemptions are unavailable to financial holding companies.
Small companies are companies that are not micro companies and for which at least two indicators do not exceed: annual net sales revenue of EUR 15 million; total assets of EUR 7.5 million; and an average annual workforce of 50 employees. Under Lithuanian financial reporting standards, their financial statements comprise a balance sheet or an abridged balance sheet, a profit and loss statement and explanatory notes. The short profit and loss statement is reserved for eligible micro companies.
Medium-sized companies are companies that are neither micro nor small and for which at least two indicators do not exceed: annual net sales revenue of EUR 50 million; total assets of EUR 25 million; and an average annual workforce of 250 employees. Under Lithuanian financial reporting standards, they prepare a balance sheet, a profit and loss statement, a cash flow statement, a statement of changes in equity and explanatory notes. A management report is also required under the applicable legislation.
Large companies are companies for which at least two indicators exceed: annual net sales revenue of EUR 50 million; total assets of EUR 25 million; and an average annual workforce of 250 employees. Under Lithuanian financial reporting standards, they prepare a balance sheet, a profit and loss statement, a cash flow statement, a statement of changes in equity and explanatory notes, together with the required management report.
Submission deadlines
For ABs and UABs whose financial year ends on or after 1 July 2026, the annual general meeting approving the financial statements must take place within five months of the financial year-end, and the approved statements must be submitted to the Register of Legal Entities within that same five-month period. For earlier financial year-ends, the previous rules require approval within four months and filing within 30 days of the annual general meeting. The filing includes the management report and auditor’s opinion where required. Other legal forms follow their applicable statutory deadlines.
While compiling and filing financial and annual reports may seem rather tedious and complicated, competent experts at Company in Lithuania UAB will help you open a company, provide accounting services and develop a business in Lithuania with ease and confidence.
