POSSIBLE OPTIONS TO REGISTER A COMPANY IN LITHUANIA
|from 1,000 EUR|
|from 1,200 EUR|
|from 1,500 EUR|
|from 1,900 EUR|
OPEN A COMPANY IN LITHUANIA
Lithuania ranks 11th in the world in terms of ease of doing business (World Bank Report «Doing Business, 2020)
The most common form of business presence in Lithuania is a limited liability company – UAB.
Uždaroji akcinė bendrovė (UAB) in translation from the Lithuanian language means Closed Joint-Stock Company. The statutory capital of the UAB is divided into shares which can be sold in whole or in part, donated or hereditary. UAB must have at least one owner/owner (natural or legal person) and at least one director (natural person) authorized to sign on behalf of the company.
Company formation in Lithuania
Forms of business in Lithuania
There are four main types of company registration in Lithuania for foreign investors and they are:
A public limited company is a suitable form of business for large companies in Lithuania.
When a public limited liability company is established, the minimum statutory capital is 40,000 euros. The authorized capital must be formed in the company’s bank account and paid in full. Capital is divided into shares that can be sold or sold publicly.
The founders/shareholders of a public limited company may be one or more natural or legal persons. The founder may be a non-resident of the Republic of Lithuania.
The company and its shareholders have limited liability for all the company’s assets.
The decision-making body in a public limited company is the board of directors, which consists of at least three members of the supervisory board. The board body of a public limited company is approved by the general meeting of shareholders.
The most common form of business activity in the Republic of Lithuania is a private company with limited liability.
With the establishment of a private limited liability company, the minimum statutory capital is 2,500 euros. The authorized capital must be formed in the company’s bank account and paid in full. Capital is divided into shares that cannot be sold or sold publicly.
The founder(s) of a private limited company may be one or more natural or legal persons. The founder may be a non-resident of the Republic of Lithuania.
The company and its shareholders have limited liability. The shareholders’ obligation is limited to the sum of the authorized capital.
Decisions in a private limited company are taken by a general meeting of shareholders and there is no requirement for a board or supervisory board.
Annual audits are required if turnover exceeds 1.4 million euros.
There are two types of partnership in the Republic of Lithuania. The main difference is the range of responsibilities.
Full partnership has unlimited liability for obligations, while limited partnership has limited liability, which means that limited liability partners are liable to the extent of their contributions, and there must be at least one general partner with unlimited responsibility.
Both partnerships with full and limited partnerships require an agreement between the partners signed by all and certified by a notary in the Republic of Lithuania.
A foreign company may open its representative offices and branches in the Republic of Lithuania. A representative or a subsidiary is part of a foreign company. At least one member of a branch/representative office of a foreign company must be physically located in Lithuania.
A branch or representation is a division of a foreign company but is not a separate legal entity.
A branch is a structural subdivision of a legal entity which has its registered office and performs the functions of a legal entity. A branch may engage in commercial activity within the limits set by the parent company.
Representation is a sub-unit of the legal entity that has its registered office and has the right to carry out the said transactions, i.e. to represent and protect the interests of the parent company. Mission may not engage in commercial activities
The main feature of the establishment or subsidiary is that the foreign company is liable for all its obligations.
All business entities must be registered in a single Register of Legal Entities.
Starting your business, you have to decide on the legal form for the enterprise. The most common forms of company registration in Lithuania are a closed joint-stock company, a small company and an individual enterprise. The most convenient option is considered to be the opening of a JSC, as indicated by the statistics.
More than 90% of all enterprises of the Republic of Lithuania are registered in the form of a closed joint-stock company (Uzdaroji Akcine Bendrove, abbreviated UAB). The founder may be a natural or legal person (up to 250 shareholders), and there are no restrictions on citizenship.
Management bodies are the general meeting of shareholders, the supervisory board and the head of which may become an individual, including a non-resident. Instead of a sole manager, a collegiate body can manage the company.
According to the legislation of the Republic of Lithuania, the statutory capital of a closed joint-stock company must be not less than 2,900 euros. At the time of registration the company has to pay 25% and the rest is paid within a year after its opening. The authorized capital is formed by transferring funds from any bank, including an account abroad, as well as by paying cash into the savings account of the enterprise.
The main advantage of UAB is limited liability to creditors. Shareholders and owners are not accountable for their personal property.
If the company employs 50 or more people, the company’s assets are estimated at 720,000 Euros or more, the company’s settlement accounts charge at 1,400,000 Euros, and a mandatory audit is required.
Why you must register company in Lithuania?
Lithuania is the most suitable country in the Baltic region to start a business abroad, as it has a stable economy, a dynamic financial sector and low rates of profit taxes. To open a company in Lithuania means to expand horizons and bring business to a new level that meets world standards. The Republic of Lithuania ranks high second in Europe in the Investment Attractiveness Index and 11 in the world in the ease of opening its business, and has also risen by 13 in the ranking of the freest economies. The labour market is estimated at 1.5 million professionals.
The decision to register a company in the territory of the Republic of Lithuania is relevant to the establishment of a transit point and further access to the European market, which includes 27 States, which allows you to multiply the number of potential clients and to conduct your business more efficiently. The entrepreneur can also open a branch in any European Union country, so the Lithuanian company becomes a conduit between Russia, Ukraine and other CIS countries on the one hand and the European Union on the other.
- The profit tax is 5% and 15%
- Trade without customs barriers (within EU)
- No double taxation
- Opening a company in Lithuania gives the right to receive GNH
- No exchange control
- Return and account for VAT code
- Strategically, Lithuanian company becomes a conductor between Belarus, Russia, Ukraine and Europe, allowing easier and faster to conclude contracts with EU residents ready to grant deferred payments up to 30 days
- The registration procedure lasts no longer than 5 days
The Republic of Lithuania is an attractive jurisdiction for obtaining a residence permit in Europe, as a result of which you will be able to move freely in the Schengen area without a visa.
Lithuania’s tax system is loyal. It has some of the lowest rates throughout the European Union. Only 5% of the profit is paid if the annual income is about EUR 289,620 and the number of employees is not more than 10. The VAT rate is 21%. Moreover, the entrepreneur can use legal ways of tax exemption and can avoid double taxation, as special agreements have been concluded with a number of countries, including Russia.
Purchase of a ready-made company in Lithuania
The fastest approach to opening a company in Lithuania will be to acquire a ready registered company. You can easily avoid bureaucracy, immediately start your business and make a profit.
Also, the purchase of a company with the existing name will be interesting to customers already operating in their country, who want to enter the European Union market and create a company with the same name.
The process of converting a company to a new owner involves updating the data in the Register Centre. Despite the fact that the procedure will take some time, it is possible to start and run a business only a couple of days after the purchase of the firm has been made.
In Lithuania, income tax on enterprises is 15 per cent, and source-of-income tax 15 per cent. Small companies may apply for a reduced rate of profit tax of 0 per cent or 5 per cent under certain conditions. The total VAT rate is 21%.
The standard rate of corporate income tax in Lithuania is 15%, but small companies with fewer than ten employees and a gross annual income of less than 300,000 euros can benefit from a reduction of the profit tax rate of 0-5%. As a rule, the income tax is applied to the taxable income earned by the Lithuanian tax resident from his local and international activities. The taxable income is calculated by reducing the total income of a given tax period, taking into account the expenditure deductible and the income not imputable.
Dividends distributed from a resident to another resident company are subject to corporate tax at a rate of 15 per cent, unless one is the parent of the other and holds at least 10 per cent of the company for at least 12 months, then the dividends are tax-free. Dividends received by a foreign national registered in an EEA State whose profits are already subject to corporate income tax or its equivalent are also exempt from taxation.
In Lithuania, the standard VAT rate is 21%, lower – 9% and 5%. The VAT of 9 per cent applies to books, information publications, periodicals, housing and passenger transport on regular routes, while the reduced rate of 5 per cent applies to equipment for persons with disabilities, pharmaceuticals and medical devices for persons entitled to compensation on the grounds specified in the Law on Health Insurance. VAT registration is required when the total volume of goods and/or services offered in the ordinary course of business exceeds €45,000 over a 12-month period.