Company Registration in Lithuania

POSSIBLE OPTIONS TO REGISTER A COMPANY IN LITHUANIA

Purchase of a ready-made company in Lithuania In addition to the establishment of new companies, we also propose to acquire an already established company, whose authorized capital is fully established. It is possible to purchase a finished company completely remote...	1, 500 EUR
Company registration by visit to Lithuania Legal address in the territory of Lithuania and registered capital (2,500 euros) is obligatory. For the establishment of the company, you need to be present at the notary in Vilnius...	1, 700 EUR
Opening a company in Lithuania by a power of attorney Legal address in the territory of Lithuania and registered capital (2,500 euros) is obligatory. A notarized power of attorney...	2, 000 EUR
Subsidiary/branch registration in Lithuania A branch of a foreign company in Lithuania has the right to conduct commercial activities in Lithuania, to receive profits, pay taxes, receive VAT number, hire personnel...	2, 400 EUR

Additional Services

Apostille and Sworn Translations of Documents of the Lithuanian Company	from 300 EUR
Assistance in Renting or Buying Real Estate in Lithuania	from 500 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. It is possible to sell the statutory capital of UAB in whole or in part, donate shares, or pass them down from one generation to the next. UAB must have a minimum of one owner or owner (natural or legal person) and a minimum of one director (natural person) who may sign on the company’s behalf.

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:

It is ideal for large companies in Lithuania to form a public limited company.

Authorized capital

40,000 euros is the minimum statutory capital required when establishing a public limited liability company. It is necessary to form and pay in full the authorized capital in the company’s bank account. It is possible to sell or publicly sell shares of capital.

Founder

One or more natural or legal persons can be the founders or shareholders of a public limited company. There is no restriction on the founder’s residency in the Republic of Lithuania.

Obligation

All assets of the company are limited liability for the company and its shareholders.

Board

Boards of directors, which comprise at least three supervisory board members, are responsible for making decisions in public limited companies. Public limited companies are governed by a board approved by shareholders at a general meeting.

Private limited liability companies are the most common type of business activity in Lithuania.

Authorized capital

The minimum statutory capital required for the establishment of a private limited liability company is 2,500 euros. A bank account and full payment must be set up in the company’s name. There are no public or private sales of shares that make up capital.

Founder

One or more natural or legal persons may be the founders of a private limited company. Lithuanians or non-Lithuanians can be the founders of the company.

Obligation

Limited liability applies to the company and its shareholders. There is a limit to the shareholders’ liability.

Board

It is not necessary to have a board or supervisory board in a private limited company. Decisions are made by a general meeting of shareholders.

Auditing

For companies with turnover exceeding 1.4 million euros, annual audits are required.

Partnerships in the Republic of Lithuania can be classified into two types. Essentially, the responsibilities differ.

Obligation

It is necessary to have at least one general partner with unlimited responsibility to ensure that full partnerships carry unlimited obligations and limited partnerships carry limited liabilities, which means that limited liability partners are liable up to their contributions.

A notary in the Republic of Lithuania is required for both limited and full partnerships to have their agreement signed by all partners.

In the Republic of Lithuania, foreign companies may open representative offices and branches. Foreign companies have representatives or subsidiaries. Foreign companies must have a physical presence in Lithuania through their branch/representative offices.

Foreign branches and representations are divisions of foreign companies, but they are not separate legal entities.

Legal entities have branches that have their registered office and perform the functions of legal entities. Within the limits established by the parent company, a branch may carry out commercial activities.

A representation represents and protects the interests of the parent company, like a subunit of its registered office. Commercial activities are prohibited by the mission,

Foreign companies are responsible for all obligations of their subsidiaries and establishments.

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?

Company registration in Lithuania is an opportunity to broaden horizons, enter the European market at low cost and increase the number of potential customers. Strategically Lithuanian company is a conductor between Russia, Ukraine, Belarus, other CIS countries and the European Union.

Company registration 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.

Why Lithuania

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.

Taxation

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.

Establishment of a Small Business (MB) in Lithuania

Main legal acts regulating registration (MB):

Civil Code of the Republic of Lithuania (LRCK)
The Law on Small Businesses of the Republic of Lithuania (LRMBĮ)

Contribution of funds to a Small Business:

Although it is not required to have an authorized capital in a Small business, but members of the business must pay contributions (their size and payment terms shall be set at a Meeting of Members), and the profit of a Small business shall be divided proportionally, taking into account the size of each member’s contribution.

The contribution of a member of a Small business is his or her property transferred to the business. The contribution may be money or other property, with the exception of works and services. The property transferred to a Small business becomes its property.

Step 1 – Name

Requirements for the business name:

Novelty
Originality
Does not contradict public order and good morals

The name of the business must comply with the norms of the Lithuanian language.

The name should not consist only of general terms that do not differ (for example, wood, jewelry, etc.), nor can it be identical with a trademark.

The business name can be reserved in the Register of Legal Entities for a period of 6 months. This means that no one can register an identical name during this period, and you will also be sure that such a name is suitable.

If a branch of a foreign company is being created, the name may match or be similar.

When registering the name in the Register, you need to fill out a specially established JAR-5 form.

Step 2 – Preparation of constituent documents (constituent agreement/act)

If there are two founders, a constituent agreement shall be concluded. If there is one founder – a constituent act.

A Small business can have no more than 10 founders and they only can be individuals.

Specified shall be:

Founders of a Small business
Company name
The main office of the business
Legal form – Small Business (MB)
The head, if the business will have a single management body
Contribution of each member to the business, its size, conditions and terms of contribution
A person who has the right to act on behalf of the business
Conditions for concluding transactions on behalf of the business
Compensation of expenses related to the establishment of the business
Date of conclusion of the constituent agreement

When a Small business is established by two or more founders and it is assumed that the Meeting of Members of the Small business will be the main governing body of the business, the representative of the business, as well the representative’s rights and obligations must also be specified in the constituent agreement.

The constituent agreement/act shall be signed by all the founders or their authorized persons.

Step 3 – The Charter

The business’s charter is the main document on the basis of which the business conducts its activities.

The charter of the business being established must be signed by all the founders or their authorized persons.

The charter must specify:

Name of the Small business
Legal form – Small Business (MB)
The purpose of the business’s activities
The business’s bodies and their competence
Rules for the appointment and dismissal of the head of the business, if the business has a single management body
Rules for holding a Meeting of members of the Small business
Rules and procedure for obtaining financial resources for personal needs by a member of the Small business in the form of an advance payment from the paid profit
Rules for the admission of new members to the Small business
Rules for voluntary withdrawal of a member from the business
Rules of settlement with members of the Small business in case of his or her voluntary departure from the business
Rules for familiarization of members of the Small business with documents and other information
Rules for informing the Small business about the intention to sell the rights of a member
The source where the public news of the Small business is published
Rules for changing the charter of the Small business
The term of activity of the Small business, if it is limited
Date of signing of the charter of the Small business
Other conditions that, according to the law, should be specified in the charter of the Small enterprise

In the case when there is only one member in the Small business, paragraphs 6, 9, 10, 11 and 12 are not mandatory.

Step 4 – Small Business Bodies

1) Members’ Meeting only:

In this case, the Meeting of Members is also the governing body that makes all decisions related to the activities of the business, and one of the members of the business is chosen by the representative of the business, who, in principle, performs the functions of a manager.

2) A meeting of members and one governing body – the head:

One of a Small business members may be its head. A contract for the provision of services shall be signed with the head. The head acts on behalf of the business and has the right to make transactions independently. In this case, a meeting of members of a Small business resolves the main issues of the business (for example, changing the charter, the location of the office, the head, etc.), and the head performs other functions provided for in the charter.

Step 5 – Notary

All prepared documents must be submitted to a Notary.

The Notary confirms the charter and checks whether the documents correspond to legal acts.

Step 6 – Register of Legal entities

Having confirmed the documents of the business, the Notary transfers them to the founder or his or her authorized person. This person must submit documents to the Register.

The Register of Legal Entities registers the business and issues a certificate of registration, as well as one copy of the confirmed charter.

The registration period is about 3 days.

The price of setting up a Small business (MB)

Registration of the name	16,22 EUR
Notary fee	about 120 EUR
Registration of the business in the Register of Legal Entities	51.61 EUR
Legal services	under a separate contract

Establishment of a limited liability company (UAB) in Lithuania

Handbook on the establishment of a limited liability company (UAB)

Main legal acts regulating Registration (UAB):

Civil Code of the Republic of Lithuania (LRCK);
The Law on Joint-Stock Companies of the Republic of Lithuania (LRABĮ).

Step 1 – Name

Requirements for the business name:

Novelty
Originality
Does not contradict public order and good morals.

The name of the business must comply with the norms of the Lithuanian language.

The name should not consist only of general terms that do not differ (for example, wood, jewelry, etc.), nor can it be identical with a trademark.

If a branch of a foreign company is being created, the name may match or be similar.

When registering the name in the Register, you need to fill out a specially established JAR-5 form.

Step 2 – Preparation of constituent documents (constituent agreement/act)

If there are two founders, a constituent agreement shall be concluded. If there is one founder – a constituent act.

Specified shall be:

Founders
Name and location of the company
Persons who have the right to represent the company
The size of the authorized capital

Specified shall be:

The nominal value of the shares, the rights granted by them, the issue price;
Number of shares acquired by each founder;
Terms and conditions of payment of shares, as well as making initial contributions;
Terms of convocation of the Founding meeting, if the Meeting is convened;
Conditions for providing founders with documents and information related to the Founding meeting, if the Meeting is convened;
Compensation of expenses related to the foundation and payment for the institution;
Date of conclusion of the constituent agreement.

The Constituent agreement of the company must be signed by all the founders or their authorized person.

The constituent agreement/act is at the same time an agreement on the signing of shares.

Step 3 – Deposit of the authorized capital/payment of shares

The signed constituent agreement / act allows you to open an account of the company with a bank.

The shares must be paid in full within the period specified in the constituent agreement/act, and cannot be longer than 12 months from the date of its certification.

The authorized capital must be at least 2500 EUR.

Shares can be paid for:

By money
By property
By ownership rights

Shares cannot be paid for:

By property removed from circulation
By work
By services

If the authorized capital is minimal (2,500 EUR), it can only be formed in money, and the entire amount shall be deposited to the account. If the authorized capital is more than the minimum amount, part of it can be paid with property, but in each case the monetary part must be at least 25% of the authorized capital and it must be at least 2,500 EUR.

Step 4 – Charter

The company’s charter is the main document on the basis of which the company conducts its activities.

The charter of the business being established must be signed by all the founders or their authorized persons.

The Charter must be submitted to the Register within 6 months from the date on which it was signed by all the founders.

The Charter shall be prepared and signed before the Founders’ Meeting, if it is convened.

The charter must specify:

Company name, legal form, purpose of activity, indicating the object of activity
The size of the authorized capital of the company
The number of shares, as well as their number by class, nominal value, rights granted
Competence of the General Meeting of Shareholders and terms of its convocation
Conditions for the announcement of the company’s news, as well as the source in which the news is announced
Conditions for providing documents and other information to shareholders
Rules for making decisions on the establishment of branches, agencies, etc.
Rules for changing the company’s charter
The term of activity of the company, if it is limited
Date of signing of the charter

Step 5 – Founding Meeting (optional)

Before the company is registered in the Register, a Founding Meeting must be convened. The Founding meeting of UAB may not be convened if the company’s management bodies selected by the general meeting of shareholders are specified in the constituent agreement/act, taking into account the charter.

Other documents required for company registration:

List of shareholders
Application according to JAR form(JAR-1, JAR-VO-V, JAR-T, JAR-AF);
Agreement on the transfer of the name
Permission to be located under the specific address of the main office
The decision of the shareholders (owner) on the appointment of the director
Personal documents of the founders

Step 6 – Notary

All prepared documents must be submitted to a Notary.

The Notary confirms the charter and checks whether the documents correspond to legal acts.

Additionally, the Notary shall be provided with:

A certificate from a bank confirming the deposit of the authorized capital;
Consent of the owner of the building where the company’s office is registered.

Step 7 – Register of Legal Entities

Having confirmed the documents of the company, the Notary transfers them to the founder or his or her authorized person. This person must submit documents to the Register.

The Register of Legal Entities registers the business and issues a certificate of registration, as well as one copy of the confirmed charter.

The registration period is no later than 3 working days from the submission of documents.

The price of creating a limited liability company (UAB)

Registration of the name	16,22 EUR
Notary fee	about 105 EUR
Company registration in the Register of Legal Entities	57.34 EUR
Legal services	under a separate contract