Accounting Services for Foreign Investors in Lithuania

AT A GLANCE

Accounting for a foreign-owned Lithuanian entity involves obligations that do not arise for domestically-owned companies — withholding tax on dividends, transfer pricing documentation, group consolidation reporting, and double taxation treaty applications.
We provide accounting from €250/month for companies without a VAT number and from €350/month for VAT-registered companies — with international ownership-specific reporting included as standard.
Every management report delivered to foreign investors includes: Lithuanian entity performance, withholding tax position on any dividend distributions, intercompany balance summary, and applicable double taxation treaty status.
Transfer pricing documentation — required for Lithuanian entities with intercompany transactions above statutory thresholds — is prepared as part of our annual engagement for foreign-owned companies.
All additional services including VAT registration, annual reports, dividend distribution accounting, and winding up are available at fixed fees listed on this page.

Accounting for a foreign-owned Lithuanian company covers everything a standard retainer covers — bookkeeping, VAT, payroll, annual financial statements — plus the international ownership-specific requirements that general accountants are not positioned to handle: withholding tax calculation on outbound dividends, group consolidation reporting in a format compatible with the parent, transfer pricing documentation for intercompany transactions, and the application of double taxation treaties to reduce tax on specific income flows. We provide this on a fixed monthly retainer from €250/month, with all statutory filings included and English-language management reports formatted for foreign owners and their advisors.

Why Accounting for Foreign Investors Requires Specialist Knowledge

The accounting obligations for a Lithuanian entity owned by a foreign shareholder are more complex than for a domestically owned company in four specific areas. Each arises directly from the international ownership structure — and each can create unexpected tax liabilities if handled by an accountant without international tax experience.

Withholding tax on dividend distributions

When a Lithuanian company pays a dividend to a non-resident shareholder — whether an individual or a foreign company — Lithuania levies withholding tax before the dividend is transferred. The standard rate is 15%. Reduced rates are available under Lithuania’s 55+ double taxation treaties, but accessing the treaty rate requires correct documentation: a tax residency certificate from the shareholder’s country of residence, submitted to VMI before or at the time of distribution. An accountant who calculates and pays dividends without assessing the applicable treaty rate and obtaining the required documentation will withhold at 15% when a lower rate may be available — or worse, withhold at the wrong rate and expose the company to a VMI assessment. We calculate the applicable withholding rate for each distribution and prepare the documentation required to apply the treaty rate.

Transfer pricing

Any transaction between the Lithuanian entity and a related party — the parent company, a sister company, or a company controlled by common shareholders — must be priced at arm’s length. This includes management fees, loan interest, royalties, and the supply of goods or services between group entities. Lithuanian law requires transfer pricing documentation for entities whose annual intercompany transactions exceed the applicable threshold (€90,000 per transaction type per year). VMI can adjust the Lithuanian entity’s taxable income if the documented prices are not at arm’s length. Preparing adequate transfer pricing documentation requires analysis of comparable market transactions — which goes beyond standard bookkeeping. We prepare transfer pricing documentation as part of our annual accounting engagement for foreign-owned companies.

Group consolidation reporting

A foreign parent company typically needs to consolidate its Lithuanian subsidiary’s financial data into its group accounts. This requires the Lithuanian entity’s financial statements to be prepared in a format compatible with the parent’s accounting standards — which may be IFRS, US GAAP, UK GAAP, or the standards of any other jurisdiction. Lithuanian entities are required to prepare accounts under Lithuanian Business Accounting Standards (VAS), which differ in specific areas from IFRS and other international standards. We prepare the Lithuanian statutory accounts under VAS and simultaneously produce a reconciliation pack in the format required by the parent company for consolidation purposes.

Double taxation treaty application

Lithuania’s 55+ double taxation treaties affect the tax treatment of dividends, interest, royalties, and other payments flowing between Lithuania and the investor’s country of residence. Applying the correct treaty requires identifying the applicable article, confirming that the conditions for treaty protection are met, obtaining the required residency certificates, and filing the required VMI notifications. An accountant unfamiliar with the treaty network will default to domestic rates — which are almost always higher than the applicable treaty rate. We identify the correct treaty position for each income flow and ensure the documentation is in place before distributions are made.

What Our Foreign Investor Accounting Service Covers

Our accounting retainer for foreign-owned Lithuanian entities covers the full statutory accounting cycle plus the international ownership-specific elements that standard retainers omit.

Monthly bookkeeping

All transactions are recorded under Lithuanian Business Accounting Standards with a chart of accounts configured for international ownership context: separate coding for intercompany transactions, dividend distributions, withholding tax, and any holding company-specific activities. Multi-currency transactions are converted at the applicable exchange rate and unrealised FX positions are calculated monthly.

Intercompany transaction accounting

Transactions between the Lithuanian entity and related parties — management fee invoices from the parent, interest on intercompany loans, royalties, and goods or services transfers — are recorded at the agreed transfer price and flagged for inclusion in the transfer pricing documentation. The intercompany balance position is included in the monthly management report, providing the foreign owner with visibility of the cumulative intercompany position and any accrued obligations.

Lithuanian VAT return

Monthly or quarterly Lithuanian VAT returns are filed with VMI. For foreign-owned companies, the VAT return often includes intra-EU B2B transactions under the reverse charge mechanism — either receiving services from EU-registered parent or sister companies, or providing services to EU-registered clients. The EC declarations and reverse charge treatment are handled as standard.

Withholding tax management

Each time a dividend, royalty, interest, or management fee is paid to a non-resident entity, we calculate the applicable withholding tax — standard Lithuanian rate and applicable treaty rate — prepare the required VMI notification, and ensure the correct amount is withheld and paid to VMI within the statutory timeframe. The annual WHT summary is prepared and submitted with the annual CIT return.

Payroll and SoDra declarations

For Lithuanian-based employees, monthly payroll is calculated and filed. For foreign directors receiving remuneration from the Lithuanian entity, we advise on the correct treatment under Lithuanian employment law and the applicable double taxation treaty — director fees may be subject to different withholding treatment than employee salaries.

Annual financial statements — VAS and consolidation package

At year end, we prepare the full set of Lithuanian annual financial statements under VAS. For foreign-owned entities, we simultaneously prepare a consolidation reporting pack — a reconciliation of the VAS accounts to the parent’s accounting standards, with a mapping of material differences and a summary of intercompany eliminations required for group consolidation.

Transfer pricing documentation

For entities with intercompany transactions exceeding the statutory threshold, we prepare the required transfer pricing documentation — identifying the applicable transfer pricing method for each transaction type, documenting the arm’s-length analysis, and preparing the master file or local file as required by the Lithuanian transfer pricing regulations.

Annual CIT return with international disclosures

The annual CIT return includes all required disclosures for foreign-owned entities: related party transactions, withholding tax summary, controlled foreign corporation (CFC) analysis where applicable, and participation exemption calculations for holding companies. The return is filed with VMI by the statutory deadline.

Monthly management report — international investor format

The monthly management report is prepared for a foreign owner who is not based in Lithuania and needs clear financial visibility without accounting jargon. It covers: Lithuanian entity P&L, balance sheet, cash position, VAT position, intercompany balance summary, withholding tax on any distributions, and any compliance deadlines or issues requiring the owner’s attention. The report is in English and formatted for sharing with the investor’s advisors and group finance team.

Withholding Tax on Dividends: Applicable Rates by Country

The withholding tax rate on dividends paid by a Lithuanian company to a non-resident shareholder depends on whether Lithuania has a double taxation treaty with the shareholder’s country of residence and the specific conditions of that treaty. The table below lists the applicable rates for the most common investor countries.

Investor Country	Standard WHT Rate	Treaty WHT Rate (Individual)	Treaty WHT Rate (Corporate)	Minimum Holding for Corporate Rate
United Kingdom	15%	10%	5%	10% for 12 months
United Arab Emirates	15%	5%	0%	10% for 12 months
Israel	15%	10%	5–10%	10–25% for 12 months
United States	15%	10%	5–15%	10% for 12 months
Germany	15%	10%	5%	10% for 12 months
Netherlands	15%	10%	5%	10% for 12 months
Cyprus	15%	0%	0%	10% for 12 months
Singapore	15%	10%	5%	10% for 12 months
Georgia	15%	5%	5%	10% for 12 months
Kazakhstan	15%	10%	5%	25% for 12 months
EU resident company (Parent-Subsidiary Directive)	15%	N/A	0%	10% for 24 months

Rates may differ from the table above

The rates above are indicative and based on standard treaty provisions. The applicable rate for a specific distribution depends on: the investor’s specific situation (individual vs. corporate shareholder), whether the minimum holding period has been met, whether the required residency documentation has been submitted to VMI, and whether any domestic anti-avoidance rules apply. We confirm the applicable rate for each investor and distribution before any dividend is declared — not retrospectively after the wrong rate has been withheld.

Transfer Pricing for Foreign-Owned Lithuanian Entities

Transfer pricing is the area of international taxation that most foreign investors encounter first — typically when their Lithuanian accountant flags that the management fee invoice from the parent company needs to be documented, or when VMI requests documentation of intercompany loan terms. Understanding the obligation before it is triggered saves time and avoids compliance gaps.

When transfer pricing applies

Transfer pricing applies to any transaction between the Lithuanian entity and a related party — defined as any party with which there is a direct or indirect ownership, control, or management connection. Common related party transactions for foreign-owned Lithuanian entities include: management fees or service charges from the parent company; interest on loans provided by the parent or a group finance company; royalties for the use of intellectual property owned by a related entity; the purchase or sale of goods at prices set within the group; and the provision of shared services across group entities.

What transfer pricing documentation requires

Lithuanian transfer pricing regulations (based on the OECD Transfer Pricing Guidelines) require entities with related party transactions above the statutory threshold to maintain documentation demonstrating that the prices used are arm’s length. The documentation must include: a description of the group structure and the Lithuanian entity’s role within it; a description of each related party transaction; a functional analysis of the parties (what functions they perform, what risks they bear, what assets they use); the transfer pricing method selected and the rationale for its selection; and the comparable market data supporting the price. The documentation must be prepared annually and must be available for VMI review on request — it does not need to be filed proactively.

Common transfer pricing methods for foreign investor structures

Management fees: Comparable Uncontrolled Price (CUP) or Cost Plus — the management fee must reflect the actual services provided and the market rate for those services
Intercompany loans: Comparable Uncontrolled Price — interest rate must reflect what an unrelated borrower of similar creditworthiness would pay in the market
IP royalties: Comparable Uncontrolled Price or Profit Split — the royalty rate must reflect the value of the IP to the Lithuanian entity
Goods transactions: CUP or Resale Price Method — the price must be comparable to transactions between unrelated parties for similar goods

Transfer pricing documentation threshold

Lithuanian transfer pricing documentation is required where the value of transactions between the Lithuanian entity and related parties in a tax period exceeds €90,000 for any single transaction type (e.g., management services, loan interest). Entities below this threshold are not required to maintain formal documentation, but the arm’s-length principle still applies and VMI can challenge pricing without documentation. We advise on the documentation requirement at onboarding based on the expected intercompany transaction volumes.

Accounting Prices for Foreign Investors

All accounting services are priced at fixed monthly retainers for ongoing work and fixed fees for one-off engagements. No hourly charges, no billing for routine questions, no surprise invoices.

Monthly retainer options

Accounting Service — Company Without VAT Number · Standard

from €250 / month

Monthly bookkeeping — intercompany transactions coded separately for transfer pricing
Withholding tax calculation on any dividend or other outbound payments to non-residents
Quarterly advance CIT payments — calculated and filed with VMI
Annual financial statements — VAS accounts with international ownership disclosures
Annual CIT return — with related party transaction summary and WHT reconciliation
JAR annual data confirmation
Monthly management report in English — Lithuanian entity performance plus intercompany summary

Accounting Service — Company With VAT Number · Standard + VAT

from €350 / month

Everything in the non-VAT package, plus:
Monthly or quarterly Lithuanian VAT return — including intra-EU B2B reverse charge transactions
EC sales declarations — for services or goods supplied to EU-registered entities
Input VAT reclaim on eligible purchases
VAT position included in the monthly management report

What determines the final monthly fee

Starting rates apply to companies with standard transaction volumes. The final retainer reflects transaction volume, the complexity of intercompany arrangements, and whether consolidation reporting is required. We assess volume and scope at onboarding and quote a fixed monthly rate — always fixed, never hourly.

Additional Services and Fixed Fees

Registrations and one-off engagements

Double taxation treaty application package
Residency certificate coordination, VMI submission, and treaty rate confirmation for a single income type€350

Service	Price
Assistance in registering VAT number (for residents)	€800
Assistance in registering VAT number (for non-residents)	€1,500
Annual report for a Lithuanian company	from €650
Individual tax consultation (international)	from €300
Transfer pricing documentation (local file) Based on number and complexity of transaction types; typically quoted per annual engagement	On request
Dividend distribution accounting and WHT filing Includes WHT calculation, treaty analysis, VMI notification, and payment	€200 per distribution
Consolidation reporting pack (VAS-to-IFRS/GAAP reconciliation) Based on complexity of differences between Lithuanian VAS and the parent’s accounting standards	On request
Winding up a Lithuanian company	from €850

Per-item and ad hoc services

Service	Price
Employee registration in Social Insurance Fund (SoDra)	€50 / person
Other work unspecified in contract	€120 / hour
Urgent work fee Applied to base invoice for urgent requests	50% surcharge

Getting Started: Onboarding for Foreign Investors

We onboard new foreign investor accounting clients within 5–7 business days. The onboarding process is structured to establish the international ownership context — withholding tax rates, intercompany transaction profile, and any consolidation reporting requirements — before the first transaction is recorded.

Initial consultation
We discuss the ownership structure, the investor’s country of residence or incorporation, the anticipated intercompany transaction types and volumes, whether a consolidation reporting pack is required, and the current status of any transfer pricing documentation. We confirm the applicable treaty position and withholding rates before proceeding.

Accounting system configuration
We configure the chart of accounts to capture intercompany transactions separately, code withholding tax positions correctly, and set up the management report template in the format required by the foreign owner. For holding companies, we set up separate ledgers for equity investments and intercompany loans.

Treaty and WHT framework setup
We confirm the applicable double taxation treaty, identify the reduced withholding rates for the investor’s specific situation, and prepare a note of the documentation required before each type of payment (dividend, interest, royalty, management fee) to access treaty rates. This framework is established before any distributions are planned.

VAT and other registrations
If the company is not yet VAT-registered, we file the VMI application. We also confirm any other registration requirements for the specific foreign ownership structure.

Transfer pricing assessment
We assess the intercompany transaction profile against the Lithuanian transfer pricing thresholds. If documentation is required, we scope and cost the annual transfer pricing documentation engagement and agree the timeline for preparation.

Monthly cycle begins
From the first full month, the accounting cycle runs on a defined schedule. The monthly management report — with Lithuanian entity performance plus intercompany summary and withholding tax position — is delivered by the 15th of the following month.

Frequently Asked Questions

To apply a reduced treaty withholding rate, the Lithuanian company must obtain a valid tax residency certificate from the shareholder confirming that the shareholder is a tax resident of the treaty country. The certificate must be issued by the tax authority of the shareholder’s country of residence — not self-certified. For corporate shareholders, additional documentation may be required confirming the beneficial ownership of the shares. The documentation must be submitted to VMI before or at the time of the distribution — it cannot be submitted retrospectively to claim a refund of excess withholding. We coordinate the residency certificate process and prepare all required VMI submissions before any distribution is made.

The EU Parent-Subsidiary Directive (2011/96/EU) exempts dividends paid by a Lithuanian subsidiary to an EU-resident parent company from Lithuanian withholding tax, provided the conditions are met: the parent must hold at least 10% of the Lithuanian company’s shares for a continuous period of at least 24 months. When these conditions are satisfied, the dividend is paid without any Lithuanian withholding tax. This exemption is available regardless of which EU member state the parent is resident in — it applies across all 27 member states. We confirm whether the conditions are met before the first dividend distribution.

The standard Lithuanian corporate income tax rate is 15% — the same for both domestically and foreign-owned companies. Foreign ownership does not affect the CIT rate. Qualifying small companies — up to 10 employees and annual revenue below €300,000 — pay 5% CIT regardless of ownership. The first year 0% rate for newly registered qualifying small companies is also available to foreign-owned companies meeting the conditions. The applicable rate is confirmed at the annual CIT return.

A management fee paid by the Lithuanian entity to its parent company is a related party transaction subject to the arm’s-length principle. Whether formal transfer pricing documentation is required depends on the annual value of the management fee: if it exceeds €90,000 in a tax period, documentation is mandatory under Lithuanian transfer pricing regulations. Below that threshold, documentation is not mandatory but the arm’s-length principle still applies. For management fee arrangements above the threshold, the documentation must describe the services provided, the method used to price them (typically Cost Plus or CUP), and the market data supporting the rate. We prepare this documentation as part of our annual engagement for foreign-owned companies.

Yes. The Lithuanian statutory accounts are prepared under VAS (Lithuanian Business Accounting Standards), which differs from IFRS in specific areas — primarily around the treatment of financial instruments, leases, employee benefits, and deferred tax. We prepare the VAS statutory accounts and simultaneously produce a reconciliation pack that identifies the material differences between VAS and IFRS, adjusts for those differences, and presents the restated figures in the format required by your group’s consolidation team. The reconciliation pack includes a detailed mapping of VAS account codes to the group’s chart of accounts.

Interest paid on a loan from the foreign parent to the Lithuanian subsidiary is a deductible expense for the Lithuanian entity (subject to the thin capitalisation and earning-stripping rules) and is income for the parent. Lithuania levies withholding tax on interest payments to non-resident creditors at the standard rate of 10%, reduced under applicable double taxation treaties — many treaties provide for 0% withholding on intercompany interest. The loan itself must be priced at arm’s length — the interest rate must reflect what an unrelated borrower would pay in the market. We advise on arm’s-length interest rate benchmarking and prepare the transfer pricing documentation for intercompany loans.

Accumulated profits in a Lithuanian entity can be distributed as dividends at any time by shareholder resolution, subject to the dividend payment restrictions in the Lithuanian Law on Companies (dividends cannot be paid if the distribution would reduce the company’s net assets below the registered share capital). The dividend is subject to Lithuanian withholding tax at the standard or treaty rate, as described above. Alternatively, accumulated profits can remain in the company to fund future investment, be converted into share capital by capitalising the reserves, or be used to increase the registered share capital of the entity. We advise on the most tax-efficient extraction method for each investor’s specific treaty and tax position.

Ready to set up accounting for your Lithuanian investment?

Contact us to discuss your ownership structure, home country, and the intercompany transaction profile of your Lithuanian entity. We will confirm the applicable withholding rates, assess any transfer pricing requirements, and provide a fixed monthly retainer quote within 24 hours of your instruction.