Business Services for SaaS Companies in Lithuania

Why SaaS Companies Choose Lithuania

Lithuania’s combination of competitive corporate tax, an accessible IP box regime, strong digital infrastructure, and a concentrated technology talent pool in Vilnius and Kaunas makes it a practical choice for SaaS companies entering the EU market. The country’s position as a full EU member state means a Lithuanian SaaS company can sell to EU clients, sign EU-standard data processing agreements, and access EU funding programmes without the operational friction of being based outside the single market.

Corporate tax – 7% or 17% in 2026

From 1 January 2026, Lithuania’s standard Corporate Income Tax (CIT) rate is 17%. Qualifying small companies with annual revenue not exceeding EUR 300,000 may benefit from a reduced 7% rate, subject to statutory eligibility conditions, including restrictions concerning related entities. Eligible newly established companies may apply a 0% CIT rate during their first two tax periods, provided that all applicable requirements are satisfied. Foreign ownership does not automatically prevent access to the reduced rate, but the company’s ownership structure and other eligibility conditions must be assessed individually.

The IP box regime

Lithuania’s IP box regime allows qualifying intellectual property income — income derived from patents, software copyright, and certain other protected rights — to be taxed at a reduced effective rate. For SaaS companies that hold their software IP in Lithuania and derive revenue from licensing or using it commercially, the IP box regime creates a meaningful tax planning opportunity. Lithuania’s preferential tax regime for qualifying intellectual property income is linked to research and development (R&D) activities and the statutory nexus requirements. In 2026, qualifying taxable profits from the commercial exploitation of eligible R&D-generated intellectual property may benefit from a reduced 7% Corporate Income Tax rate. The regime does not automatically apply merely because a company owns software copyright, acquires intellectual property or performs routine enhancements. Eligibility depends on the nature of the R&D activities, the intellectual property’s qualifying status, the company’s contribution to its development and the attribution of taxable profits under the applicable rules. — passive IP holding does not qualify. We structure the IP ownership and accounting correctly for SaaS companies seeking to access the IP box from incorporation.

Technology talent pool

Vilnius and Kaunas have established technology communities — software engineers, product designers, data scientists, and DevOps specialists — with salaries that are competitive by EU standards but significantly below those in Berlin, Amsterdam, Stockholm, or London. For SaaS companies that plan to build engineering or operations teams in Lithuania, the labour market is accessible and the quality of candidates is high. We support the recruitment and employment documentation side of building a Lithuanian tech team as part of our legal and outsourcing services.

EU single market access

A company incorporated in Lithuania is a legal entity established in an EU Member State. It may provide SaaS services to customers throughout the EU, subject to applicable VAT, consumer protection, data protection and sector-specific regulatory requirements. Incorporation in Lithuania does not automatically establish compliance with all EU rules or guarantee eligibility for EU funding programmes. Eligibility for Horizon Europe, European Innovation Council funding and other programmes depends on the specific call and applicant criteria. It can contract with EU clients under EU law, sign GDPR-compliant data processing agreements that satisfy EU regulatory requirements, and access EU funding programmes including Horizon Europe and the European Innovation Council. For SaaS founders based outside the EU who want a credible EU legal presence — without the complexity and cost of incorporating in Germany, France, or the Netherlands — Lithuania provides a straightforward entry point.

Digital infrastructure

Lithuania ranks among the top EU member states for internet speed, digital public services, and e-government infrastructure. The country’s .lt domain and Lithuanian business register are fully digital. Bank account opening, VAT registration, and company filings can all be handled electronically. For a SaaS company that operates digitally and values administrative efficiency, Lithuania’s digital infrastructure removes many of the friction points that affect business establishment in less digitally advanced jurisdictions.

Key Compliance Obligations for SaaS Companies in Lithuania

SaaS companies face a specific set of compliance obligations — distinct from those of physical product businesses or service companies — that arise from the nature of software delivery and the data processing that accompanies it.

VAT on digital services to EU consumers

SaaS subscriptions sold to EU consumers (B2C) are taxed at the VAT rate of the consumer’s country — not Lithuania’s rate. A subscription sold to a French consumer is subject to French VAT at 20%; to a German consumer, German VAT at 19%; to a Polish consumer, Polish VAT at 23%. The EU One Stop Shop (OSS) scheme allows a Lithuanian SaaS company to report and pay all EU cross-border B2C VAT through a single quarterly return filed with VMI — eliminating the need for separate VAT registrations across the EU. For qualifying EU-established businesses, the EUR 10,000 annual threshold determines when cross-border B2C telecommunications, broadcasting and electronically supplied services generally become taxable in the customer’s Member State rather than the supplier’s Member State. The threshold is calculated using the combined value of relevant cross-border digital services and intra-Community distance sales of goods during the current and preceding calendar years. Once the applicable threshold is exceeded, the supplier must account for VAT in the relevant Member States. Registration for the EU One Stop Shop (OSS) scheme is optional: businesses may instead fulfil the applicable VAT obligations directly in the relevant Member States. Eligible businesses may also voluntarily apply destination-country VAT rules before exceeding the threshold.

GDPR as a data processor

When a SaaS company processes personal data on behalf of its business clients — user records, activity logs, customer data entered into the platform — it is acting as a data processor under GDPR, and its clients are the data controllers. This creates specific obligations: the SaaS company must have a signed data processing agreement with each B2B client before processing begins; it must implement appropriate security measures; it must notify clients of any data breaches affecting their data; and it must cooperate with the client’s GDPR compliance obligations. Most enterprise clients require a DPA before signing a contract. Not having a compliant DPA ready delays sales cycles and creates regulatory exposure.

IP ownership — ensuring the company owns its code

For SaaS companies, the most valuable asset is the software itself. The legal ownership of that software depends on whether the code was written by employees under employment contracts with IP assignment clauses, by contractors under agreements that explicitly assign ownership to the company, or by founders before the company was incorporated — in which case an IP assignment agreement is required. A SaaS company that has been operating for two years but has not executed IP assignments from its founding developers or early contractors does not have clean IP ownership — which becomes a serious problem during investor due diligence or an acquisition process.

Lithuanian IP box — qualifying conditions

Lithuania’s IP box regime allows income derived from qualifying intellectual property — including software protected by copyright — to be taxed at a reduced effective rate. The regime requires that the qualifying IP was created or significantly developed by the company itself (the nexus approach), and that the income is separately tracked and attributable to the qualifying IP. SaaS companies that qualify can apply the IP box to the subscription revenue attributable to the software licence component of their service. We advise on IP box qualification and set up the accounting framework from incorporation to ensure the benefit is accessible from the first tax year.

Services by Company Stage

The services a SaaS company needs evolve as the business grows. The table below maps our five service areas to the stage of the company at which each becomes most relevant.

GDPR for SaaS: Controller vs. Processor Obligations

The GDPR framework distinguishes between two roles: the data controller (the entity that determines why and how personal data is processed) and the data processor (the entity that processes data on the controller’s behalf). For SaaS companies, both roles typically apply — creating a layered compliance obligation that is more complex than for most other business types.

As a data controller — your own user data

When a SaaS company collects and processes data about its own users — account information, usage analytics, marketing email addresses, support ticket content — it is acting as a data controller. It determines the purpose and means of that processing. As a controller, it must have a lawful basis for each processing activity, provide a GDPR-compliant privacy notice, honour data subject rights requests, maintain records of processing activities, and implement appropriate security measures. The privacy policy on the SaaS website is the primary mechanism for fulfilling the controller transparency obligation.

As a data processor — client user data

When a B2B SaaS company’s platform processes personal data that belongs to its clients’ users — names, email addresses, payment data, health records, or any other information that its clients’ customers enter into the system — the SaaS company is a data processor, and each client is a data controller. As a processor, the SaaS company must: sign a data processing agreement with each controller client before processing begins; process data only on the client’s documented instructions; implement appropriate technical security measures; notify the client of any data breaches; ensure any sub-processors it uses are also bound by adequate data protection obligations; and delete or return all data at the end of the contract.

Sub-processors — the chain extends

As a data processor, the SaaS company also uses sub-processors — AWS, Google Cloud, Stripe, SendGrid, Datadog, and any other third-party services that receive or access client user data as part of the SaaS infrastructure. Every sub-processor must be covered by a data processing agreement that imposes GDPR-equivalent obligations. The SaaS company must maintain a sub-processor list that is disclosed to clients, and must notify clients before adding new sub-processors — allowing clients the opportunity to object. Enterprise clients routinely audit sub-processor lists during procurement. Not having one ready creates friction and delays.

Frequently Asked Questions