The Basics of Accounting Services in Lithuania

If you are planning to start a business in Lithuania, you need to pay attention to the  accountancy of your company as all companies and branches of foreign companies operating  in Lithuania are subject to accounting. Below is an overview of what accounting representing  in Lithuania.

Accounting in Lithuania is described and regulated by the following legal acts:

The Law regulates the organization of accounting in Lithuania, the rules for writing documents for their storage and correction.

Business Accounting Standards or International Accounting Standards, depending on the activity

The law regulates the rules of carrying out an audit, publishing a consolidated annual report as well as a report on payments to governments, etc.

BASIC REQUIREMENTS FOR THE ORGANISATION OF ACCOUNTING

  • Each company must prepare and submit an annual return to the Lithuanian Canter of Registers for within 5 months from company’s financial year.
  • Financial year can start on any month of a calendar year
  • Accounting cannot be handled by the head of the company.
  • All business transactions must be recorded in accounting programs.
  • All business transactions must be documented.
  • Accounting should provide a reliable, objective, and comparable view of the company’s financial situation, performance, and cash flows.
  • All accounting documents must be kept in the archive for at least 10 years.

Annual report

  • Annual reporting is mandatory for all companies registered in Lithuania, even for companies  with no activities during the financial year.
  • Annual report must be confirmed at yearly General Meeting of Shareholders within 4 months  after the end of the financial year.
  • Financial year usually starts from 1st of January, but it can start on any month of a calendar  year and must have twelve consecutive months.
  • The annual report must be submitted to the Lithuanian Centre of Registers within 30 days  from the general meeting.

MAIN COMPONENTS OF THE ANNUAL REPORT

  • Balance sheet
  • Income statement
  • Cash flow statement
  • Statement of changes in equity
  • Notes to the annual accounts

What must be included in the report depending on the company scale:

Very small enterprise if at least two of the following statements apply on the last day of the  fiscal year:

  • Net turnover 700 000 EUR
  • Value of the assets 350 000 EUR
  • Number of employees 10 persons

According to the Accounting Law, very small enterprise can prepare an abridged annual  report consisting of short balance sheet and a short profit/loss statement. The very small  enterprise can (optionally) prepare an abridged or full annual report. 

Small enterprise if at least two of the following statements apply on the last day of the fiscal  year:

  • Net turnover 8 000 000 EUR
  • Value of the assets 4 000 000 EUR
  • Number of employees 50 persons

The financial report of a small enterprise is drawn up in accordance with the Business  Accounting Standards. It consists of two main reports: balance sheet and a profit/loss  statement as well as explanatory notes. 

Medium-sized enterprise if at least two of the following statements apply on the last day of  the fiscal year:

  • Net turnover 40 000 000 EUR
  • Value of the assets 20 000 000 EUR
  • Number of employees 250 persons

Large-sized enterprise if at least two indicators exceed a medium-sized enterprises indicators  on the last day of the fiscal year.

The annual report is drawn in accordance with the Law on Company Financial Statements of  the Republic of Lithuania. It consists of Balance Sheet, Profit/loss statement, Cash Flow  Statement, Statement of Changes in Equity and explanatory notes.

The annual report needs to be signed by the manager and accountant as well as approved by  shareholders.

According to Lithuanian legislation, an annual report must be audited in a company that  exceeds at least two of the following indicators:

  • Net turnover 3 500 000 EUR
  • Value of the assets 1 800 000 EUR
  • Number of employees 50 persons

Annual financial reports and the annual report together with the auditor’s report are published  in the Legal Entities Register. The certified auditor must keep confidential the information  obtained during the audit and is liable for damage caused by violation of their duties arising  from their professional activities.

Company in Lithuania UAB specialists will be glad to provide accounting services for your company.

FREQUENTLY ASKED QUESTIONS

  • Why do I need to keep accounting for my company?
    It is required by the law. A company in Lithuania has to provide reports to Tax Inspectorate, Social Security Fund, Department of Statistics, Centre of Registers, Customs Department and migration offices. Non-compliance with the annual report requirements or failure to pay taxes will result in troubles with authorities.
  • What companies need to submit accounting reports?
    All companies in Lithuania must submit reports. Accounting cannot be handled by the head of the company. Each Lithuanian company must have a accountant who will assist in preparing the needed reports and submit them to state authorities as well as provide advice on what taxes one must pay.
  • What is an annual report in Lithuania?
    Annual reports are describing to shareholders and other interested people information about the annual results. The annual report’s mandatory components include the balance sheet and the company’s profit and loss statement.
  • Does every company need to submit an annual report?
    Yes. Each company registered in Lithuania obligated to submit an annual report. Even companies with no activity during the financial year.
  • What is the deadline for submitting an annual report in Lithuania?
    Annually, no later than 5 months after the end of the financial year. An annual report must be confirmed by Shareholders and submitted to the Lithuanian Centre of Registers.
  • Does my company need a VAT number?
    The obligation to register the VAT number with the company arises: a) when the volume of sales exceeds 45 000 EUR for 12 months b) when the volume of purchase in EU exceeds 14 000 EUR
  • Do I need to register a company taxable if the turnover is less than EUR 45 000?
    If the shareholder (participant) has 50% or more shares in other companies, the profits and purchases from the EU in the last 12 months must be summed by both companies (the shareholder’s income as a natural person is also summed up if the shareholder is engaged in activities as a natural person).
  • Does my company need to be audited?
    An annual report must be audited in a company that exceeds at least two of the following indicators: 1. Net turnover 3 500 000 EUR 2. Value of the assets 1 800 000 EUR 3. Number of employees 50 persons
  • Who handles the accounting of the companies in Lithuania?
    • Employed accountant, a company, or a person providing accounting services is responsible for the accuracy of accounting entries. Accounting cannot be handled by the head of the company. Each Lithuanian company must have an accountant who will assist in preparing the needed reports and submit them to the government authorities.
  • What affects the cost of accounting services for the Lithuanian company?
    The price of accounting depends on VAT availability. The cost can also vary depending on the amount of the processed documents, employees, and other company’s responsibilities.
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