In the modern world, Lithuania is considered an economic hub of the Baltic region. This is due to its stable economy, comfortable business environment, and low inflation. That is why most entrepreneurs choose this country to enter the European market. Below, you can read Maira Consult’s recommendations on how to open a company in Lithuania.
What are the main considerations when opening a company in Lithuania?
We recommend choosing this country for businesses operating in agriculture, IT services, logistics, or transportation. The main points you should know in order to open a company in Lithuania:
For the listed areas, the primary company form is a private limited liability company (UAB). In companies of this type, the founders’ liability to third parties is limited solely to the company’s assets.
A resident of any country can be a company founder. If desired, a company in Lithuania can be registered with just one founder, without shareholders.
Only an individual can become the director of a Lithuanian company. This person may also be a shareholder.
An essential condition for the company’s operation is the official payment of a salary to the director. Please note that its minimum amount is 1,153 euros.
To open a company in Lithuania in the form of a UAB, the minimum share capital must be 1,000 euros. This amount must be deposited into the company’s account and may be used for current expenses after the company is opened.
It is possible to open a company in Lithuania remotely.
Small companies have an advantage because they pay only 5% corporate income tax.
Companies do not need to obtain a VAT number immediately after registration.
Information about the director, shareholders, and the company itself is publicly available.
The company name must be unique, so a request must be submitted to the Commercial Register in advance.
Tax considerations and reporting requirements for companies opened in Lithuania
We recommend opening a company in Lithuania if a businessperson needs maximum registration speed and low taxes. This is particularly relevant to entrepreneurs working in transportation. However, timely submission of financial reports, obtaining a VAT number, and paying taxes are equally important. Maira Consult can provide advice on the following financial matters:
accounting reports;
the procedure for obtaining a VAT number;
preparation of contracts;
maintaining internal documentation;
conducting an audit;
working with tax declarations and reports.
Below, we will examine everything related to taxes and reporting in Lithuania.
Official reporting
All Lithuanian companies must prepare and submit annual financial statements for the relevant reporting period. In Lithuania, this period is 12 calendar months. The document must be submitted by June 1 of the current year.
The accountant must prepare the following documents:
the company’s income tax return, submitted to the tax inspectorate;
the profit and loss statement, balance sheet, statement of changes in the company’s capital, and explanatory letter, submitted to the Register of Legal Entities.
Public or private joint-stock companies must undergo an audit in the following cases:
the value of the assets exceeds 2 million euros;
the company’s sales revenue exceeds 3.5 million euros;
the company has more than 50 official employees.
VAT
For newly registered companies, obtaining a VAT number is voluntary. Subsequently, it must be obtained in the following cases:
The value of goods purchased in other EU countries during the calendar year exceeds 10,000 euros.
Revenue from goods sold or services provided during the previous calendar year exceeds 45,000 euros. The exceptions are the purchase of new vehicles and goods subject to excise duty in Lithuania.
One person holds controlling stakes in several Lithuanian companies.
The standard VAT rate is 21%. However, there are cases when it is 0%. Let us consider them:
exporting goods outside the country’s territory;
purchasing and selling goods outside the country’s territory, so that the goods do not even enter Lithuania;
selling used cars that were previously recorded as company assets.
Taxes
If you wish to open a company in Lithuania, you should know that corporate income tax is mandatory in the country. For UAB companies, it is 5%. The maximum rate of 15% must be paid in the following cases:
the company’s annual account turnover exceeds 300,000 euros;
the company has more than 10 official employees;
the founder holds a controlling stake in another Lithuanian company;
the founder’s spouse operates a registered individual enterprise in the country.
The country also has a low tax rate on passive income and dividends, ranging from 0% to 15%. The zero rate applies if a Lithuanian company has held 10% or more of the shares in another Lithuanian company in Lithuania for one year. The same rate may apply to a foreign company if it is not registered in an offshore jurisdiction.
