Lithuania is a European country that attracts many investors and entrepreneurs as a business location. Company registration in Lithuania opens up numerous opportunities, and the process is straightforward and fast.
In this article we will cover Lithuania’s unique features as a jurisdiction for company registration, outline the company registration procedure itself, and delve into taxation and reporting aspects.
SUMMARY
HOW LITHUANIA COMPARES TO OTHER COUNTRIES
Incorporation Cost
relative to other jurisdictionsTurnaround Time
relative to other jurisdictionsUpdated: 20/09/23
Advantages of company registration in Lithuania
- Low tax rates;
Perhaps the most significant advantage of Lithuania as a business jurisdiction is its favorable corporate taxation. - Fast and straightforward company registration;
The registration process in Lithuania takes only 5-7 days, sometimes even less. It requires minimal documentation and information. - Favorable geographic location;
Lithuania is an advantageous location for various activities, especially in the transport sector, both within the EU and to/from other countries. - The possibility of obtaining a residence permit.
Business immigration in Lithuania is highly popular. By developing a business in Lithuania, you can apply for a temporary residence permit (TRP).
Tips to keep in mind when opening a company in Lithuania
- Minimum share capital requirements;
You need to transfer a minimum share capital of €2,500 into the company’s bank account in Lithuania. - Document translation;
Documents for company registration need to be translated into Lithuanian. - Worldwide profit taxation;
Lithuania follows the worldwide income tax principle, meaning that a Lithuanian company’s worldwide profits are subject to taxation.
Legal forms of business organization in Lithuania
There are various legal forms of companies in Lithuania. The most popular ones include:
- Private Limited Liability Company (UAB): the most commonly used form, suitable for small businesses. The minimum share capital required for this type of company is €2,500. It is equivalent to an LLC in the United States or an Ltd in the United Kingdom.
- Public Company (AB): more suitable for medium to large businesses, as the minimum declared capital for this type of company is €40,000.
- General Partnership (TUB): partners have unlimited liability.
- Limited Partnership (KUB): limited partners have limited liability, but there must be at least one general partner with unlimited liability.
For details about each form, consult GFLO Consultancy specialists.
The process of company registration in Lithuania
1. Gathering information and preparing documents.
In addition to identification documents for each participant in the future company, you need to provide the following information:
- company name;
- information about the company’s structure (the director, shareholder, beneficiary);
- detailed description of the future business activities.
2. Name check.
The company’s name is subject to verification. Once the name is approved, the company is ready for registration.
3. Opening a temporary bank account and depositing share capital.
An obligatory step of setting up a business in Lithuania involves placing the minimum share capital of €2,500 into a temporary account. It is acceptable to deposit 25% of this amount (get in touch with our experts to learn more).
4. Submitting paperwork with the Register of Legal Entities of Lithuania, notarizing documents.
Company registration via the Register takes about 5-7 days.
5. Changing the temporary bank account to a permanent one.
The company’s director does this after its establishment.
6. Issuing statutory documents for the company.
In addition to certificates, other statutory documents about the company’s structure and main characteristics will be prepared.
7. Notarization and apostille of documents.
Since Lithuania has ratified the Hague Convention on Apostille, document apostille is widespread in this country. The document notarization period for the company varies from 3 to 5 days, and apostille takes from 5 to 7 days.
Taxation in Lithuania
Lithuania is attractive due to its low tax rates. Let’s look at the main taxes a company registered in Lithuania may encounter.
Interesting:
A lot of information about taxation in Lithuania is available on the official website of the Ministry of Finance of Lithuania.
- Corporate Income Tax
The standard corporate income tax rate in Lithuania is 15%, but for micro-enterprises with an annual turnover not exceeding €300,000 and no more than 10 employees, a reduced rate of 5% is applied.
Important:
Residency plays a significant role in determining the principle of income taxation. Resident companies are subject to tax on their worldwide profits, meaning profits earned both in Lithuania and abroad. Non-resident companies are taxed only on profits derived from sources in Lithuania.
- VAT in Lithuania
The standard VAT rate in Lithuania is 21%. The standard rate applies to most goods and services within Lithuania.
There are also reduced VAT rates:
- 9% – applies to some passenger transport, books, and central heating services;
- 5% – for pharmaceutical products, medical equipment for disabled persons, newspapers, and periodicals;
- 0% – for domestic and international transport.
Preparation and submission of reports in Lithuania
Every company registered in Lithuania must prepare and submit annual financial statements. Typically, the reporting period coincides with the calendar year.
The financial statements should comprehensively reflect the results of the company’s economic activities. To prepare financial statements with our specialists, we will need all contracts, invoices, and other related transaction documentation between your company and partner companies.
Please note:
Failure to submit or late submission of financial statements can result in fines and other sanctions, including the compulsory liquidation of the company.
Conclusion
Company registration in Lithuania is simple and very fast. Moreover, Lithuania is an extremely advantageous jurisdiction for company registration. Registering a company in this country can be suitable for several reasons, which you can learn about during a free consultation with our specialists.
Benefits you can achieve from our cooperation
- You will learn about all the nuances of doing business in Lithuania from specialists with many years of experience in this field;
- You will receive consultations on any issues related to the starting and managing a business in Lithuania;
- You will own a company in Lithuania within a week after starting the process;
- You won’t have to handle communications with registration and tax authorities because we manage all interactions with them on your behalf;
- You will receive a package of certified statutory documents for the registered company at any convenient address;
- You will be aware of our professional support 24/7 throughout the process.
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