Global expansion into Lithuania generally means that you need to set up an in-country entity. Setting up an entity in foreign territory can be difficult and comes with many complexities and requirements. However, by partnering with us you create the possibility to bypass this process and utilize our Lithuanian entity. By using our PEO-service we take care of the complicated paperwork.
Setting up an entity in Lithuania involves filing in the right documents, registering at the tax office, obtaining your office address, and many more formalities. Since the rules and regulations are not always easily accessible, we created this guide to give you a head start for your expansion plans.
In this guide, we will share which documents you need to establish an entity in Lithuania but also where you will need to register your business address and company’s name. We will also break down the advantages and disadvantages of setting up an entity in Lithuania.
An entity or subsidiary in Lithuania
Foreign subsidiary entities in Lithuania hold the same company standing as any other conventional limited liability companies in the country and are treated equally with domestic businesses. They enjoy independence from the parent company and are subject to all national laws of Lithuania.
The registration process comes with some variation (depending on the company type), but it is generally straightforward and can be done with little difficulty. Once that is done, however, setting up a subsidiary in Lithuania involves a heavy workload.
How to set up a Lithuania Subsidiary
- Decide on the company type that suits the nature of your business, your business goals and matches your own capabilities to meet establishment requirements. Common company types include: The Lithuania Limited Liability Company (UAB), The Lithuania Public Limited Company (AB), a branch office, or a representative office.
- Obtain a business address in Lithuania and prepare the documents for registration.
- The selection of a general manager.
- Check if your business requires any additional permits or documentation.
- Prepare the appropriate registration documents and have them translated to Lithuanian and the national language of the founder(s).
- Reserve a temporary company name (optional).
- Open an accumulative bank account in Lithuania and deposit the appropriate share capital.
- Notarize the registration documents at a notary’s office.
- Register your company at the Register of Legal Entities of Lithuania under the Center of Registers.
- Register with the State Tax Inspectorate for a Tax Identification Number and a VAT Number no more than 5 days after registration.
- Register with SODRA, the State Insurance Fund Board.
- Receive a VAT Number, Tax Identification Number, a certificate of registration and a unique registration number.
- Open a bank account/convert accumulative account for normal commercial operation.
- Receive the official company seal.
- You will also need to check requirements for permits and residencies for foreign employees.
Fees & Registration Times: The fees for registration are as follows -
Process Price (EUR) Time
- Reservation of Company name: 16 Euro - 1 working day
- Open a bank account: 30 Euro - 5 working days
- Notarize documents: 72-290 Euro (depending on share capital) - 1-2 working days
- Company Registration: 57 Euro - 3 working days
Overall, the company registration process will take about 3 weeks to complete (if there are not any delays). The registration procedures regarding employment will take more time, especially if you are bringing in employees from non-EEA countries.
Company registration can take place in person or online. In some cases, to apply online you will need proof of a residence permit and/or e-residence signature. E-signatures are also provided by the Center of Registers.
What you need to set up a Lithuania Subsidiary
For foreign companies wishing to expand into Lithuania, certain requirements must be met:Notarized registration documents with the Apostille of the Special Hague Convention, and Lithuanian translations.
- A Lithuanian business address – leased or purchased with all relevant documentation.
- The appointment of a general manager.
- A Lithuanian bank account with the appropriate share capital deposited (depending on the subsidiary type), and a bank account for normal commercial operation.
- Completed registration documents:
- The Articles of Association, which must contain: the name of the company, the name of the incorporator(s), headquarters address, type of business, shares-related procedures, procedures of company liquidation or reorganization, power of the general meeting and the implementation of a Supervisory Board (if applicable).
- The resolution of the parent company detailing its decision to form the subsidiary.
- Minutes of the founding meeting.
- Confirmation of bank account with the appropriate capital.
- Business address documentation.
- Notarized registration documents with the Apostille of the Special Hague Convention, and Lithuanian translations.
- The company’s unique registration number.
- A company seal from the Center of Registers.
- A Tax Identifier Number.
- A VAT Number.
- Special permits and licenses with the city municipality, certain ministries, or special authorities (depending on type of business).
Benefits of Setting up a Lithuania Subsidiary
Lithuania is a strong business attraction and destination for establishing a subsidiary and growing your business’ influence. There are also significant benefits to establishing an entity in Lithuania:
• Subsidiaries in Lithuania are taxed the same as any other resident company.
• Subsidiary entities in Lithuania also benefit from double tax treaties, which reduces or removes taxes on dividends, interests or royalties paid to the foreign country.
• Lithuania boasts the largest ICT industry in the Baltic States with great potential for local and foreign expanding businesses, and is also excelling in the life sciences, textile, furniture, food, and the printing and paper industries.
• Lithuania benefits from the name of “geographical centre of Europe”, and has established itself as a high-value export competitor.
• According to the Fraser Institute (2020), Lithuania is 11th globally for economic freedom.
• Lithuania is also the 11th globally for the ease of doing business, according to the World Bank Report (2020).
• Lithuania is first amongst the EU countries based on the part of the active population with a tertiary education, according to Eurostat (2019).
• Lithuania’s physical infrastructure gives a range of reliable and high-quality logistics options for investors looking to streamline their operations – markets in Northern Europe, Western Europe and Asia are all easily and affordably accessible.
Lithuania Subsidiary Laws
Subsidiary Laws in Lithuania vary depending on what type of subsidiary entity you choose to establish – but all are regulated under The Law of Companies. Compliance entails meeting these requirements:
Registration & Documentation
- A Limited Liability Company (UAB) requires 1 director (who must be a natural person), and 1 shareholder, with a minimum share capital of EUR 2,500.
- A Public Limited Company (AB) requires at least 1 director and 1 shareholder of any nationality, as well as minimum share capital of EUR 40,000. The shares of a public limited company can also be disclosed on the Nasdaq Baltic Stock Exchange.
- All entities required a registered general manager.
- All entities must be registered and regulated the Center of Registers.
- Entities must also be registered with the Tax Inspectorate, and the State Insurance Fund Board (SODRA).
- For the entity founders: foreign legal persons must submit certain documents that confirm their identities, as well as the existence of the parent company, such as the Articles of Association and the resolution of the parent company.
Accounts and Taxation:
- All subsidiary companies must pay a corporate income tax rate of 15%.
- All entities must have a Tax Identification Number and file an annual tax return by the 15th of June of the following year.
- Entities in Lithuania must file annual financial statements, as well as monthly VAT statements and an annual VAT Return statement.
- For both limited companies, an annual statutory audit is required.
- Withholding Tax payments are applicable to both resident and not-resident companies: dividends – 15%, interests – 10%, royalties – 10%, and capital gains – 15%.
- However, with-holding taxes are reduced under a Double Taxation Treaty, which Lithuania has signed with over 50 countries.
• Management bodies of a public limited company (AB) and a private limited liability company (UAB) must include the general meeting of shareholders, as well as the general manager of the company.
• For both companies, a supervisory board and management board may also be formed but are not mandatory.
• Lithuanian company law requires that managing bodies of legal persons can be natural persons only.
Working with Bradford Jacobs
Establishing an entity takes considerable time and resources, despite the ease of establishment you can find in Lithuania. To do this, you need to acquire the right people and the right resources, which will not be easy. A cost-effective and time-saving alternative to this is engaging the services of a Professional Employer Organization (PEO) such as Bradford Jacobs.
With over two decades of global recruitment expertise and our Employer of Record (EOR) solutions, we can have employees operational within days, ensuring that all laws and regulations (employment, payroll, tax) are followed. Our Human Resources’ experts will ensure a smooth transition of your onboarded employees into your new territory. International borders should not stand in the way of international expansion.
Contact us today to make your expansion goals a reality, with ease and confidence.