If you are
planning to start a business in Lithuania please be informed that there are
following possibilities:
1. To incorporate limited liability company in Lithuania.
Limited
liability company (UAB) requires at least 2500 EUR share capital which shall be
paid before a company registration with the Commercial register when the
company bank account is opened. It is responsible for its own obligations and
shall cover any losses incurred. Limited Liability Company [UAB] may be founded
by a natural person, as well as by a legal person (company).
2. To incorporate limited liability micro company in Lithuania.
A micro company (MB) is not required to have a minimum
share capital, thus micro company may be
established with 1 EUR or any other tangible
property contribution. A founder can only be a natural person (max 10 persons). Founders of MB work for company
without employment contract and receive payments for personal needs out of company
account or distributed profits. Micro company has less corporate compliance and
more similarities to joint venture partnership.
3. To register a branch of your company in Lithuania.
The branch of the foreign entity is not a separate legal person but an independent unit of the company and can provide commercial activity. It does not require share capital formation. Parental company partakes the risk of losses.
4. To register your foreign company in VAT register in the Tax Authority of Lithuania.
If you have a short term project it is possible to
register a foreign company only with the Tax authority and register as VAT payer. In this case the foreign
company will have a right to provide commercial activity in Lithuania.
Lithuanian taxes will be applicable on
income attributed to Lithuanian project.
5. To register a permanent establishment in the Tax Authority of Lithuania.
In order to
carry out activities in Lithuania, foreign company may register its permanent
establishment in Lithuania with the Tax authority. It does not require any
share capital, this is the simplest form of legal presence. However, it is not
considered a legal person, it is merely for purposes of imposing taxes on the
foreign company’s Lithuanian turnover and legalize its activities. Registration
is performed with the Tax Authority only.
6. To register a representative office of your foreign company in Lithuania.
Representative
office is not a separate legal entity, activities
are limited to parent company
promotion & public relations. Representative office is forbidden to enter into
commercial contracts in its own name.
Corporate income received by Lithuanian
limited liability company (UAB) or micro company (MB) not exceeding
300 000 EUR in financial year, whole income is taxed with 5 % Corporate
Income Tax (CIT), turnover above 300 000 EUR - whole
income is taxed with 15 % CIT.
In order to take advantage of 5 % CIT, company shall have less than 10 employees and company’s shareholders shall not have more than 50 % control in other undertakings, which means that if same shareholder controls 2 or more companies in Lithuania, 5 % CIT could be applicable to only one of the companies.