If you are planning to start a business in Lithuania consider different forms of establishments to choose from. Find out our basic review about most common forms of incorporations available.
Limited Liability Company (LLC)
Limited liability company requires minimal 2500 EUR share capital which shall be paid before a company registration with the Commercial Register when the company bank account is opened. Shareholders of LLC are not held personally liable for LLC obligations. LLC may be founded by a natural person or a legal person (company). At least director (CEO) shall be employed within LLC.
Limited Liability Micro Company
Micro company (MB) is not required to have a minimum share capital. MB may be established with 1 EUR. A founder and members of MB can only be natural persons. At least 1 member shall be the stakeholder of MB (maximum 10 members allowed). Stakeholders/members 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 small partnership. Stakeholders are not held personally liable for MB obligations.
Branch of foreign company
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.
Foreign company registration in VAT register at the Tax Inspectorate of Lithuania
If you have a short term project it is possible to register a foreign company only with the Tax Inspectorate 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.
Representative office of foreign company
Representative office is not a separate legal entity, activities are limited to parent company promotion and public relations. Representative office is forbidden to enter into commercial contracts in its own name.
Overview of corporate taxes in Lithuania
Corporate income/profit tax – 15% (5% tax rate may apply)
VAT – 21%
Dividends (withholding tax) – 0/15% (tax exemption may apply)
Personal income tax – 15-20%
Social security taxes – ~ 40%
Minimal salary – 555 EUR
Real estate tax – 0,3-3%
Find more info about corporate taxation here.
Find more info about personal taxation here.
Companies incorporated in Lithuania with up to 10 employees and annual income with up to 300,000 EUR may be exempt from tax for the first tax period and entitled to a reduced rate of 5% for subsequent tax periods.
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For more information about starting your business in Lithuania, contact at email@example.com