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Lithuania Company Formation and Registration

Lithuania, country of northeastern Europe, the southernmost and largest of the three Baltic states. Lithuania was a powerful empire that dominated much of eastern Europe in the 14th–16th centuries before becoming part of the Polish-Lithuanian confederation for the next two centuries. On March 11, 1990, Lithuania declared its independence by a unanimous vote of its newly elected parliament. The new Soviet parliament acknowledged Lithuania’s independence on September 6, 1991. Lithuania was admitted into the European Union (EU) and the North Atlantic Treaty Organization in 2004. The capital is Vilnius. Lithuania is bounded by Latvia to the north, Belarus to the east and south, Poland and the detached Russian oblast of Kaliningrad to the southwest, and the Baltic Sea to the west.
 
Economy
 
Lithuania’s economy exited the COVID-19-crisis successfully and was growing fast until early 2022, buoyed by rising exports and rapid integration into global value chains. However, with Russia’s aggression of Ukraine continuing and its consequences spreading, the outlook has darkened. Growth has slowed, and inflation has risen to some of the highest levels in the euro area, driven by high energy and food prices. The country cut all energy ties with Russia, relying on imports from other countries instead. The government supports the many Ukrainian refugees and helps households and firms weather the energy crisis. Structural unemployment and skills mismatch remain high, while poverty declines only slowly.
 
Further reform could help maintain economic resilience and cope with rising uncertainty. Reducing the scope of state-owned firms and improving their governance would help raise productivity. Linking education to labour market needs more closely would help improve employment and skills. Greater uptake of digital technologies by firms, along with a modernised public sector and strong skills will also help lift trend growth. Reaching the climate objective of net zero emissions by 2050 will require bold policy action, both on the tax and the spending side.
 
Company Formation in Lithuania
 
Lithuania is the biggest of the Baltic states and regards itself as the region’s economic powerhouse. Certainly it has succeeded in attracting significant inflows of foreign direct investment, with investors encouraged by a combination of a stable economy, low inflation, low labour costs and a liberal business environment. Corporation tax is 15%, one of the lowest rates in the EU. Lithuania is one of the most popular locations for business incorporation in northeastern Europe. The business climate in Lithuania is very encouraging. In terms of the nation’s ease of doing business, Lithuania is placed eleventh. It is simple to conduct business in Lithuania because there is only a single stockholder and one director requirement, both of whom can be of any nationality.
 
The country’s 15% business tax rate is among the lowest in the European Union. Lithuania is one of the most rapidly expanding fintech hubs in Europe, and it is ranked fourth globally. Lithuania, which has a population of about 2.8 million, provides enterprises with a sizable workforce. The service sector made up the majority of the Lithuanian economy, with almost half of the labor force employed in it and accounting for around two-fifths of the country’s yearly GNP.
 
What are the main types of company in Lithuania?
 
There are four main kinds of business entity for foreign investors, and they are as follows:
 
- public limited company (AB)
- private limited company (UAB)
- general partnership (TUB) or limited partnership (KUB)

What are the main features of a public limited company?
 
- the most common business vehicle for medium/large companies
- minimum share capital is approx. €44,000, at least 25% to be paid up
- one of more shareholders are required in order to register a public company
- auditors required to prepare annual financial statement
- company and its shareholders have limited liability
- you must appoint a supervisory council or “board of management”

What documents are required to register a public limited company?
 
- incorporation agreement or act of incorporation
- the company’s articles of association
- minutes of the founding meeting
- confirmation of Lithuanian bank account
- confirmation of share registration with Securities Commission
- report on company together with auditor’s opinion

What are the main features of a private limited company?
 
- popular format for smaller foreign investors
- minimum share capital is approx. €2,900
- maximum number of shareholders is 250
- company and its shareholders have limited liability

What documents are required to register a private limited company?
 
- incorporation agreement or act of incorporation
- the company’s articles of association
- minutes of the founding meeting
- confirmation of Lithuanian bank account
What are the main features of a partnership?
 
- available as a general or limited partnership
- general partnerships have unlimited liability
- limited partnerships have limited liability

What are the main features of a branch or representative office?
 
- foreign parent is responsible for all liabilities
- ranch office can conduct trade within scope set by parent
- representative office can promote but cannot trade
- at least one manager must reside in Lithuania
- no formal auditing requirements

Are there financial incentives available?
 
Investment incentives in Lithuania are centered on three Free Economic Zones in the cities of Klaipeda, Utena and Kaišiadorys. They include the following:
 
- tax holidays and tax reductions for companies investing over €1 million - no taxes on dividends paid on foreign investments
 
How much does it cost to set up a company in Lithuania?
 
The cost of incorporating a company in Lithuania is as follows: The state charges 574 EUR to register a UAB (private limited liability business). The notary fees, ranging from 102 EUR to 232 EUR, are not included in the state fee. Lithuania has no governmental cost associated with registering as a VAT payer.
 
What taxes are paid by Lithuanian companies?
 
The standard CIT rate is 15%. However, small companies and agricultural companies can apply a reduced CIT rate of 0% or 5% if certain conditions are met.
 
And what about banking facilities?
 
Lithuanian banks offer the standard range of facilities, including foreign exchange and international payments. There are no foreign exchange restrictions. You will need a local bank account if you open a company in Lithuania and we will be happy to help you with this.
 
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