Company Formation Lithuania
Updated on Monday 27th July 2020
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Lithuania is an appealing destination for foreign investors wanting to set new companies. BridgeWest offers tailored solutions for clients who want to incorporate a company in Lithuania, but it can also assist those who are interested in offshore company setup. BridgeWest provides company formation services in Lithuania. Our assistance includes:
- drawing up the articles of association that can be signed through power of attorney (Lithuanian laws require power of attorney for any public notary proceedings);
- drawing up documents for company incorporation in Lithuania - specimen signatures, identification papers copies, application form required by the Lithuanian Company Registration Office;
- arranging public notary proceedings (all procedures for company incorporation are done in front of a Lithuanian public notary);
- providing a registered office in Lithuania on demand - the registered office serves as headquarters for the company in Lithuania and it will be made public;
- setting up a bank account for the company in Lithuania - BridgeWest will help in setting up the share capital bank account, as well as a current bank account once the company is incorporated;
- recommending a Lithuanian accountant, as accounting services are needed for new businesses in Lithuania.
Types of companies in Lithuania
Investors can register a Lithuanian private limited company (Uždaroji akcine bendrove –UAB); the Lithuanian private limited company is the most common type of company because it requires minimum one shareholder and maximum 250 and a director who can be an individual or a legal entity.
The minimum share capital for a private limited company in Lithuania is LTL 10,000 (approximately EUR 2,900) and it must be subscribed in the articles of association of the company. Shareholders are held accountable for the company’s obligations and debts to the extent of their share contribution. The shares of private limited companies cannot be traded on the stock exchange. The private limited company is a common way to start a business in other European countries as well, and this business structure is also very common for offshore company formation.
Local and foreign businessmen can set up a Lithuanian public limited company (Akcine bendrove - AB). The Lithuanian public limited company is required to have at least one shareholder, one director and a supervisory council or a management board. The shareholders of a public limited company in Lithuania are held liable for the company’s debts and obligations, to the extent of their share contributions. The minimum share capital for a public limited company in Lithuania is LTL 150,000 (EUR approximately 44,000) and the shares can be transferred or traded on the stock exchange.
Foreign investors can also set up a Lithuanian branch, subsidiary or representative office. Foreign companies are allowed to set up separate enterprises from the parent company, where the foreign company will be a shareholder in a Lithuanian company. Foreign companies can also open extensions of the parent company in Lithuania.
What is the timeframe for opening a private limited company in Lithuania?
Since the private limited company represents a very popular structure in Lithuania or in jurisdictions suitable for offshore incorporation, we will present below the process for registering this company type in this country as well as the time an investor has to spend with the incorporation procedure. Some of the basics are the following:
- open a corporate bank account at a local commercial bank (all private limited companies need a bank account, including offshore businesses, which need an offshore bank account) - a procedure that can be completed in 1 day;
- obtain the confirmed electronic signature – there are 3 options for completing this step, and all of them will require investors spending 1 day;
- reserve the company’s trading name – this procedure also lasts 1 day;
- investors also have to spend 1 day with the purpose of registering with the state institutions, such as the State Social Insurance Fund Board (SODRA);
- the company must be registered for value added tax (VAT) and this procedure is lengthier compared to the ones mentioned above, as it may take approximately 10-15 days;
- the Lithuanian company will also need a settlement account, and this step can be completed in a period of 1 to 7 days.
What documents are necessary for company registration in Lithuania?
When registering a local company, investors should prepare the entire set of papers required by the local institutions. Our team of consultants in company formation in Lithuania can assist you with in-depth advice on this matter and can provide legal representation during this process. As we presented above, the company has to be registered with the State Social Insurance Fund Board, but also with the Register of Legal Entities and the State Tax Inspectorate for Corporate Tax.
In order to be able to register with the said institutions, investors should prepare documents such as: the articles of association of the company, the company’s licenses (where applicable), the minutes of the statutory meeting, the detailed list of the company’s shareholders, as well as the application for company registration in Lithuania.
Additional papers can be requested, depending on the institution with which the investors need to register, this being a common situation for all company types registered here or in other European countries. As a general rule, all European institutions require numerous company registration documents, but this is not the case of those interested in offshore company setup, as in offshore jurisdictions companies can be registered very fast, by submitting only few corporate documents.
When is VAT registration mandatory in Lithuania?
According to the applicable law, a company has to be registered for VAT purposes in the case in which it has a taxable turnover of minimum EUR 45,000 in a financial year. The obligation to register for VAT is not only applied to local companies, as it also includes foreign companies. You can find out more details on the obligation to register for VAT from our team of specialists, who can also present the VAT compliance procedures available here.
Taxation in Lithuania
The corporate tax in Lithuania is 15%, but a reduced rate of 5% applies to agricultural companies. The standard VAT rate in Lithuania is 21%, but reduced rates of 9% and 5% apply to books, respectively pharmaceuticals. Capital gains and dividends are taxed with 15% in Lithuania, unless participation exemption or double tax treaties apply. The tax system applicable in Lithuania is similar with the ones of other European countries and, besides the above mentioned taxes, includes the following:
- the personal income tax, applicable only to natural persons obtaining a taxable income here (including foreigners), is charged at a rate of 15%;
- the real estate tax, which ranges from a rate of 0.3% to 3%;
- the land tax, charged at rates ranging from 0.01% to 4% from the value of the land;
- the inheritance tax, applicable at a rate of 5% for a taxable inheritance with a value of maximum EUR 150,000 and with a rate of 10% for a value above EUR 150,000;
- starting with 2009, activities related to gambling and lotteries are charged at a rate of 5% (for lotteries) and 15% (for bingo and bets activities).
BridgeWest is also able to offer ready-made Lithuanian companies and VAT registration. Please contact us for more information and prices. Please address to our specialists for additional information on how to register a Lithuanian company; our representatives can also assist you invest in an offshore jurisdiction. You can rely on our specialists from the process of offshore incorporation, information on the local law, as well as on how to open an offshore bank account.