Company Registration in Lithuania

POSSIBILITIES OF REGISTERING A BUSINESS IN DERIKTA

1,500 EUR

Acquisition of a ready-made business in Lithuania
We also propose the acquisition of an already established company with fully formed authorized capital, in addition to the establishment of new companies. A fully remote purchase of a finished company is available….

1,700 EUR

Company registration during a trip to Lithuania
The legal address is mandatory in the territory of Lithuania with a registered capital of EUR 2,500. You must be present at the Vilnius notary in order to form the firm….

2,000 EUR

Establishing a business in Lithuania through the utilization of a power of attorney.
A mandatory requirement for company registration in Lithuania includes having a legal address within the country’s jurisdiction and a registered capital of 2,500 euros. Additionally, a notarized power of attorney is also necessary….

2,900 EUR

Registration of a subsidiary or branch in Lithuania
In order to comply with the legal requirements, it is necessary to have a registered address within the territory of Lithuania and a minimum registered capital of 2,500 euros. Additionally, a power of attorney that has been duly notarized is also mandatory

MORE SERVICES

from 300 EUR

The apostille certification and sworn translations of documents pertaining to the Lithuanian company.

from 300 EUR

Adding a Lithuanian company’s beneficiaries as beneficial owners to JANGIS

from 500 EUR

Providing support in the process of leasing or purchasing real estate in Lithuania

OPEN A COMPANY IN LITHUANIA

According to the Doing Business report by the World Bank in 2020, Lithuania holds the 11th position globally for its favorable business environment.

The predominant business entity type in Lithuania is the limited liability company, UAB.

The term “Uždaroji akcinė bendrovė” (UAB) translates to “Closed Joint-Stock Company” in English. In a UAB, it is permissible to sell all or a portion of the statutory capital, gift shares, or transfer them to the next generation. A UAB must have at least one owner (individual or legal entity) and a minimum of one director (individual) authorized to sign on behalf of the company.

ADVANTAGES

TYPES OF BUSINESS IN LITHUANIA

Foreign investors have the option to choose from four primary types of company registration available in Lithuania, namely:

1. A public society (AB) in Lithuania is equivalent to a public company (AB)

Establishing a public limited company is highly advantageous for large-scale businesses operating in Lithuania

Authorized capital

When establishing a public limited liability company in Lithuania, a minimum statutory capital of 40,000 euros is required. It is mandatory to form the authorized capital and deposit it in full into the company’s designated bank account. Furthermore, there is the option to sell or publicly trade the shares of the company’s capital

Founder
The founders or shareholders of a public limited company in Lithuania can be one or more individuals or legal entities. There are no limitations on the residency of the founder(s) within the Republic of Lithuania.

Obligation

The company and its shareholders enjoy limited liability, meaning that the company’s assets are protected and the shareholders’ personal assets are not at risk beyond their invested capital.

Board

Decisions in public limited businesses are made by boards of directors, which must have three supervisory board members. A board that has been approved by shareholders at a general meeting runs public limited businesses.

2. Private company (UAB)

Private limited liability companies are the prevailing form of business activity in Lithuania, widely adopted by a majority of enterprises.

Authorized capital

To establish a private limited liability company, a minimum statutory capital of 2,500 euros is mandated. It is necessary to create a dedicated bank account in the company’s name and make full payment of the capital. Unlike in public limited companies, there are no provisions for public or private sales of the shares comprising the capital.

Founder

The formation of a private limited company allows for the involvement of one or more individuals, whether they are natural persons or legal entities. The exciting aspect is that the founders can be of Lithuanian descent or non-Lithuanians, opening up possibilities for diverse collaboration and entrepreneurship.

Obligation

The concept of limited liability extends to both the company itself and its shareholders, providing a safeguard against unlimited personal liability. Shareholders’ liability is restricted to a predefined limit, offering a protective boundary and fostering a sense of security in the business endeavor.

Board

In a private limited company, the structure is dynamic and flexible, as there is no mandatory requirement for a board or supervisory board. Instead, decision-making power rests in the hands of the shareholders, who come together in a general meeting to collectively shape the company’s direction.

Auditing

Once a company’s annual turnover surpasses the threshold of 1.4 million euros, an exciting and crucial milestone is reached: the requirement for annual audits comes into effect.

3. Partnership (TUB) or Limited Partnership (KUB) entities for business structures.

In the Republic of Lithuania, partnerships can be categorized into two distinct types, each with unique responsibilities and characteristics.

Obligation

To ensure compliance with legal requirements, it is essential for a full partnership to have at least one general partner who bears unlimited liability. This means that full partnerships are obligated without limit. Conversely, in limited partnerships, partners have limited liability, and their obligations are restricted to the extent of their contributions.

In the Republic of Lithuania, it is mandatory for both limited and full partnerships to have their agreements signed by all partners in the presence of a notary. This requirement ensures the legal validity and authenticity of the partnership agreements.

4. The establishment of a branch or representative office for a foreign company.

Foreign companies have the opportunity to establish representative offices or branches within the Republic of Lithuania. These offices serve as the local presence for foreign companies and can act as representatives or subsidiaries. It is a requirement for foreign companies to establish a physical presence in Lithuania through these branch or representative offices.

Foreign branches and representations are organizational units associated with foreign companies, yet they do not possess independent legal entity status.

Legal entities may establish branches, which serve as extensions of the parent company and have their own registered office. These branches function as separate entities and, within the parameters defined by the parent company, are authorized to engage in commercial activities.

A representation serves as a subunit of the parent company’s registered office, responsible for representing and safeguarding its interests. However, it is important to note that the primary role of a representation is not to engage in commercial activities but to fulfill its mission and support the parent company’s objectives.

Foreign companies bear full responsibility for all obligations incurred by their subsidiaries and establishments.

In compliance with the legislation of the Republic of Lithuania, a closed joint-stock company is required to have a minimum statutory capital of 2,900 euros. During the registration process, the company must pay an initial 25% of this capital, with the remaining amount to be paid within one year of its establishment. The authorized capital can be formed through the transfer of funds from any bank, including overseas accounts, as well as through cash deposits into the company's designated savings account.

WHY DO YOU NEED A COMPANY REGISTRATION IN LITHUANIA?

Lithuania offers an enticing prospect for company registration, enabling businesses to expand their horizons, access the European market, and capitalize on a growing customer base. With its strategic location, Lithuanian companies serve as pivotal intermediaries between Russia, Ukraine, Belarus, other CIS countries, and the European Union. This positioning facilitates advantageous trade routes, fosters international partnerships, and opens doors to a wealth of cross-border opportunities.

Lithuania stands out as the prime destination in the Baltic region for international business ventures, offering a stable economy, a vibrant financial sector, and advantageous profit tax rates. Establishing a company in Lithuania presents an opportunity to broaden horizons and elevate business operations to global standards. The Republic of Lithuania holds an impressive second place in Europe in terms of its Investment Attractiveness Index and ranks 11th worldwide for the ease of doing business, showcasing its favorable business environment. Additionally, Lithuania has surged by 13 places in the ranking of the freest economies. With a labor market boasting 1.5 million skilled professionals, the country offers a rich pool of talent to support business growth and development.

Opting to register a company within the Republic of Lithuania holds strategic significance, serving as a gateway for transit and providing expanded reach into the European market encompassing 27 member states. This facilitates the amplification of potential clientele and enhances business efficiency. Furthermore, entrepreneurs have the opportunity to establish branches in any European Union country, leveraging the interconnectedness of the European market and unlocking new avenues for growth and market penetration.

WHY DERIKTA

The Republic of Lithuania offers a compelling jurisdiction for securing a residence permit in Europe, granting individuals the invaluable privilege of unrestricted mobility within the Schengen area, eliminating the need for a visa. This presents a remarkable opportunity for individuals seeking seamless travel and access to the vast opportunities available in the European region.

Lithuania boasts a favorable tax system, characterized by its accommodating nature and comparatively low rates within the European Union. With an annual income of approximately EUR 289,620 and up to 10 employees, entrepreneurs are subject to a mere 5% profit tax. Additionally, the value-added tax (VAT) stands at 21%. Entrepreneurs also have the advantage of utilizing legal methods for tax exemptions and mitigating the risk of double taxation, thanks to specially crafted agreements with several countries.

BUYING A LITHUANIA READY-MADE COMPANY

Opting for the acquisition of a pre-registered company is the most expeditious method to establish your business presence in Lithuania. This approach allows you to bypass bureaucratic procedures, enabling you to swiftly commence operations and generate profits.

Furthermore, the acquisition of a company with an existing name holds particular appeal for businesses already operating in their respective countries, seeking to establish a presence in the European Union market while retaining their familiar brand identity

The process of transferring company ownership entails updating the relevant data in the Register Centre. While this procedure may require a certain amount of time, it is worth noting that once the firm’s acquisition is completed, entrepreneurs can swiftly commence and manage their business operations within just a few days.

TAXATION

At Derikta, the corporate income tax rate for enterprises is set at 15 percent, alongside a corresponding 15 percent source-of-income tax. However, it is important to note that small companies meeting specific criteria have the opportunity to apply for a reduced profit tax rate of either 0 percent or 5 percent, subject to certain conditions. Additionally, the standard value-added tax (VAT) rate applicable to all transactions stands at 21 percent.

1. Corporate tax

Lithuania follows a corporate income tax system wherein the standard tax rate stands at 15%. However, small companies meeting specific criteria can enjoy a reduced profit tax rate ranging from 0% to 5%. This opportunity is available to companies with fewer than ten employees and a gross annual income below 300,000 euros. Typically, income tax is levied on the taxable income generated by Lithuanian tax residents from both domestic and international activities.The calculation of taxable income involves deducting eligible expenses and excluding non-imputable income from the total income over a given tax period.

2. Dividends

Dividends disbursed between resident companies in Lithuania are generally subject to a corporate tax rate of 15%. However, an exemption applies if one company holds at least a 10% ownership stake in the other for a minimum of 12 months, and the receiving company is the parent of the distributing company. In such cases, the dividends become tax-free. For foreign nationals registered in an EEA State, dividends received from Lithuanian companies are also exempt from taxation if the distributing company’s profits have already been subjected to corporate income tax or an equivalent tax in the respective EEA State.

3. VAT

In the Republic of Lithuania, the Value Added Tax (VAT) system incorporates different rates based on the nature of goods and services. The standard VAT rate is set at 21%, with lower rates of 9% and 5% applied to specific categories.

The reduced rate of 9% is applicable to items such as books, information publications, periodicals, housing, and passenger transport operating on regular routes. On the other hand, a further reduced rate of 5% is reserved for essential goods such as equipment for persons with disabilities, pharmaceuticals, and medical devices intended for individuals entitled to compensation as specified by the Law on Health Insurance.

For businesses operating in Lithuania, it is mandatory to register for VAT when the cumulative value of goods and/or services provided in the regular course of business exceeds €45,000 within a 12-month period

ESTABLISHING A SMALL BUSINESS (MB) IN LITHUANIA

Principal laws governing registration of a Small Business (MB):

Civil Code of the Republic of Lithuania (LRCK)
The Law on Small Businesses of the Republic of Lithuania (LRMBĮ)

Contribution of funds to a Small Business:

While Small businesses are not obligated to maintain authorized capital, members of the business are required to make contributions, the amount and payment terms of which are determined at a Members’ Meeting. The distribution of profits in a Small business is proportionate to the size of each member’s contribution.

A member’s contribution to a Small business refers to the transfer of their personal assets to the business. This contribution can take the form of monetary funds or other tangible assets, excluding labor or services. Once transferred, the property becomes the rightful possession of the Small business.

Step 1 – Name

Criteria for the selection of a business name:

The business name should adhere to the linguistic standards of the Lithuanian language.

The name should not solely consist of generic terms without distinction (such as wood, jewelry, etc.), and it should not be identical to an existing trademark.

The business name can be secured in the Register of Legal Entities for a duration of 6 months, ensuring that no other entity can register an identical name during this timeframe. This reservation provides you with the assurance that the chosen name is suitable and exclusively reserved for your use.

When establishing a branch of a foreign company, it is permissible for the name to be either identical to or resemble the name of the parent company.

To register the name in the Register, it is necessary to complete the designated JAR-5 form provided for this purpose.

Step 2 –Drafting the constituent documents (constituent agreement/act) is part of the process of preparing the necessary paperwork for establishing a business entity.

In the case of two founders, it is required to enter into a constituent agreement, whereas if there is only one founder, a constituent act needs to be executed.

A Small business is limited to a maximum of 10 individual founders, with no provision for corporate entities to be involved.

Specified shall be:

Founders of a Small business
Company name
The main office of the business
Legal form – Small Business (MB)
The head, if the business will have a single management body
Contribution of each member to the business, its size, conditions and terms of contribution
A person who has the right to act on behalf of the business
Conditions for concluding transactions on behalf of the business
Compensation of expenses related to the establishment of the business
Date of conclusion of the constituent agreement

In the case of a Small business being established by multiple founders, where the Meeting of Members is designated as the primary governing body, the constituent agreement must explicitly outline the representative of the business, along with their associated rights and responsibilities. This constituent agreement/act should be signed by all founders or their duly authorized representatives.

Step 3 – The Charter

The business’s charter serves as the primary document that governs and guides the operations and activities of the business.

The charter of the newly established business must be signed by either all of the founders or their authorized representatives.

The charter should include the following provisions:

Name of the Small business
Legal form – Small Business (MB)
The purpose of the business’s activities
The business’s bodies and their competence
Rules for the appointment and dismissal of the head of the business, if the business has a single management body
Rules for holding a Meeting of members of the Small business
Rules and procedure for obtaining financial resources for personal needs by a member of the Small business in the form of an advance payment from the paid profit
Rules for the admission of new members to the Small business
Rules for voluntary withdrawal of a member from the business
Rules of settlement with members of the Small business in case of his or her voluntary departure from the business
Rules for familiarization of members of the Small business with documents and other information
Rules for informing the Small business about the intention to sell the rights of a member
The source where the public news of the Small business is published
Rules for changing the charter of the Small business
The term of activity of the Small business, if it is limited
Date of signing of the charter of the Small business
Other conditions that, according to the law, should be specified in the charter of the Small enterprise

If a Small business has only one member, paragraphs 6, 9, 10, 11, and 12 are not obligatory.

Step 4 – Small Business Bodies

1) Solely the Members’ Meeting:

In such instances, the Members’ Meeting assumes the role of the governing body responsible for making all decisions pertaining to the business’s operations. Additionally, one of the business members is designated as the representative, who effectively fulfills the managerial duties.

2) The business is governed by a single body, consisting of the Members’ Meeting and the appointed head.:

The head of a Small business can be appointed from among its members. A service agreement is concluded with the head to define their role. The head represents the business and possesses the authority to conduct transactions autonomously. The Members’ Meeting of the Small business handles crucial matters such as charter amendments, office location, and the appointment of the head, while the head assumes other responsibilities outlined in the business’s charter.

Step 5 – Notary

All the requisite documents must be submitted to a qualified Notary Public.

The Notary verifies the conformity of the charter and ensures that the documents comply with legal regulations.

Step 6 – Register of Legal entities

Once the business documents have been validated by the Notary, they are handed over to the founder or their authorized representative, who is responsible for submitting the documents to the Register.

The Register of Legal Entities performs the registration of the business and issues a certificate of registration along with a copy of the validated charter.

The registration process typically takes approximately three days.

THE COST ASSOCIATED WITH ESTABLISING A SMALL BUSINESS (MB)

Registration of the name

16,22 EUR

Notary fee

about 120 EUR

Registration of the business in the Register of Legal Entities

51.61 EUR

Legal services

under a separate contract

CONTACT US

DERIKTA LT, MB

Registration number: 305883144
Registration Date: 24-08-2021.
Address: Giruliu G. 5, Vilnius, 12124, Lithuania.

PHONE

We are happy to answer any questions you may have during our office hours, 9AM–5PM.
[EASTERN EUROPEAN SUMMER TIME]

+370 6279 1138

We try to answer all e-mail enquiries within 1 hour between 9AM–5PM [EASTERN EUROPEAN SUMMER TIME]

info@derikta.com