Lithuania Company Formation & Taxation FAQ: Essential Guide to Starting a Business in Lithuania
Lithuania is rapidly becoming one of Europe’s most attractive destinations for business incorporation, thanks to its strategic location within the European Union, robust economic growth, and supportive government policies. With a competitive corporate tax rate, efficient company registration process, and access to the EU single market, Lithuania offers significant advantages for entrepreneurs, startups, and established international investors looking to expand their operations.
This comprehensive FAQ on Lithuania company formation provides answers to the most commonly asked questions by those interested in establishing a legal entity in Lithuania. Whether you are planning to set up a Private Limited Liability Company (UAB), branch office, or subsidiary, this guide covers everything you need to know—from legal requirements and documentation to tax implications and ongoing compliance.
Lithuania’s business-friendly environment includes simplified procedures for company registration, low minimum share capital requirements, and a transparent legal framework. Additionally, Lithuania supports digitalization of services, enabling faster online registration and easier business management.
This FAQ also addresses key topics such as director and shareholder roles, registered office requirements, accounting standards, and corporate governance. Lithuania’s growing economy and skilled workforce make it an ideal base for companies engaged in IT, manufacturing, trade, and services.
Whether you’re a local entrepreneur or an international investor, this guide will help you navigate the complexities of Lithuania company formation, ensuring a smooth and compliant start to your business journey. Explore the answers below to learn more about Lithuania’s corporate landscape and how to successfully incorporate your company.
Frequently Asked Questions About Lithuania Company Setup
Lithuania is an increasingly popular destination for business incorporation due to its strategic location in the EU, competitive tax rates, and streamlined company registration process. Our Lithuania company formation FAQ answers common questions about establishing a Private Limited Company (UAB), branch, or subsidiary. Learn about legal requirements, minimum capital, shareholder and director roles, and compliance obligations. Whether you’re a local entrepreneur or an international investor, this guide simplifies Lithuania company formation and helps you navigate the process with confidence. Benefit from Lithuania’s digital infrastructure and business-friendly environment to successfully launch and grow your company.
🇱🇹 Lithuania Company Formation FAQs
1. What is a Lithuania company?
A Lithuania company is a legal entity established under Lithuanian Commercial Law, offering businesses and investors EU market access, low corporate taxes, and a strategic location in Northern Europe. Learn more on our Lithuania company formation page.
2. What types of companies can be formed in Lithuania?
The most common business structures include:
-
UAB (Private Limited Liability Company) – ideal for small to medium enterprises.
-
AB (Public Limited Company) – suitable for large corporations.
-
Branch or Representative Office – for foreign companies expanding into Lithuania.
3. Who can establish a company in Lithuania?
Both residents and non-residents can incorporate a Lithuanian company. There are no nationality restrictions, making it highly attractive for foreign investors and entrepreneurs.
4. How long does Lithuania company registration take?
Company formation usually takes 3–7 business days, depending on document preparation and registration with the Centre of Registers.
5. What documents are required for incorporation?
-
Certified passport copies of shareholders and directors
-
Proof of residential address
-
Company name and registered office details
-
Memorandum of Association
6. What is the minimum share capital?
For a UAB (Private Limited Company), the minimum share capital is €2,500, which can be deposited during incorporation.
7. Do I need a local director or shareholder?
No. Foreign shareholders and directors are permitted. However, every company must maintain a registered address in Lithuania.
8. Can a Lithuania company hold international assets?
Yes. Lithuanian companies can own and manage international assets, including real estate, intellectual property, and global subsidiaries.
9. Is physical presence required to register a company?
No. Remote company registration is possible via power of attorney and electronic signatures, making Lithuania a convenient choice for non-residents.
10. How private is a Lithuania company?
While shareholder and director details are publicly listed, beneficial ownership is protected by confidentiality laws and disclosed only to regulatory bodies.
11. Can I open a corporate bank account for a Lithuanian company?
Yes. Companies can open accounts with Lithuanian banks or EU-based financial institutions, enabling multi-currency and SEPA payments.
12. What are the annual compliance requirements?
All companies must file:
-
Annual financial statements
-
Tax declarations
-
Annual reports to the Centre of Registers
13. Can a company be owned by another company?
Yes. Corporate shareholders are fully allowed, enabling international holding structures and parent-subsidiary setups.
14. How do I close a Lithuania company?
A company can be voluntarily liquidated by shareholder resolution, completing tax clearance, debt settlement, and submission of dissolution documents.
15. Why choose Lithuania for company formation?
Lithuania offers EU membership, modern digital infrastructure, low operating costs, and favorable taxation, making it an ideal jurisdiction for global entrepreneurs and cross-border investors. Explore more on our Lithuania company formation page.
💰 Lithuania Company Taxation FAQs
1. What is the corporate income tax rate in Lithuania?
The standard corporate tax rate is 15%, while small companies meeting specific criteria may qualify for a reduced rate of 5%.
2. How are dividends taxed?
Dividends paid to foreign shareholders are generally subject to 15% withholding tax, but may be exempt under EU directives or double taxation treaties.
3. Are there capital gains taxes in Lithuania?
Yes, capital gains are taxed at 15%, except where participation exemption rules apply to qualifying EU shareholdings.
4. What is the VAT rate in Lithuania?
The standard VAT rate is 21%, with reduced rates of 9% and 5% for certain goods and services.
5. Are there double taxation agreements (DTAs)?
Yes. Lithuania has signed over 55 DTAs with countries worldwide, allowing businesses to avoid double taxation on income and capital gains.
6. Are retained earnings taxed?
No. Retained and reinvested profits are not subject to additional corporate tax, encouraging business growth and reinvestment.
7. Are there tax incentives for startups and small enterprises?
Yes. Qualifying micro and small enterprises may benefit from a 5% corporate tax rate and R&D expense deductions.
8. How are non-resident companies taxed?
Non-resident entities are taxed only on Lithuanian-sourced income, including real estate, dividends, and local business activities.
9. Are there payroll and social contributions?
Yes. Employers contribute 1.77%–2.49%, while employees contribute 19.5% toward social security and health insurance.
10. Are there incentives for foreign investors?
Lithuania provides tax relief in Free Economic Zones (FEZs), where companies may enjoy 0% corporate tax for 10 years and reduced rates thereafter.
11. How are holding companies treated for tax purposes?
Lithuanian holding companies benefit from participation exemption, meaning dividends and capital gains from EU subsidiaries are tax-free.
12. Can losses be carried forward?
Yes. Tax losses can be carried forward indefinitely to offset future taxable profits, under specific conditions.
13. Does Lithuania apply transfer pricing rules?
Yes. Lithuania adheres to OECD transfer pricing guidelines, requiring documentation for related-party transactions.
14. Can a Lithuania company change its tax residency?
A company is tax-resident if management and control are exercised in Lithuania, but dual residency can be managed under tax treaties.
15. Why is Lithuania ideal for international tax planning?
With low corporate tax, EU single market access, and R&D-friendly policies, Lithuania is one of the most competitive jurisdictions in Europe for tax-efficient business operations. More details are available on our Lithuania company formation page.
Interested in setting up a company in Lithuania?
Visit our Lithuania Company Formation page for detailed guidance, packages, and expert support tailored to your needs.
Back to Main FAQ page
Back to Company Formation FAQ page