Company in Lithuania

Taxes in Lithuania

Quite unexpectedly, behind polish eastern border, a small tax paradise was created, offering corporate tax rates competing with Malta or Cyprus, encouraging foreign investors to open business in Lithuania. Although, the nominal CIT rate of 15% gives Lithuania a high position in the ranking of the lowest rates in Europe, the local authorities decided to encourage investors and reduce it even more. The reduced CIT rate applies to some agricultural companies and small enterprises, if among others: their number of employees does not exceed 10 and the annual income does not exceed EUR 300,000.00.

In the case of special economic zones, CIT is 0% for the first years and then 7.5% for the next 10 years. Moreover, Lithuania is to advance in international rankings thanks to its quick VAT refund procedure. Thanks to the electronic tax administration system Lithuania has 53 agreements on the avoidance of double taxation in force, and is in the leads in the world when it comes to the procedure of registering property ownership (no PCC). Therefore, taxes in Lithuania are a clear advantage of this economy.

Favorable provisions for business

One of the most common chosen legal forms of business activities, for which the first step consisting of company registration in Lithuania, are private company (UAB), public limited company (AB) and limited partnership (KUB). Company formation in Lithuania, in comparison to Poland, is relatively uncomplicated. For this reason, buying a ready made company in Lithuania is not very profitable.

UAB – private company in Lithuania

It is beneficial to establish a company in Lithuania as a private company (UAB). The minimum capital amount is around EUR 2,900. Thus, it is not considered as a major barrier for a foreign investor. There can be from 1 to 249 partners in a company, they do not have to be residents of Lithuania and their liability is limited to the amount of capital contributed. In addition, in a company of this form management board or a supervisory board does not have to be appointed, thus, procedural matters are significantly simplified. UAB company in Lithuania is similar to a limited liability company.

AB- public company in Lithuania

In AB company there is no upper limit as to the number of partners, and liability is the same as that provided for UAB company. It should be notet that to open company in Lithuania as AB requires large financial outlays because its minimum capital is around EUR 43,450. Also, there must be a management boards or a supervisory board created. This form of a company is suggested for medium and large enterprises.

KUB- limited partnership company in Lithuania

To establish a limited partnership in company requires less financial outlays, in comparison to UAB and AB company, because there is no restriction on the minimum amount of initial capital. The number of partners must be not less than two and not more than twenty, but it must be noted that the liability of only one of them is unlimited, and for others limited.

Open business in Lithuania

Besides friendly legal and tax solutions that the company can use, the country is open and encourages fintech company formation in Lithuania and strives to continue such actions gradually and consistently. The local authorities are aspiring to obtain businesses that will leave Great Britain after Brexit. In addition, the Bank of Lithuania has already invited the first entities to design a collector’s digital coin, and this may be just the beginning of Lithuanian expansion in this industry. Establishing a company in Lithuania before a potential boom for this type of business proves to be an extremely beneficial move.