Lithuania

Civil Code of the Republic of Lithuania laid the foundation for the legal rules on an entity’s establishment, liquidation, reorganisation, legal status, governing bodies and their mandate. Pursuant to the Code, all companies operating in Lithuania have the status of a legal person, the latter being defined as a company, institution, or other organisation which may acquire and exercise rights and obligations on its own behalf.

It is important to assess various types of enterprises and choose the one most suitable in legal and economic terms prior to incorporating a company since this choice will have an impact not only on the required amount of own capital but also on the legal status of an entity and on some other business-related issues.

6 simple steps to purchase a company

  1. choosing a country

  2. choosing a bank

  3. payment (by any method)

  4. sending documents

  5. company registration

  6. bank account opening

Registration procedure and main advantages

Private Limited Liability Company (Lithuanian: UAB) is the most widespread organisational form in Lithuania. In general, there are following basic types of the companies that can be established in the country by foreign investors:

  1. Public Limited Liability Company (Lithuanian: AB) is similar to Limited Liability Company (LLC) and Joint-Stock Company (JSC);
  2. Private Limited Liability Company (Lithuanian: UAB);
  3. General Partnership (Lithuanian: TUB) or Limited Partnership (Lithuanian: KUB);
  4. Branch or representative office.

All economic entities shall be entered into the Register of Legal Entities (the Registrar) which is maintained by the State Enterprise Centre of Registers.

SPS Legal will assist you in preparing constituent instruments and represent your interests in the Centre of Registers. Our company will help you set up a business in Lithuania and provide support in addressing enterprise registration issues.

Public Limited Liability Company (Lithuanian: AB)

Public Limited Liability Company is the most common type of medium and large entities in Lithuania.

Share capital:

When registering AB, the minimum share capital of EUR 25,000 is required. It shall be formed by depositing funds into company’s bank account, with at least 25% to be paid up. The capital is divided into shares that may be sold or offered for public sale.

Founder:

One or more individuals and/or entities of any residency can be the founder/s (shareholder/s) of a Public Limited Liability Company.

Status:

Public Limited Liability Company is considered as a legal person.

Liability:

The company and the shareholders have limited liability for the entity’s obligations to the full extent of its assets. Founder or shareholder is not liable for the AB obligations, as well as the AB has no liability for the obligations of its founder or shareholder.

Governing body:

The governing body of a Public Limited Liability Company is a management board and /or a supervisory board with at least 3 members. The body is elected by the general meeting of shareholders.

Private Limited Liability Company (Lithuanian: UAB)

Incorporating a Private Limited Liability Company is the most popular option small-scale foreign investors choose so as to start operating in the Republic of Lithuania.

Share capital:

When registering UAB, the minimum share capital of EUR 2,500 is required. It shall be formed by depositing funds into company’s bank account, with at least 25% to be paid up. The capital is divided into shares that may be neither sold nor offered for public sale.

Founder:

One or more individuals and/or entities of any residency can be the founder/s (shareholder/s) of a Private Limited Liability Company.

Status:

Private Limited Liability Company is considered as a legal person.

Liability:

The company and its shareholders have limited liability. Shareholder’s liability does not exceed the amount of his or her capital contribution.

Governing body:

A company must have a general meeting of shareholders. No requirements for a management board or a supervisory board are imposed. The number of the shareholders must be less than 250.

Audit:

Annual audit reports are required if the UAB meets at least two of the following criteria:

  1. net revenue from sales exceeds EUR 3.5 million for the financial year;
  2. value of assets in the balance sheet exceeds EUR 1.8 million;
  3. average number of employees exceeds 50 for the financial year.

General Partnership (Lithuanian: TUB) or Limited Partnership (Lithuanian: KUB)

There are two types of partnerships in the Republic of Lithuania, with the amount of liability being the main difference between them.

Status:

Both partnerships are considered as legal persons.

Liability:

TUBs have unlimited liability, while KUBs liability is limited. With regard to the KUB, the limited partners are liable only to the extent of their personal contributions, and there must be at least one general partner, which is subject to unlimited liability.

There shall be the partnership agreement signed by each member of the partnership and certified by a notary. The present requirement applies to both General and Limited Partnerships.

Branch or representative office

Foreign companies and other organisations may establish branches and representative offices, which are considered as the parts of a foreign-based company or other organisation and not as separate entities.

Key points on taxation

The Republic of Lithuania pursues a business-friendly taxation policy. Since 1990, the country’s tax system has gone through fundamental changes in such a way so as to promote foreign investment and labour market development and now is adapted to the European Union legislation.

Taxes and other payments to the budget are levied pursuant to the laws adopted by the Supreme Council. However, Councils of regions and towns may act independently in collecting payments. The basic principles of taxation are regulated by the Law on Tax Administration, which defines the rights and obligations of tax administrator and taxpayer, as well as payments calculation procedure.

There are 7 main types of taxes in Lithuania:

  1. corporate income tax;
  2. personal income tax;
  3. real estate tax;
  4. land tax;
  5. inheritance tax;
  6. value added tax;
  7. excise duties;
  8. lottery and gambling tax.

Another payments collected in the country are social insurance contributions, state natural resources tax, petroleum and gas resources tax, tax on environmental pollution, consular fees, state fees and charges, etc.

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