LITHUANIA

SETTING UP IN BUSINESS

Introduction

Lithuania is the biggest of the Baltic states and regards itself as the region’s economic powerhouse. Certainly it has succeeded in attracting significant inflows of foreign direct investment, with investors encouraged by a combination of a stable economy, low inflation, low labour costs and a liberal business environment. Corporation tax is 15%, one of the lowest rates in the EU. But investors are advised to tread carefully. If you are thinking of opening a company in Lithuania, please contact us and we will help you every step of the way.

What are the main types of company in Lithuania?

There are four main kinds of business entity for foreign investors, and they are as follows:

	public limited company (AB)
	private limited company (UAB)
	partnership
	branch or representative office

What are the main features of a public limited company?

	the most common business vehicle for medium/large companies
	minimum share capital is €43,443, at least 25% to be paid up
	minimum of three board or supervisory council directors
	auditors required to prepare annual financial statement
	company and its shareholders have limited liability

What documents are required to register a public limited company?

	incorporation agreement or act of incorporation
	the company’s articles of association
	minutes of the founding meeting
	confirmation of Lithuanian bank account
	confirmation of share registration with Securities Commission
	report on company together with auditor’s opinion

What are the main features of a private limited company?

	popular format for smaller foreign investors
	minimum share capital is €2,896, at least 25% to be paid up
	no requirement for board or supervisory council
	maximum number of shareholders is 250
	company and its shareholders have limited liability
	conditional requirement for auditors (eg if annual revenue exceeds €1.4m)

What documents are required to register a private limited company?

	incorporation agreement or act of incorporation
	the company’s articles of association
	minutes of the founding meeting
	confirmation of Lithuanian bank account

What are the main features of a partnership?

	available as a general or limited partnership
	general partnerships have unlimited liability
	limited partnerships have limited liability

What are the main features of a branch or representative office?

	foreign parent is responsible for all liabilities
	branch office can conduct trade within scope set by parent
	representative office can promote but cannot trade
	at least one manager must reside in Lithuania
	no formal auditing requirements

How easy is it to recruit staff in Lithuania?

Lithuania used to be known as Soviet Silicon Valley, such was the reputation of its workforce for innovation and productivity. The Soviet era may now be over but its reputation remains intact. Lithuania’s workforce is generally young, well educated and very highly motivated, while labour costs are among the lowest in Europe. Recruitment is straightforward – contact us if you require local help with this.

What is the regulatory environment like?

	government committed to free-market economy liberal business environment
	member of the WTO and has ratified most international treaties
	investment laws conform to European Union standards
	foreign investors are free to buy Lithuanian companies
	unrestricted movement of capital and dividends
	double-taxation agreements with many countries

Are there financial incentives available?

Investment incentives in Lithuania are centred on three Free Economic Zones in the cities of Klaipeda, Utena and Kaišiadorys. They include the following:

	tax holidays and tax reductions for companies investing over €1 million
	no taxes on dividends paid on foreign investments
	EU support funds for companies setting up in Klaipeda

And what about banking facilities?

Lithuanian banks offer the standard range of facilities, including foreign exchange and international payments. There are no foreign exchange restrictions. You will need a local bank account if you open a company in Lithuania and we will be happy to help you with this.

How can I get more information?

Our company formation service makes it easy for you to open a company in Lithuania, so please contact us for further details.