BUSINESS IN LITHUANIA
Business immigration to Lithuania in 2024 is a good opportunity for entrepreneurs from third countries to settle in a member state of the European Union, enter the global markets and look confidently into the future. People from different countries are keen to start a business in Lithuania.
In 1990, the Republic of Lithuania was one of the first countries to announce its secession from the USSR. Foreign investment and EU financial support helped to reformatise the local economy to European market standards. Since 2015, Lithuania has joined the euro zone. Today, the country is developing steadily, as evidenced by the positive GDP growth dynamics over the past few years.
The Lithuanian labour force is quite qualified, most of them are employed in the service sector (70%), about 20% work in industry and up to 10% in agriculture. By the way, Lithuanian universities provide quality education, and diplomas are quoted in most countries of the world. Unemployment in the country is about 8-9%, and inflation does not exceed 2-3%.
In the long term, own business in Lithuania will help to apply for Lithuanian citizenship, which will give additional advantages and rights on a par with the locals. In this article we will familiarise ourselves with the peculiarities of doing business in the Lithuanian territory, the procedure of company registration, the rates of basic taxes and other aspects of business immigration to Lithuania.
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How to open a business in Lithuania
The Republic of Lithuania is comfortably situated in the north-eastern part of Europe, bordering Poland, Belarus, Latvia and Russia. The non-freezing port in Klaipeda is the main transport hub and is of great importance for the country's economy.
Lithuania has both industrial enterprises, such as shipbuilding, machine building, woodworking, and companies focused on agricultural production. The tourism sector, fishery, information technologies are also developed. Some types of business activities require a licence.
In general, there are quite a lot of directions for doing business in Lithuania. The local population, especially the business part, is fluent in English, and there are also many Russian-speaking citizens living in the country. Lithuanian business culture does not differ much from other civilised countries.
Punctuality, respectful communication, observance of dress code and other attributes of business life are valued. Despite a favourable legal environment and investment climate, corruption remains one of the main problems in Lithuania. Although comprehensive work is constantly carried out to eliminate and prevent such facts.
The Lithuanian authorities do their best to attract foreign businessmen to invest in the local economy. However, over the last few years a number of amendments have been made to the legislation aimed at reducing the number of fictitious companies created by foreigners in order to obtain official status in Lithuania, which allows them to move freely around European countries and enjoy other benefits of living in the EU.
Today, in order to run a legitimate business on Lithuanian territory with the right to reside in this country, a foreigner, in most cases, needs to register a company and employ at least three Lithuanian citizens. And only after the expiry of the six-month period the foreigner has the opportunity to obtain a residence permit in Lithuania in order to conduct a full-fledged business on Lithuanian soil.
In this matter, the assistance of specialised firms and business immigration consultants is likely to be required. It is also very important to work closely with the Lithuanian Consulate staff, who will provide the necessary assistance in obtaining a business visa to Lithuania. The residence permit procedure may take 2-4 months. Initially, the document is issued for one year with the right to extend it.
Procedure and cost of company registration in Lithuania
Lithuania ranks 11th in the Doing Business ranking of 190 countries in terms of accessibility of opening and ease of doing business. Compared to last year, the country has improved its position by 2 points. The Republic of Lithuania managed to surpass such developed and prosperous countries as Austria, Switzerland and France.
Main steps to register a company in Lithuania
Registration of a unique company name, which must fulfil certain language requirements. This is checked by a special state commission for the Lithuanian language. The procedure is carried out through a special electronic service, the cost of the service is 16 euros.
Opening an account in a Lithuanian banking institution.
Preparation and notary support of company registration documents: memorandum of association, articles of association, minutes of shareholders' meeting, application for registration.
Registration of the company in the register of legal entities, as well as with the tax authorities and the social insurance fund. Under certain conditions, such as having an electronic signature, this procedure can be done online. The cost is 51 euros.
Important. Foreigners who seek to open or buy a ready-made business in Lithuania have equal conditions with local citizens.
Forms of ownership for business in Lithuania
One of the most important stages for successful business immigration to Lithuania is the correct choice of the form of ownership for the future company. Let us consider the main and most popular types:
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Individual enterprise (IE). As a rule, the company belongs to one owner, who is fully personally liable for its financial obligations. This is the biggest disadvantage. There are no requirements for the minimum amount of authorised capital.
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Private limited liability company (UAB). The maximum number of shareholders cannot exceed 250 people. The management of the company is vested in a manager or a board of directors. The liability of the owners is limited to contributions. The authorised capital must be at least 2,900 euros.
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Small partnership (MB). The number of owners of the company varies from 1 to 10 persons, who determine the amount of the authorised capital. There are no formal requirements. Liability for the company's obligations is limited to contributions. Management is joint or a manager is appointed.
Taxes in Lithuania
Optimisation of taxation is the key to a successful and profitable business not only in Lithuania, but also in any other country of the world. It may be better to use the services of Lithuanian tax consultants for this purpose. It is worth noting that the Lithuanian tax system is very flexible and the tax rates are among the lowest in Europe.
Main tax rates in Lithuania in 2024
Corporate income tax – 15%. If the number of employees is less than ten people and annual turnover does not exceed 300 thousand euros the rate is reduced to 5% and the first year of activity 0%.
VAT. The basic rate is 21%. Preferential rates are 9% (print media, passenger transport), 5% (equipment for the disabled) and 0% (domestic and international transport).
Income tax – 20%; in some cases there is an increase to 32% if annual income exceeds 60 average salaries.
Social security contributions – 19.5%
Health insurance contributions – 6.98%
Dividend tax – 15%
Lithuania has signed double taxation treaties with 53 countries around the world. In addition, the country has established special economic zones where taxes are practically not levied in the first years of activity. In particular, no corporate income tax is paid for the first 6 years.
Business visa to Lithuania
In addition to the basic requirements for doing business in Lithuania related to company registration, hiring Lithuanian citizens, contributions to the share capital and fulfilment of other legislative norms, to move to the Lithuanian territory a foreigner must obtain a business visa. The document is issued at the Lithuanian diplomatic department in the country of the businessman.
Documents for a business visa to Lithuania
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Correctly filled in and signed visa application form.
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One colour passport photo (3.5x4.5cm), taken recently.
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Copies of all pages of civil and foreign passports.
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Certificate of financial status (bank statement).
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Medical insurance with the amount of coverage of at least 30 thousand euros.
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Information about the registration of your own company or an invitation from business partners.
In each case the Lithuanian Consulate staff may request additional documents.
