Starting A Business In Lithuania

Business Opportunities in Lithuania

Lithuania, located near the three major markets of Scandinavia, Western Europe, Russia, and the CIS region, is the geographic center of Europe and a component of Northern Europe. The nation shares borders with Poland, Latvia, Belarus, and the Russian Federation’s Kaliningrad area.

Lithuania is easy to reach from Europe, thanks to many nonstop airline facilities. The country aspires to be the startup hub of the Baltics on top of its advantageous geographic position. It’s a small nation that adopts international trends, which fosters a vibrant startup culture. The country offers access to the top talents in the region through its bilingual and global workforce. 

There are numerous significant advantages when viewing Lithuania as a prospective nation for business. It gets more and more exciting to watch how the ecosystem will change over the years since it is flourishing. Moreover, the entrepreneurs are ready to produce future technologies and are acknowledged.

You will learn how to start a business in Lithuania and how to register a company in Lithuania from this post.

Benefits of Starting a Business in Lithuania

Lithuania’s business-friendly environment and vibrant tech culture have made it a hotspot for business expansion. Local councils are working to secure equal opportunities for national and international participants as more and more potential entrepreneurial ideas arrive in the country. Because of this, Lithuania is home to several multinational start-ups and fast-growing businesses that promote new initiatives and foster cooperative growth. One of the State’s top strategic aims is to draw business to Lithuania. 

To realize this goal, Lithuania constantly works to enhance its reputation and investment appeal domestically and in its dealings with other countries or people who live abroad. Some advantages of establishing a business in Lithuania include:

• Under Lithuanian law, foreign nationals may enter and remain in the nation by establishing a company. Foreign nationals are permitted to either create a new legal corporation or join the management of one already incorporated in Lithuania (by becoming shareholders of the business).
• Creating a business in Lithuania gives you access to a beneficial tax structure.
• Since they are not offshore corporations, Lithuanian businesses have a good reputation on the market. A trustworthy business partner benefits from this, along with certain tax advantages.
• There are no exchange regulations on businesses incorporated in Lithuania, and they have accounts with banking institutions, enabling unrestricted financial flow.
• When engaging with partners from the EU, Lithuanian firms are entitled to a VAT number and the ability to use the VAT reverse procedure.
• Creating a corporation in Lithuania allows you to apply for a residence permit. You get unlimited time to stay in Lithuania and freedom of movement within the Schengen area.

Requirements for Starting a Business in Lithuania

It could seem like a good idea to start a business in Lithuania, but without the right advice, it might be challenging. This becomes noticeably more challenging when enterprises attempt to establish their presence in a foreign country.

Companies should enlighten themselves on how to set up a business in Lithuania. The following steps to opening a business in Lithuania are:

Company name: You need to choose the name of the business first. Then enter the name into the Lithuanian Register of Legal Entities. The documentation phase will start once the name has been registered and provisionally listed in the register.

Share capital: To start a business in Lithuania, you need minimum share capital in your bank account. In Lithuania, a company’s minimum share capital must be at least 1 EUR for Mazoji bendrija (MB) and 2,500 EUR for a Private limited liability company (UAB). Higher share capital requirements of

• 14,000 EUR for an individual, 
• 28,000 EUR for a pair, and 
• 42,000 EUR for a trio is typically needed for business immigration and residency permits.

Memorandum of Association: The Memorandum of Association describes the Lithuanian company’s purposes and powers. It details the company’s name, registration office, registered agent, and commercial activities.

Director: A Lithuanian business must have at least three directors. All nationalities are accepted. We can give you information about Lithuanian firms’ registered company directors and shareholders. Lithuanian enterprises are required to register their companies.

Types of Business Structures in Lithuania

Selecting the kind of business you’ll run is the first step to starting a business in Lithuania. You can choose between a corporation, a partnership, or solo ownership. The company structures commonly used by foreign enterprises to set up a business in Lithuania are

Public limited liability company (AB)

• Public limited liability corporation (AB) is Lithuania’s most popular business structure for medium-sized or large businesses.

• The minimal registered capital required to form a public limited liability corporation is EUR 40,000. Companies must pay minimum capital to their bank account (at least 25% to be paid up). Shares made up of the capital may be exchanged or made available to the public for purchase.
• A public limited liability company may have one or more founders (shareholders), who may be either natural individuals or legal organizations. The founder might live in the Republic of Lithuania or might not.

Private limited liability company (UAB)

• Creating a private business is typical for smaller overseas investors to invest in the Republic of Lithuania. 
• The minimal registered capital required to form a private limited liability company is EUR 2,500. At least 25% of the required authorized capital must be paid up. Shares of the capital are created but cannot be sold or put up for public sale.
• One or more people can be founders/shareholders of UB. It can be a local or a foreign national. 

General partnership (TUB) or limited partnership (KUB)

• In the Republic of Lithuania, there are two types of partnerships – general and limited. The fundamental distinction is in the scope of liability. 
• Each partnership is regarded as a separate legal entity. Limited partnerships have a responsibility that is only as great as the number of limited partners’ contributions.  General partnerships must have at minimum one general partner with unlimited liability.

Branch or representative office

• Foreign businesses or organizations may establish representative offices and branches.

 It is a division of a foreign business or organization located on the Republic of Lithuanian soil. There must be a Lithuanian resident among the managers.

• A branch office is a functional part of a legal entity. It has its registered office and carries out all or some of the responsibilities of the legal person. The branch office may conduct business within the parameters established by the foreign corporation.

Company Registration Process

Following are the steps of company registration in Lithuania:

Step 1: Create a founding act and founding agreement along with the articles of association: 

• Articles of association specify the rules and regulations for a company’s operations. It defines the company’s purpose. For this, you will need the company’s address.
• You have to designate a general manager to carry forward this stage. 
• If handled by a legal expert, it solely involves legal fees.

Step 2: Make a temporary company name reservation (optional):

• The next step is to get the company’s name registered. 
• Decide a name that best represents your company’s activities and operations. 
• You must apply (form JAR-5) to the Register of Legal Entities to reserve a company name. The registered name remains reserved for six months.

Step 3: Open savings account for accumulation: 

• Depositing share capital is the only purpose for using this accumulative bank account. 
• You can use any bank for activities later on. €2,500 is the bare minimum share capital needed.

Step 4: Share capital should be transferred to such accumulative account:

After opening a savings account for accumulation, you must transfer the share capital into the same account. You should be aware that at least 25% of the share capital goes to the accumulative account if the share capital is more than €2,500 (with the leftover amount to be paid within 12 months).

Step 5: The founding paperwork at a registered notary’s office for notarization:
– Your documents require an Apostille if your nation has ratified the 1961 Hague Convention (list of countries). You should legalize documents issued by foreign organizations in non-listed nations. In Lithuania, documents issued in Russia, Ukraine, Belarus, Moldova, Estonia, and Latvia do not need to be legalized or certified by an Apostille.

Step 6: Add the business to the list of legal entities:
You must first notarize documents before submitting them to the registrar (step 5). 

Step 7: Get an electronic signature that has been verified:
You can obtain a competent electronic certificate (electronic signature)  in one of three ways:

• Using a Lithuanian national identification card or a Lithuanian public servant ID card, both provided by the Identity Documents Personalization Center, which is part of the Ministry of Interior of the Republic of Lithuania.
• Mobile network providers Bite, Telia, and Tele2 can offer mobile electronic signatures.
• Using a protected electronic token with an integrated electronic signature supplied and authorized by the Center of Registers.

How Much Does it Cost to Incorporate a Company in Lithuania?

The cost of incorporating a company in Lithuania is as follows:

• The state charges 574 EUR to register a UAB (private limited liability business). 
• The notary fees, ranging from 102 EUR to 232 EUR, are not included in the state fee. 
• Lithuania has no governmental cost associated with registering as a VAT payer. The price varies widely depending on the bank you choose to open your business account with. 
• There may be additional fees for translation services (around 20–25 EUR/page) if the business is established by a legal person (company). The registration process takes three business days after the local authorities receive the required paperwork, and the total state charge ranges from 290 to 580 euros.

Are Foreigners on Certain Passes Allowed to Start a Business in Lithuania?

EU/EEA citizens need an ID card or passport to remain in Lithuania for up to 90 days. You must register and obtain a residency permit from the Migration Department if you intend to stay longer. 

Non-EU/EEA citizens require special visas and permits. Here are some more visas and permits that you need to start a business in Lithuania: 

• Acquire a Schengen visa (C)
  You are permitted to stay in Lithuania for 90 days with a Schengen visa. You must use up these days within a 180-day time frame. It is comparatively simple and quick to obtain a Schengen visa.
• Acquire an EU Blue Card
  Two-in-one (work and residence) permits are available for highly skilled non-EU nationals. It is valid for a maximum of three years and renewable for another three years. You are allowed to bring your family. After five years, you will be eligible for permanent residency.
• 2-years of residence permit 

Before submitting a residency visa request, the company has to be operational for at least six months. The business must have at least €28,000 in equity. Foreign investors must have invested a minimum of €14,000.

Government Assistance for Foreign-owned Businesses 

The law provides equal protection to foreign and domestic investors in Lithuania. No specific authorization from the government is needed to invest foreign money in Lithuania. 

Entities of the state are not permitted to impede the legitimate ownership of property owned by foreign investors. In the event of legitimate expropriation, investors are entitled to compensation equal to the market worth of the confiscated property.

Lithuania is subject to WTO capital investment because it is an EU member. Invest Lithuania is the government’s institution to attract more foreign investment. It functions as a one-stop shop for data on business costs, labor, tax, legal implications, and other business concerns. It also helps with company incorporation and launch, assists with obtaining government funding, and advocates on behalf of shareholders for more investor-friendly laws. 

The government is also growing its network of business agents; an attaché has just been assigned to work at the Los Angeles Consulate General. Additional postings in Taiwan, South Korea, and Japan are being considered.

Every year, the government invites foreign investors to a conference to address their worries and suggestions to enhance Lithuania’s investment climate.

How Multiplier Can Help

Launching a business in a foreign nation like Lithuania can be difficult. Lithuania has specific laws, requirements for registration, and tax policies. To start a business, you must abide by all applicable tax rules and regulations. Global PEO service companies, like Multiplier, can help in this situation.

Multiplier functions as a PEO to efficiently manage intricate business startup processes; our team of professionals assists your payroll processes. You may concentrate more on extending the market reach of your business when you leave payroll services to professionals. We also support the management and payment of freelancers employed worldwide.