Opening a business and operating in Lithuania

Opening of the company and running a business in Lithuania

Lithuania is one of the EU countries with very attractive conditions for starting a business. The country is part of the European Union. The economic situation in Lithuania is generally favorable, there is a stable development of the market economy, Lithuanians can find their niche here, there are favorable conditions for doing business also for immigrants.

The advantages of opening a business in Lithuania

– Low rental rates and tax

– Possibility of entering European markets

– No currency control, the official currency is the euro, but the account can be opened in any freely convertible currency

– Technological environment and convenient mechanisms of cooperation with state institutions through electronic systems

– obtaining a residence permit for all family members and subsequent residence in the EU, free movement in Europe

– Opportunity to buy real estate

– Education at leading universities in Europe

– Simplified obtaining a visa to other countries

– Facilitation of European citizenship

– Trade without customs barriers (in the EU)

– Different types of benefits and no double taxation

– Getting loans on favorable terms and at a low interest rate

– Similar mentality for entrepreneurs from the CIS

– A lot of Russian-speaking people

What is needed to open a company

To set up a business, the following conditions must be met:

– Apply for a business visa in Lithuania and obtain residence permits within six months

– Skilful organization of all necessary documents.

Then choose the form of ownership:

1. IP is an individual enterprise. The owner is a natural person, the presence of share capital during registration is not required, the liability rests entirely on the owner and is unlimited.

2. CJSC – closed joint-stock company. The presence of share capital is assumed, which is divided into shares. The maximum number of shareholders is up to 250 people. Limited liability.

3. OAO – an open joint-stock company. This form of ownership is entitled to issue shares.

Registration

The terms of company registration in Lithuania are the same for both residents and non-residents and are as follows:

– The presence of an official company’s address office where documents will be sent

– Control in tax evictions. After registering your company within five days, you must register.

– Accounting. Every 30 days it is necessary to provide payroll reports, and the balance must be submitted once a year. This can be done by a full-time specialist or an outsourcing company.

– Accessibility of the component documentation. Should only be in Lithuanian, the translation from abroad must be certified by a notary.

– Presence of the card

– Payment of authorized capital that is made on time

– Preparation of the minutes of the shareholders’ meeting or the decision whether the owner is one person

Registration will be based on the following rules:

– Receiving a registration fee

– Document confirming ownership

– Notarial copy of the document with the company name

– Local authority permit issued by the company for running a business

The 4 main stages of registration:

1. Registration of a unique name that must meet certain standards of the Lithuanian language.

2. Opening an account in a Lithuanian bank.

3. Preparation of registration certificates and their certification by a notary public.

4. Company registration in tax, insurance fund and register of legal entities. For your convenience, you can issue an electronic signature.

The cost of services related to the opening and registration of a company through intermediaries is from EUR 700 to 2,000, depending on the service package.

Taxes in Lithuania

One of the key advantages of starting a business in Lithuania is taxation loyalty (rates are lower here than in many EU countries) and the possibility of granting loans on preferential terms. The state allows foreign investors to develop fully.

Tax rates in Lithuania are as follows:

1. VAT. The basic rate is 21%, the preferential rate is 9%, and the rate for goods for the disabled is 5%.

2. Profit tax is 15%, and its reduction of 5% is possible provided that the annual income of the company does not exceed 300,000 euros, and the number of employees involved is less than 10 people.

3. Medical and social insurance contributions – 40%.

4. Income tax is 15%, and under certain requirements it can be reduced to 10%.

5. Real estate tax – depends on the commune (0.3-1%)

6. Dividend taxation is 15%.

It should be noted that in the first six years of operation, entrepreneurs are not charged with income tax.

For comparison, the table below shows the rates of the main taxes of neighboring countries: