Lithuania

Legal framework

The legal system of Lithuania recognizes the generally accepted principles of the legal regulation of investments. The principle of equal treatment means that both Lithuanian and foreign investors have equal business conditions defined in the Lithuanian Law on Investment and other relevant legislation. The principle of equal protection means that the laws of Lithuania protect the rights and lawful interests of both local and foreign investors.

Double tax treaties

As at 1 January 2018, Lithuania had 53 double tax treaties providing

for certain tax benefits for foreign investment in Lithuania. Moreover, a double tax treaty with Japan is pending ratification.

A business can be set up electronically in just a few days if the entity’s establishment documents comply with the standard forms of documents.


Types of entities


Private limited liability company (UAB)

• Separate legal entity (legal entity with limited liability) - A shareholder may be held liable for the obligations of a company only in the event of failure to fulfil the obligations due to unfair actions of the shareholder

• May engage in any legitimate activities

• May engage in licensed activities upon obtaining the respective license

• Minimum amount of share capital is EUR 2,500

• Registration in 1–2 weeks

• General meeting of shareholders (sole shareholder) and general manager (single-member management body) are mandatory bodies

• Management board (min. 3 members) and (or) supervisory council (3–15 members) are optional bodies

• In a public limited liability company (AB) management board or supervisory council is a mandatory body

• The functions assigned to the competence of the supervisory council might be fulfilled by the management board if half of the members are not in the employment relations with the company

• No residence requirements to the general manager, other members of other bodies

• Employment contract must be concluded between the general manager and the company

• Comprehensive tax regulation

• Transfer pricing regulation is applicable

• Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million

• Thin capitalization rules apply (4:1)


Public limited liability company (AB)

• Separate legal entity (legal entity with limited liability)

• A shareholder may be held liable for the obligations of a company only in the event of failure to fulfil the obligations due to unfair actions of the shareholder

• May engage in any legitimate activities

• May engage in licensed activities upon obtaining the respective license

• Minimum amount of share capital is EUR 25,000

• Registration in 1-2 weeks

• General meeting of shareholders (sole shareholder) and general manager (single-member management body) are mandatory bodies

• Management board (min. 3 members) and (or) supervisory council (3-15 members) are optional bodies.

• In a public limited liability company (AB) management board or supervisory council is a mandatory body.

• The functions assigned to the competence of the supervisory council might be fulfilled by the management board if half of the members are not in the employment relations with the company

• No residence requirements to the general manager, other members of other bodies

• Employment contract must be concluded between the general manager and the company

• Audit required

• Comprehensive tax regulation

• Transfer pricing regulation is applicable

• Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million

• Thin capitalisation rules apply (4:1)

Accounting and audit requirements

Limited liability companies may choose at their own discretion to follow either the Lithuanian Business Accounting Standards or International Financial Reporting Standards (IFRS).

The companies whose securities are traded in the regulated markets must keep their accounting records and prepare their financial statements in accordance with IFRS.

If the financial year of a company coincides with a calendar year, the financial statements must be approved by the general meeting of shareholders by 30 April of the following calendar year.

The financial statements together with an independent auditor’s report (in case of statutory audit) must be submitted to the Register of Legal Entities, and they must be made publicly available in accordance with the legal acts.



Branch office

• Structural unit of a foreign company (not a separate legal entity)

• A founder is liable for the obligations of a branch

• May engage in all or any part of the business activities of a founder

• May engage in licensed activities with certain restrictions

• No share capital requirements Registration in 1–2 weeks

• General manager is a mandatory management body

• No additional corporate body may be formed

• If the founder of a branch is a non-EEA company, at least one person acting on be- half of the branch should reside in Lithuania

• Employment contract must be concluded between the general manager and the branch

• Audit may be performed as a part of the founder’s audit

• Less comprehensive tax regulation

• Transfer pricing regulation is applicable

• Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million

• No thin capitalization rules apply

Representative office

• Structural unit of a foreign company (not a separate legal entity)

• A founder is liable for the obligations of a representative office

• May engage in limited-scope operations: act on behalf of the founder, etc.

• No share capital requirements Registration in 1–2 weeks

• General manager is a mandatory manage- ment body

• No additional corporate body may be formed

• If the founder of a representative office is a non-EEA company, at least one person acting on behalf of the representative office should reside in Lithuania

• Employment contract must be concluded between the general manager and the representative office

• Audit may be performed as a part of the founder’s audit

• Less comprehensive tax regulation

• Transfer pricing regulation is applicable

• Transfer pricing documentation is mandatory when turnover is over EUR 2.9 million

• No thin capitalization rules apply


Corporate income tax (CIT)

A company is treated as a Lithuanian tax resident for CIT purposes if it is incorporated in Lithuania. No other tax residence rules apply.

Tax base

For local Lithuanian companies the tax base comprises all income sourced inside and outside Lithuania.

For foreign companies the tax base comprises income generated from business activities carried out through permanent establishments in Lithuania and other specific income sourced in Lithuania, such as:

• interest,

• dividends,

• royalties,

• proceeds from rent/sale of immovable property, etc.

The standard CIT rate is 15%. The reduced CIT rate of 5% applies to:

• small companies which meet certain conditions;

• companies involved in agricultural activities and which meet certain conditions.

The reduced CIT rate of 0% applies to:

• small companies which meet certain conditions (for the first year of operations);

• companies that are established in a FEZ (for the first 10 years).

0% Withholding tax rate applies to payment of dividends and interest in most cases.

The standard VAT rate is 21% and it applies to the majority of goods and services supplied in Lithuania.

The reduced VAT rate of 9% applies to:

• books, newspapers, other printed material;

• public transport services;

• heating of residential premises;

• hotel accommodation.

The reduced VAT rate of 5% applies to:

• pharmaceuticals, subject to restrictions;

• technical aid devices and their repair for disabled persons.

A flat rate of Personal income tax is 15%.

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