Key Considerations for Lithuania Company Registration

Preface: As the largest of the Baltic states, Lithuania has earned a well-deserved reputation as an economic powerhouse. Its stable and robust economy, coupled with a business-friendly environment, makes it an attractive destination for foreign investors looking to register a company in Lithuania. With low labor costs, favorable taxation rates, and minimal inflation, it’s no surprise that Lithuania is a magnet for foreign investment. Let Fionza Consultants be your partner in unlocking the full potential of Lithuania’s business landscape.

  1. Lithuania company registration with the State Enterprise Centre of Registers.
  2. Local company secretary services and registered address.
  3. Facilitating the opening of local or international corporate bank accounts.
  4. Annual accounting and tax services.

Pros and cons of Lithuania company registration

Political Landscape in Lithuania

Lithuania boasts a relatively low level of corruption, ranking 35th out of 180 countries on Transparency International’s Corruption Perceptions Index. This indicates a favorable environment for businesses looking to operate with integrity.

The shift in political leadership towards European Union support, exemplified by Gitanas Nausėda’s election in 2019, suggests Lithuania’s alignment with EU values and policies. The government’s commitment to a free-market economy and pro-business policies further enhances the business-friendly atmosphere.

Economic Environment

Lithuania stands out as the 16th freest country in terms of economic policies, according to the 2020 Index of Economic Freedom. As a member of the World Trade Organization, Lithuania actively collaborates with other nations to bolster its economic growth through international treaties that protect and promote investments.

Investors in Lithuania benefit from strong legal protections. The country’s laws safeguard foreign investors’ rights, ensuring their legal protection in case of any violations.

Social Factors

While Lithuanian is the official language, the country ranks 21st out of 100 on the EF English Proficiency Index, indicating widespread proficiency in English. This linguistic diversity facilitates international business interactions.

Concerning safety, Lithuania is labeled as a moderate risk for crime, with organized crime being the primary concern, according to the 2019 Crime & Safety Report by the Overseas Security Advisory Council.

A noteworthy social challenge is that approximately 28.3% of Lithuania’s population faces a risk of poverty or social exclusion, according to Eurostat.

Technological Advancements

Lithuania boasts a highly advanced technological landscape, exemplified by the implementation of the New Computerized Transit System, which streamlines import-export procedures and customs clearance.

The country also stands out as a major Fintech hub in Europe, with a rapidly growing startup ecosystem, ranking 2nd in the region.

In terms of innovation, Lithuania leads the European Union in university-business collaborations for Research & Development, as per the World Bank’s 2019 Global Competitiveness Report.

Legal Framework

Lithuania maintains a robust legal framework to address investment disputes. Disputes between foreign investors and the Republic of Lithuania are handled by the country’s courts or international arbitration institutions.

Additionally, Lithuania adheres to the principle of equal treatment, ensuring that both Lithuanian and foreign investors enjoy fair and equal business conditions under the Law on Investment. Foreign investors have unrestricted access to all sectors of the economy, with exceptions in state security and defense.

Environmental Initiatives

Lithuania prioritizes environmental protection, evident through the Environmental Impact Assessment process that evaluates projects with significant environmental impacts.

The country has ratified 21 multilateral environmental agreements, showcasing its commitment to addressing environmental challenges.

According to the European Commission Representation in Lithuania, over 61% of Lithuanians view the growing volume of waste as a critical issue, highlighting the nation’s environmental concerns.

What types of companies are there?

When considering Lithuania company formation, it’s crucial to weigh various factors such as personal liability protection, tax implications, ownership and management flexibility, and compliance requirements. Fionza Consultants takes a comprehensive approach to understand your business needs before recommending the most suitable business entity in Lithuania.

Several business structures in Lithuania offer distinct features:

  1. Individual Enterprise (IĮ):
    1. Ideal for sole owners, similar to sole proprietorships.
    1. No minimum initial capital required.
    1. Owner is personally liable for the business.
  2. Limited Liability Company (AB or UAB):
    1. A popular choice, offering separate legal entity status.
    1. Owners are not personally liable for the company’s debts.
    1. Two subsets: Public Limited Liability Company (AB) and Private Limited Liability Company (UAB).
    1. AB requires a minimum registered capital of €40,000.
    1. UAB requires a minimum of €2,500 in registered capital (audits for turnover over €1.4 million).
  3. General Partnership (TŪB):
    1. Jointly shared by partners.
    1. Partners and the business are legally considered one entity.
    1. No minimum capital requirement.
    1. Partnerships are taxed separately, and financial statements must be audited.
  4. Limited Partnership (KŪB):
    1. Combines characteristics of a limited liability company and general partnership.
    1. General partners have unlimited liability; limited partners’ liability is limited to their investment.
    1. Similar taxation and audit requirements as general partnerships.
  5. Small Partnership (MB):
    1. Suitable for small business owners, with limited liability.
    1. No minimum share capital requirement.
    1. Partners determine their contributions.
  6. Branch Office:
    1. An extension of a foreign parent company.
    1. Requires a resident manager in Lithuania.
    1. Liabilities are held against the foreign parent company.
    1. Minimum paid-up capital of €1.
  7. Representative Office:
    1. Used for market exploration and promotion, not for business activities.
    1. Liabilities held against the parent company.
  8. Agricultural Company (ŽŪB):
    1. Suitable for agricultural businesses.
    1. At least 2 members needed to set up.
    1. No minimum share capital.
    1. Members are not personally liable.

Consider these business structures based on factors like your business activity, tax obligations, and the nationalities of shareholders and directors. Fionza Consultants can guide you through the requirements for each entity and help you make an informed choice for your Lithuania company formation.

How to carry out Lithuania company registration?

The key steps to Lithuania company registration are as follows:

Step 1: Choose the Right Business Structure

Selecting the ideal business structure is the first crucial step when considering company registration in Lithuania. Options include Individual Enterprise (IĮ), Limited Liability Company (AB or UAB), General Partnership (TŪB), and more. Limited Liability Company (UAB) is popular among foreign investors due to its straightforward requirements and limited liability benefits.

Step 2: Reserve Your Company Name

Before proceeding, reserve your preferred company name through the Lithuania Register of Legal Entities. This name reservation is valid for up to six months and involves a reservation fee of approximately EUR 16.

Step 3: Prepare Required Documents

Prepare essential documents for company registration, including a registered local address and necessary KYC (Know Your Customer) documents. Fionza Consultants will assist in document preparation, including Articles of Incorporation, Business Plan, and Company Constitution. Translation of these documents into Lithuanian will also be arranged.

Step 4: Notarization and Registration

Notarize the founding documents at a registered notary’s office, which is mandatory before official incorporation. Notarization fees vary, typically ranging from EUR 70 to 290 based on share capital. After notarization, submit the documents to the Lithuania Register of Legal Entities for processing, accompanied by a registration fee of around EUR 57. Approval usually takes about three business days.

Step 5: Receive Corporate Documents

Upon approval, Fionza Consultants will courier the Certificate of Incorporation, Memorandum and Articles of Association, and other corporate documents to your preferred address. Documents will be translated into English for your review.

Step 6: Open a Corporate Bank Account

Fionza Consultants will assist in opening a corporate bank account with reputable banks such as Citadele Bank, Danske Bank, and Nordea Bank. Account setup typically takes approximately four weeks, with options for remote meetings. If needed, a nominee director can be provided.

Step 7: Ensure Tax and Accounting Compliance

After company setup, Fionza Consultants will continue to provide essential accounting and tax services to ensure your business stays compliant with regulatory requirements. This includes obtaining a Value Added Tax Number from the Ministry of Finance and managing financial statements, corporate tax returns, and bookkeeping in Lithuanian.

Corporate income tax is generally set at 15%. Our dedicated consultants will assist in translating and submitting financial records in Lithuanian while addressing any compliance queries.

Fionza Consultants: Your Comprehensive Solution for Lithuania Company Registration

Discover seamless Lithuania company registration with Fionza Consultants, your all-in-one partner. Our services encompass company formation, registered agent services, registered address solutions, and assistance in opening a business bank account.

Connect with us today to explore the ins and outs of registering your company in Lithuania. Our team of seasoned experts is ready to assist, and you can expect a response within 24 hours. Start your journey to establishing your business presence in Lithuania now.

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