Setting up a company in Lithuania is clear-cut: choose a legal structure, prepare minimal share capital, and register online.
The country offers direct access to the EU single market, a digitally advanced infrastructure, and a reputation for fast, streamlined company registration.
Unlike many jurisdictions that involve long waiting times and heavy bureaucracy, Lithuania allows businesses to be registered in just a few days, often entirely online through the use of e-signatures or e-Residency.
This guide provides a detailed overview of Lithuania company formation. It covers the different legal structures available, capital requirements, step-by-step registration procedures, taxation, and the incentives offered through Free Economic Zones.
It also answers key questions about costs and process of starting a business in Lithuania as a foreigner, timelines, and foreign ownership so entrepreneurs can evaluate whether Lithuania is the right location for their venture.
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Le informazioni contenute in questo articolo hanno un valore puramente indicativo. Non costituiscono consulenza finanziaria, legale o fiscale e non rappresentano una raccomandazione o una sollecitazione a investire. Alcuni fatti potrebbero essere cambiati dal momento della stesura.
Why Start a Business in Lithuania?
Positioned at the crossroads of Western Europe, the Nordics, and Eastern markets, Lithuania provides a gateway to over 450 million consumers within the EU single market.
The country is well-known for its digital-first approach to government services. Company registration, tax filings, and official reporting can be completed electronically, with e-signatures widely accepted.
For foreigners, Lithuania’s e-Residency program makes it possible to establish and manage a company remotely, providing flexibility for international founders.
Lithuania also offers competitive tax policies. The standard corporate income tax is 16%, but startups and small companies may qualify for reduced rates of 6% or even 0% under certain thresholds.
Businesses operating in designated Free Economic Zones enjoy additional benefits, such as exemptions from corporate tax and property tax for initial years of operation.
Beyond tax advantages, Lithuania has cultivated a thriving innovation and startup ecosystem, with strong support from government-backed agencies such as Invest Lithuania. Entrepreneurs gain access to consulting, networking opportunities, and a skilled workforce in one of the EU’s fastest-growing economies.
In short, Lithuania combines the advantages of an EU jurisdiction with low setup barriers, efficient digital services, and a favorable tax environment, making it a strong option for both local and foreign entrepreneurs.
Setting Up a Business in Lithuania
The first step in setting up a company in Lithuania is selecting the right legal structure. The country offers several options, each suited to different business sizes, investment levels, and liability preferences.
Private Limited Company (Uždaroji akcinė bendrovė – UAB)
The UAB is the most common business form in Lithuania. It requires a minimum share capital of about €2,500–€2,900 and offers limited liability protection, meaning shareholders are only liable up to the amount of their contribution.
It is well-suited for small and medium-sized enterprises and is often the structure of choice for foreign entrepreneurs.
Public Limited Company (Akcinė bendrovė – AB)
The AB is intended for larger enterprises and companies planning to raise capital from the public. It has a higher capital requirement, around €44,000, and stricter governance rules.
While less common among small businesses, it is essential for ventures aiming for significant growth or stock exchange listings.
Small Partnership (Mažoji bendrija – MB)
The MB is a flexible, low-cost option created for small businesses or partnerships. It has no formal share capital requirement, and its rules are less restrictive than those for UABs.
This makes it attractive for small teams or startups testing business ideas before committing larger resources.
Sole Proprietorship (Individuali įmonė – IĮ)
This is the simplest structure, owned and managed by a single individual. While it is easy to set up and inexpensive to run, the owner is personally liable for all debts and obligations, which may be risky for ventures planning larger operations.
Partnerships (TŪB / KŪB)
- General Partnership (Tikroji ūkinė bendrija – TŪB): All partners share full liability for obligations.
- Limited Partnership (Komanditinė ūkinė bendrija – KŪB): At least one partner has unlimited liability, while others are liable only up to their contribution.
Branches and Representative Offices
Foreign companies that do not want to establish a new legal entity can instead register a branch or representative office. These allow foreign businesses to operate or promote their services in Lithuania without forming a local company.
How to Register a Business in Lithuania: Step-by-step
- Prepare the documents.
Draft the Articles of Association, prepare the act of establishment (if there is a single founder), and secure a registered office address in Lithuania. If the office belongs to a third party, written consent from the owner must be provided. Entrepreneurs can also reserve a company name before submitting the application. - Open a temporary bank account.
Using the Articles of Association, open a temporary accumulation account at a Lithuanian bank or electronic money institution. Deposit the required share capital of at least €2,500 for a UAB. Proof of payment will be required for registration. - Notarise and sign.
Hold the constituent meeting if there are multiple founders, approve the statutes, and appoint the company’s governing bodies. The incorporation documents must be notarised by a civil law notary before submission. - Register with the authorities.
File the application with the Register of Legal Entities at the Centre of Registers. The required forms include JAR-1, JAR-VO-V, and JAR-T. Pay the €30.83 registration fee. If the documents are in order, the company is usually registered within three business days. - Activate the company bank account.
After the company is formally registered, the temporary accumulation account is converted into a permanent corporate bank account for day-to-day operations. - Register beneficial owners.
Within ten days of incorporation, the company must submit information on its ultimate beneficial owners (UBOs) to the JANGIS register. - Register for tax and social contributions.
New companies must register with the State Tax Inspectorate (VMI) using the online Mano VMI portal. VAT registration becomes mandatory once turnover exceeds €45,000. If hiring employees, employers must also notify the social insurance authority (Sodra) by filing the 1-SD form no later than one day before employment begins. - Remote option with e-Residency.
Foreign founders who cannot be physically present can incorporate remotely using Lithuania’s e-resident card, which enables signing documents electronically and managing the company online.
This process is designed to be fast and efficient. With the proper documents prepared, a company can be established and fully operational in less than a week.
How much does it cost to start a business in Lithuania?
The cost of starting a business in Lithuania varies by company type and required services.
For a private limited company (UAB), the minimum share capital is €1,000. This must be deposited into a temporary accumulation account before registration, and each shareholder is required to contribute at least 25% of their share.
For a public limited company (AB), the threshold is significantly higher at €40,000, reflecting its suitability for large enterprises. A Small Partnership (MB) does not require any share capital, making it one of the lowest-barrier options.
Beyond capital, there are other mandatory costs. A state registration fee of €30.83 is payable to the Register of Legal Entities, and incorporation documents must be verified by a civil law notary.
Entrepreneurs may also choose to reserve a company name in advance for a small fee. If incorporation is done remotely, Lithuania’s e-resident card is necessary, which costs €90 plus an additional €18 service fee.
Ongoing costs begin immediately after registration. Businesses must budget for accounting services, the cost of a registered office if using a third-party provider, and sector-specific licenses if applicable.
Companies are not required to register for VAT until their annual turnover exceeds €45,000, though voluntary registration is possible.
Doing Business in Lithuania: Taxation and obligations
Once a company is registered, it must comply with Lithuania’s tax and reporting framework. The corporate income tax rate is 16% (increased from 15% starting January 2025), but small businesses that meet specific conditions may qualify for a reduced 6% rate, and certain startups may enjoy 0% tax in their first year.
Companies operating in Free Economic Zones may also receive exemptions from corporate tax for an initial period, provided they meet investment thresholds.
As of 2025, the value-added tax (VAT) rate is 21%. Registration becomes mandatory once a company’s annual turnover exceeds €45,000, though voluntary registration is allowed. For businesses trading across borders, EU VAT rules apply, including the use of the One-Stop Shop system.
It is important to note that current legislation may raise the current VAT threshold in the next few years.
Employers have additional responsibilities. Personal income tax must be withheld from employees’ salaries, and both the employer and employees contribute to social security.
The main contributions include health insurance and pension funding. Before the first working day, employers are required to notify the social insurance authority (Sodra) by submitting the 1-SD form electronically.
All Lithuanian companies must maintain proper accounts and submit annual financial statements. These are filed with the Centre of Registers, and electronic submission is standard practice.
Failure to comply with reporting or tax obligations may result in penalties, making professional accounting support essential from the start.
Incentives and Free Economic Zones Lithuania
Lithuania actively encourages investimenti esteri through a system of incentives and Free Economic Zones (FEZs). The Kaunas and Panevėžys FEZs are the most established, offering substantial tax relief for businesses that meet minimum investment levels.
Companies based in these zones can enjoy 0% corporate income tax for the first 10 years and a reduced rate thereafter, as well as exemptions from real estate tax and dividend tax.
In addition to FEZ benefits, Lithuania promotes startups through reduced corporate tax rates and easier incorporation rules for small partnerships. The government also provides access to grants and EU funding programs aimed at innovation, technology, and sustainability projects.
Lithuania’s combination of competitive taxation, EU market access, and targeted incentives in FEZs creates a favorable landscape for both small ventures and larger investors looking for a European base.
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