The advice below is for general guidance only. You should check all information before acting on it.
What kind of bureaucracy do I have to be aware of?
- Until the last day of the current month or
- Until the 15th day of the subsequent month or
- Once a year, no later than within 10 days after a deadline for submitting an annual income declaration to the STI (deadline for provision of annual income declarations usually is May 1st).
How important is it to know the local language?
If your Lithuanian skills are not that good, you may encounter some difficulties while trying to establish and develop your business.
New businesses must have a Lithuanian company name; all documents must be completed in Lithuanian; the main language for communication in institutions is Lithuanian; reports, declarations and other accounting documents must be submitted in Lithuanian.
When communicating with customers or business partners, you may experience less difficulties, as the older generation speaks Russian, and young people have a good command of English. So, if you speak one of these languages, you will be able to “survive” without the Lithuanian language in most of the cases.
See instructions provided in FAQ question „Which local organisations can help free of charge?“
Which local organisations can help free of charge? E.g. Business clubs, business advisory organisations etc?
Consultations for refugees and immigrants: Vilnius Archdiocese Caritas; Lithuanian Red Cross Society.
And branches thereof: Lithuanian Red Cross Centre INLT in Kaunas Lithuanian Red Cross; Infocentre for Migrants in Klaipėda.
If your written and spoken Lithuanian skills are good enough, you can consult directly with the State Tax Inspectorate, the Centre of Registers and other institutions.
Co-operation centres “Spiečius” provide free consultations for entrepreneurs starting a business, organizes trainings and provides workplaces.
More information:
Consultations for refugees and immigrants:
- Vilnius Archdiocese Caritas (Kalvarijų str. 39, Vilnius, tel. No. +370 699 31977)
- Lithuanian Red Cross Society (A. Juozapavičiaus str. A, Vilnius, tel. No. +370 5 2628037)
And branches thereof:
- Lithuanian Red Cross Centre INLT in Kaunas (Šv. Gertrūdos str. 18A, tel. No. +370 656 96766).
More information: https://www.facebook.com/www.redcross.lt/
- Lithuanian Red Cross Infocentre for Migrants in Klaipėda ( Donelaičio str. 21 a, tel. No. +370 620 44701).
More information: https://www.facebook.com/Infocentras/
Here you will be informed about the conditions for starting a business, opportunities for individual activity and so on. If necessary, they will escort you and help by mediating in various institutions: municipality, departments of social support and migration, banks; will help to complete necessary documents.
If your written and spoken Lithuanian skills are good enough, you can consult directly with the State Tax Inspectorate, the Centre of Registers and other institutions.
The State Tax Inspectorate regularly organizes seminars and training sessions for starting entrepreneurs on topical issues. Sign up for these seminars on the STI website. You can view event videos on the STI website or the STI Youtube channel (search for: Valstybinė mokesčių inspekcija vaizdo kanalas).
STI provides tax advice by phone. Call 1882 or +370 5 260 5060. You can also submit your request via My STI area Submit inquiry.
You can also find answers to frequently asked questions on the website of Centre of Registers. You can also submit your inquiry online or via phone (+370 5) 268 8262. You can register your company and use other services of the Centre of Registers via the website of the State Enterprise Centre of Registers.
Co-operation centres “Spiečius” are available in Lithuania. These centres provide free consultations for entrepreneurs starting a business, organizes trainings and provides workplaces. More in FAQ question “Where should my business be located?”.
Business consultations for young business owners are provided by the Business Consultants’ Network.
National Mentors’ Network (NMN) provides virtual consultations. NMN is focused on owners and managers of businesses operating for 1-2 years.
More information:
What type of refugee business exists in your local community?
Hairdresser business is popular among Syrian and Iraqi refugees. Most of them are working in Vilnius with a business certificate or business licence.
However, there are examples of foreigners who have successfully developed their business in Lithuania, at example, restaurants, construction business and other.
More information:
Rawad, a Syrian refugee, founded a Don Pedro café in Vilnius, where he also employed other refugees.
More information: https://www.facebook.com/Don-PEDRO-180708369416654/?tn-str=k*F
Eskedar Tilahun Maštavičienė, refugee from Ethiopia, is a well-known businesswoman and public figure. Her first business in Lithuania was a clothing shop. She is now successfully importing coffee beans from Ethiopia. More information: https://www.facebook.com/eskedarcoffee/
She is also involved in social and public activities — teaches employees business English, works as an interpreted in the Department of Migration, “Caritas”, helps to integrate refugees. She’s constantly visiting Women’s Crisis Centres, hostels. In 2019 she was elected a person of the year by “Kauno žinios” news portal.
Pavel, refugee from Belarus, is involved in construction business. More information: https://www.unhcr.org/neu/914-in-person-pavels-successful-integration-in-lithuania.html
- Ghulam, refugee from Afghanistan, with his friend Tajik Sulamano opened a restaurant in Vilnius “Rytietiška virtuvė”. More information: https://www.facebook.com/pages/category/Product-Service/Rytieti%C5%A1ka-Virtuv%C3%A9-425446034546734/
Uzbekistan refugee Farruh Azimov has been leading Halal Control Lithuania for several years. It provides certification for food and non-food manufacturers, meat processors and control of production produced in accordance with the Halal requirements. Businessman successfully develops international business with Malaysia.
What is a mobile business?
Mobile business, more commonly referred to as electronic business or e-commerce in Lithuania, covers not only purchase and sale of various goods and services online, but also supply, orders, advertising, consulting, various agreements and business cooperation.
E-shops are the most developed area of electronic business in Lithuania. Examples of popular e-shops: pigu.lt, senukai.lt, varle.lt, barbora.lt.
More information:
E-business advantages:
- Provides more information on products and company, attracts more users;
- Provides opportunity to receive customer feedback, gather information about customers, process it and thus meet customer needs more effectively.
- Selling without a need for agents, without renting premises, lower number of employees, thus being able to offer lower prices for goods and services you provide.
- Convenient information system of the company;
- Developing the image of an innovative company;
- New international business possibilities.
Where to start?
- Analyse the market segment of interest; evaluate competition and development possibilities.
- At the start of your business, especially if you are engaged in individual production (making clothes, handbags, crafting jewellery, etc.) online social networking (e.g., Facebook) features come in handy.
- Then you could launch an e-shop as your business grows. Create a plan of your goods and services, decide on your range and then contact website developers who will create your e-shop design and web page with a database.
- Buy a website address and domain for your website.
Make sure that your website is suitable for mobile phones, as “Google” ranking system is more favourable for websites adapted for mobile use. This means, that websites suitable for mobile phones will appear higher in “Google” searches. This is especially important in Lithuania, as surveys suggest that customers usually search for goods online rather than in a specific shop.
Where should my business be located?
When looking for premises for the realization of services and products, it is important to choose a place where your services would be in demand. It also must be a convenient place for employees and customers, convenient access and not too close to competitors, etc.
More information:
If you are planning to engage in individual activity (under a business licence or an individual activity certificate), formation of a legal entity is not required under the Lithuanian laws, meaning that you don’t have to declare your business address. However, if you are planning to establish a company (private limited liability company, individual company, small partnership, etc.), it must be registered in the Register of Legal Entities and business address must be declared. Premises in which the registered office of the legal person is registered must be registered in the Register of Real Estate. Consent of the owner of the premises to provide premises to a legal person for a registered office, if the owner of the premises is not the founder is required. Companies specialising in business registration may help you to find premises for registered office.
If you are trying to set up an e-business, you need to buy a website address, website domain and create your website.
For a small-scale business you may have enough office space in your apartment, however, as the business grows, you may need to search for bigger premises. It is convenient to rent such offices in so-called co-working spaces. Currently there are 25 such workspaces in Lithuania. 15 in Vilnius, 8 in Kaunas and 2 in Klaipėda. Typically, such spaces offer cost-effective rental rates. Short-term rent is also possible — be it one hour or one day.
For several years now, new co-working centres — “Spiečius” — are being set up for entrepreneurs starting a business. These are a non-traditional business development environments intended for cooperation and development of small- and medium-sized businesses. “Spiečius” co-working spaces are focussed on representatives of digital and creative industries. Here entrepreneurs are provided with free workstations with equipment, business consultation, practical mentor sessions and business development trainings. Services there are free of charge.
These co-working spaces can be found in Alytus, Šiauliai, Tauragė, Panevėžys and Klaipėda.
When looking for premises for the realization of services and products, it is important to choose a place where your services would be in demand. It also must be a convenient place for employees and customers, convenient access and not too close to competitors, etc.
IMPORTANT. Before buying the business premises you like, make sure that the purpose of those premises is suitable for your business. The laws of the Republic of Lithuania provide that certain activities may only be carried out at the premises of that purpose, otherwise, a business permit is not granted. Exceptions when buildings or their premises can be used for business without changing their purpose are listed in the Decree on Approval of the Procedure of the use of the building and premises thereof for not their intended purposes. The decree provides activities that may be carried out in apartment buildings, administrative, commercial, cultural and recreational places, etc.
Where do you plan to get your financial resources to start the business?
Usually business is established using personal funds without external funding.
The most popular external funding sources are banks and credit unions. However, collateral is usually required and high risk assessment requirements for the company are raised, therefore, it is quite difficult to get approved for a loan for a new company.
For some businesses it is possible to use EU structural funds’ loans or loan guarantees granted under various business support programs.
More information:
Financial support for small and medium-sized businesses is provided by the following institutions:
- National Development Body INVEGA
- Employment Service
- Ministry of Agriculture of the Republic of Lithuania
- Municipalities of cities and districts
- Lithuanian Business Angels Network — Litban
- Crowdfunding
EU Structural Funds
For some businesses it is possible to use EU structural funds’ loans or loan guarantees granted under various business support programs. You may receive soft loans for start-up businesses. Soft loans are those that are more favourable than conditions which market provides. In most cases the state is the entity that facilitates the debtors’ burden in paying annual interest on a loan repayment period.
Financial support for small and medium-sized businesses is provided by the following institutions:
National Development Body INVEGA
- Soft loans under the Entrepreneurship Promotion Fund (EPF2) up to EUR 25,000.
More information: http://invega.lt/en/solf-loans/entrepreneurship-promotion-fund/
- Soft loans under the Open Credit Fund (OCF2) up to EUR 600,000
More information: http://invega.lt/en/solf-loans/open-credit-fund-2/
- Risk-shared loans financed by the European Regional Development Fund (RSL) up to EUR 4 mln.
More information: http://invega.lt/en/solf-loans/risk-shared-loans-2/
Employment Service
Provides subsidies to remuneration when hiring disabled people, long-term unemployed, unemployed aged 50 plus, refugees and other individuals whose employment is promoted by the state.
Ministry of Agriculture of the Republic of Lithuania
Provides soft loans and subsidies for the ones conducting businesses in rural areas:
- Support for starting of economic activities in rural areas.
- Investments for setting up and development of economic activities.
Municipalities of cities and districts
Provides financial support for start-ups and other business entities under the small and medium business support programs. Find more information on websites of each municipality.
Lithuanian Business Angels Network — Litban
Entrepreneurs, having experience and funds, finance new promising businesses. Business Angels help both financially and by transmitting their knowledge, experience and business contacts.
More information: https://www.litban.lt/
Failing to get funding in the above mentioned way, you can always try crowdfunding. Crowd funding is the funding of a project of any kind by raising monetary contributions from a large number of people. Business idea and necessary funds are announced using special platforms (such as Kickstarter, Indiegogo, FundedByMe), and people make small contributions to help to implement that idea.
Business support from EU Structural Funds is also available. Calls to apply for grants are issued. Call are published on the website of Ministry of Economy and Innovation:
Calls are administered and consultations on the preparation of applications and implementation of projects are provided by the Lithuanian Business Support Agency (LVPA) and Agency for Science, Innovation and Technology (MITA).
You may also participate in public tenders and provide services to other companies. Invitations to tender are published on Central public procurement portal: https://cvpp.eviesiejipirkimai.lt/.
How do I increase the reputation of my refugee-owned business?
Customer opinion has a significant influence on the company’s reputation. Therefore, you should pay attention to business qualities that are important to clients. This information is provided in Annual Business Index in Lithuania Reports.
More information:
In order to have a good reputation for your business, you should find out what are the characteristics of a reputable company in Lithuania. Reputable companies in Lithuania are the ones that:
- Have a strong value-based foundation;
- Produce high quality products and services;
- Focus on all key interest groups;
- Perform transparent activity;
- Have public representatives able to communicate well.
Customer opinion has a significant influence on the company’s reputation. Therefore, you should pay attention to business qualities that are important to clients. This information is provided in Annual Business Index in Lithuania Reports. Recent survey has shown that the following factors are most important to the company’s reputation:
- Innovation;
- Honesty;
- Ethics;
- Quality of provided goods and services,
Ability to meet clients’ needs.
What cultural differences should I be aware of?
Just like in any other country, you may encounter some cultural differences while trying to establish and develop your business in Lithuania. On your way to success you will have to empathize with the existing conditions and culture — the way business partners and clients perceive and behave in business dealings — as well as to realize that in many cases you will have to behave differently than you are used to.
More information:
What are key features of a Lithuanian businessman?
Lithuanian Free Market Institute distinguishes 5 most prominent features of a Lithuanian businessman:
- Hard working,
- Risk taking,
- Future oriented,
- Providing and giving,
- Responsible
One of the most distinctive features of Lithuanian entrepreneurs in Europe is education and proficiency in languages. Therefore, you should not worry about competence of your business partners or language barrier.
Lithuania promotes equal rights for women and men in terms of employment and work and aims to achieve balanced participation of women and men in decision making and top management positions. Therefore, you will meet women in high positions during your business dealings.
Several business communication features:
- Lithuanian businessmen are quite punctual and expect the same from others.
- Planning is usually quite slow and detailed, however, projects are implemented promptly and smoothly.
- Nevertheless, Lithuanian entrepreneurs may also be spontaneous and are able to make decisions quickly.
- Strict deadlines are observed. However, as noted by foreigners, “sometimes they fail by taking on so many orders that they are not able to deliver on time.” It is joked that only the loudest clients’ orders are delivered on time in Lithuania.
- Lithuanian businessmen are more likely to emphasize their flaws and things they could do better rather than talking about their achievements. They tend to underestimate their own work.
- Lithuanians usually answer the phone with “Alio” or “Klausau” (hello) even in business settings. When communicating with foreign partners, Lithuanians follow their example, and start a conversation on the phone by telling their names and company name.
- Calling after working hours is considered a sign of disrespect.
Typical business meeting:
- Business meetings are planned in advance, and confirmed the day before via e-mail or a telephone call.
- Handshake is a proper way for greeting and saying goodbye. Direct eye contact is crucial. Personal space is very important — do not stand too close while communicating. Touches are not acceptable.
- Lithuanians usually act composed in business settings. Excessive hand gestures and relaxation are considered a sing of disrespect and untrustworthiness.
- One of the worst behaviour traits is interrupting someone while they are speaking. Courtesy and good manners are highly valued and cherished.
- Formal dress code prevails. Dark colours in winter and autumn, bright colours during other seasons of the year.
Lithuanians as employees
Lithuanians are described as excellent employees and reliable team members. According to foreign employers, Lithuanians not only tend to wait for the instructions from their managers, but also actively propose various solutions themselves. They are described as having realistic approach to work, being logical thinkers and willing to change. Lithuanian employees may sometimes be described as slow, but they are rather more responsible than their spontaneous colleagues.
Lithuanians as clients
Lithuanian consumers are not ashamed of their rational solutions and hunting for good deals. Lithuanians are not loyal and quite demanding clients as they understand value of their money. They also like novelties.
Most of the buyers tend to purchase only reliable and tested goods for their homes. The other strong group of buyers: people willing to try innovations and to experiment, fond of technologies and promoting a healthy lifestyle (based on “Spinter tyrimai” performed survey).
Price is still one of the most important criteria for many Lithuanians. Businessmen have to scratch their heads really hard to offer high quality goods for a low price.
Lithuanians are interested in healthy nutrition options; also are very demanding on the quality of freshness of food products. They are big patriots in terms of food products: Lithuanian products are valued and considered a guarantee of quality. Currently the trends of healthy lifestyle are increasingly shaping consumer purchasing habits.
Lithuanian consumers are increasingly buying online. Purchases are made both from traditional computers and mobile phones. Therefore, it is important for an e-commerce shop to work equally well on all devices. Lithuanians are also scouring the Internet for good deals. They make purchases only after checking prices on several e-shops. Therefore, businessmen must always keep looking for ways to make good use of marketing to propose an offer that his customers’ simply could not resist.
Visual appearance of goods is very important. Therefore, your success highly depends on quality of product photos.
A typical Lithuanian
Lithuanians usually describe themselves as being modest, silent, hardworking and faithful individuals. According to the results of a study of national archetypes of Lithuanians, they are kind-hearted, composed, caring, long suffering, down-to-earth, ordinary, and have a special relationship with nature. Foreigners are surprised that most of Lithuanian families own homesteads or small land plots near the city where they can spend weekends or summer holidays.
Foreigners usually see Lithuanian women, especially the older generation, as quite compliant and sometimes even too obedient to their husbands. Modest attitude of Lithuanian women is usually misinterpreted as oppression. However, most of Lithuanian women are well educated and often have a higher education than men.
Lithuanians are going for the image of a hardworking nation. Based on sociological surveys, Lithuanians mostly seek to teach their kids to be diligent in their work. However, they are usually quite modest about their achievements.
Lithuanians are also persistent and flexible. They demonstrate stability, persistence and self-esteem. Lithuanians are also notable for courage. They always guarded and tried to preserve their statehood and identity.
Lithuanians are usually described as loyal friends. They can clearly define a line between friends and acquaintances.
Melancholy and passive mood may also be regarded as a national trait. Many on the streets may seem sad and cold, especially the older generation. They also rarely smile and communicate with strangers. In her book “Culture smart: Lithuania” Lara Belonogoff says that Lithuanians are characterised by natural moderations that may often be confused with harshness and unfriendliness. However, this first impression changes with a closer acquaintance: Lithuanians turn out to be very cordial, helpful and frank people.
Most Lithuanians belong to the Roman Catholic Church, but other religious communities also prevail (Orthodox, Evangelical, Jewish, Muslim, etc.).
Most people consider themselves religious, but rarely go to church and are more likely to adhere to secular values. Still, religious traditions remain important in lives of Lithuanians, as religious ceremonies for marriages, christening and funerals are held in almost every family.
Lithuanians have always been tolerant of various cultures and beliefs. Unfortunately, tolerance to foreigners has decreased recently. Foreign nationals coming to live to Lithuania notice that Lithuanians are reluctant to show their hospitality and invite foreigners to their homes. Therefore, people coming from other countries may feel strange and unwelcome. Nevertheless, other cultures are respected, and Lithuanians show interest in them.
Lithuania can be described as a region of 3 languages. Apart from Lithuanian, the older generation speaks Russian, and young people has a good command of English. A lot of people speak German, Polish, French or any of Scandinavian languages.
Can I start right away?
You can start your business in Lithuania only after completing all the necessary formalities.
More information:
If you choose individual activity under an individual activity certificate, you can start your business the same day you submit an application and provide personal identification documents to the STI.
If you decide to engage individual activity under a business licence, you will be able to start your business within 4 days after submission of documents to the STI and the payment of a defined personal income tax (GPM) contribution.
Should you select another type of business (private limited liability company, individual enterprise or small partnership), which requires the establishment of a company (registering in the Register of Legal Entities), you will encounter greater bureaucracy and the process may take up to 3 weeks.
Currently, there are many companies in Lithuania that provide paid services and help to set up a company: prepare documentation, provide consultations in Lithuanian and foreign languages (English, Russian).
Organizations that provide services free of charge are listed under the FAQ question “Which local organisations can help free of charge?”.
What type of business (business format) can you set up in this country and what are the differences?
You can start business by choosing an individual activity or setting up a company – a legal entity.
More information:
Individual activity
The main difference between the ways of conducting individual activity is that the person working under a business licence shall pay a fixed fee in advance and may only engage in strictly defined activities. An individual activity certificate allows engaging in a variety of activities; income tax shall be paid from the actual income.
Start and termination of individual activity is quick and non-expensive: you only have to obtain a business licence or a certificate at STI.
Business by establishing a company
The most common business enterprises:
- Private limited liability company (UAB);
- Individual enterprise (IĮ);
- Small partnership (MB).
Individual activity
The main difference between the ways of conducting individual activity is that the person working under a business licence shall pay a fixed fee in advance and may only engage in strictly defined activities. An individual activity certificate allows engaging in a variety of activities; income tax shall be paid from the actual income.
Start and termination of individual activity is quick and non-expensive: you only have to obtain a business licence or a certificate at STI.
More about Individual activity under an individual activity certificate
- Possible activities
All activities are allowed, except for some instances when it is required to establish a legal entity. You can get the code for a suitable activity by calling the Department of Statistics at (+370 5) 236 4716.
- Do I have to establish a company?
No
- When can I get started?
Activity may be started the same day the application is submitted to the STI. Activity period is unlimited.
- Activity period
Unlimited
- Termination of activity
You need to inform the STI 5 days in advance.
- Recruitment of other individuals
Allows hiring employees.
- Personal income tax (GPM)
Depends on the actual income. There are no income taxes, if activity fails and no income is earned. Rate — from 5% to 15%
A 5% rate applies if income does not exceed EUR 20,000 per calendar year. As the annual income exceeds EUR 20,000, the applicable tax rate increases depending on the amount until it reaches a fixed rate of 15% (as the annual income reaches EUR 35,000). Profit from individual activity — the income reduced by the expenses incurred or by deducting 30% from all the revenues gained. Find more information about the income tax on the STI website.
- State Social Insurance (VSD)
Rate — 12.52% (additional 1.8 or 3.0% contributions are made if a person is involved in pension accumulation)
Paid from 90% of taxable income gained from individual activity.
- Compulsory health insurance (PSD)
Rate — 6.98%
Paid from 90% of taxable income gained from individual activity.
IMPORTANT. If this activity is the main income and the resident is not elsewhere covered with social and compulsory health insurance:
VSD and PSD contributions are calculated from the taxable income but not less than from a minimum monthly salary (MMA) which now is equal to EUR 555. I.e. EUR 38.74.
PSD of EUR 38.74 must be also paid on months when no income is received. There is no need to make state social insurance contributions for such months.
- Value Added Tax (PVM)
Registering as VAT payer is not required, if the total amount for economic activity performed in the territory of Lithuania does not exceed EUR 45,000 during the last 12 months.
However, if the amount of all the intra-Community acquisitions of goods by a person during the preceding year was in excess of EUR 14,000 or it is estimated to exceed the threshold during the current year, such person must file an application to be identified as VAT payer, even if the annual income of EUR 45,000 is not exceeded.
- Corporate income tax
Not applicable
- Accounting
Income-expense journal and cash register must be kept.
One of the following accounting documents must be issued for buyers of goods or services: invoice, VAT invoice or cash register receipt.
Detailed information is specified in the Rules of Accounting of Residents’ Individual Activities (except for residents holding business certificates).
- Legislation and other references
For more information, please visit the STI website (http://www.vmi.lt/index.jsp?lang=en)or call 1882.
Legislation:
Law on Tax Administration of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.141918?jfwid=p1ug7nle7;
The Resolution No 1059 of the Government of the Republic of Lithuania of 6 September 2000 “Regarding establishment of the Register of taxpayers and approval of the provisions thereof”;
The Order No 373 of the Head of State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 24 December 2002 “Regarding the Rules of issuance of self-employment certificate of the permanent resident of Lithuania and the certificate of registration of a permanent base of non-residents of Lithuania in Lithuania”;
The Order No VA-39 of the Head of State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 13 April 2006 “Regarding the description of the procedure of registration of the residents in the Register of Taxpayers”;
The Order No VA-36 of the Head of State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania of 25 June 2013 “Regarding approval of the Rules of registration/deregistration of Natural persons in/from the Register of Taxpayers”.
More about Individual activity under a business licence
- Possible activities
Business licence allows engaging only in a limited set of activities (list of allowed activities here (http://www.vmi.lt/index.jsp?lang=en).
The amount for service rendered by a legal entity in the course of the year shall not exceed EUR 4,500.
VAT payers are not allowed to engage in individual activity under a business licence.
- Do I have to establish a company?
No
- When can I get started?
Activity may be performed during the business licence validity period. Business licence is issued within 4 business days. Number of different business licences is unlimited.
- Activity period
Business licence may be issued for at least one day, but no longer than for a year. It may be extended, if needed.
- Termination of activity
No liquidation or notification needed.
- Recruitment of other individuals
Only one of the following family members is allowed to participate in activity under a business licence: spouse, father, mother, minor aged 14 years, ward, caregiver.
Person working under a business licence is not allowed to hire people for the activity performed under a business licence, however, person who acquired a business licence may employ natural person for works not related to his activity performed under a business licence.
- Personal income tax (GPM)
GPM shall be paid before the day of issue of a business licence.
A municipal income tax shall be paid for a business licence if income does not exceed EUR 45,000 per year.
- State Social Insurance (VSD)
State social insurance contribution depends on the business licence duration.
A standard contribution is paid when a business licence is valid for a month (from the first to the last day of the month):
- EUR 48.40 (8.72% of MMA)
- EUR 58.39 (10.52% of MMA, if a person is involved in pension accumulation and pays 1.8%)
- EUR 65.05 (11.72% of MMA, if a person is involved in pension accumulation and pays 3%).
If a business licence is valid for longer or less than a month, state social insurance contributions are calculated in proportion to the business licence duration.
- Compulsory health insurance (PSD)
Compulsory health insurance (PSD) — EUR 38.74 (6.98% of minimum monthly salary (MMA) — EUR 555: EUR 555 x 6.98%). Contribution amount stays the same regardless the validity period of a business licence during that month.
IMPORTANT. Foreigners who have temporary residence permits and are engaged in individual activity under a business licence should pay compulsory social insurance contributions in advance (for example, they must pay entries for September until 31 August), as these persons are considered covered by compulsory health insurance only after making contributions for the current month.
- Value Added Tax (PVM)
Registering as VAT payer is not required, if the total amount for economic activity performed in the territory of Lithuania does not exceed EUR 45,000 during the last 12 months.
However, if the amount of all the intra-Community acquisitions of goods by a person during the preceding year was in excess of EUR 14,000 or it is estimated to exceed the threshold during the current year, such person must file an application to be identified as VAT payer, even if the annual income of EUR 45,000 is not exceeded.
- Corporate income tax
Not applicable
- Accounting
The seller working under a business licence must issue a sale and purchase receipt.
Income-expense journals must be kept.
- Legislation and other references
Guide for an individual who obtains a business licence.
For more information, please visit the STI website (http://www.vmi.lt/index.jsp?lang=en) or call 1882.
Legislation:
Law on Personal Income Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.319033?jfwid=rivwzvpvg;
Law on State Social Insurance of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.371035?jfwid=5sjolge5y;
Law on Health Insurance of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/224f56c0507811e485f39f55fd139d01?jfwid=q8i88kxfa;
Resolution No 1797 On the Rules of Issuing Business Certificates to Individuals of 19 November 2002 of the Government of the Republic of Lithuania;
Order of the Minister of Finance of the Republic of Lithuania No. 415 of 24 December 2002 “Concerning approval of the accounting rules for residents who have acquired business licenses”;
Order of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania No. 333 of 21 November 2002 “Concerning approval of the business licence form and the classifier of registered individual activities that may be pursued by holders of business licenses”.
Business by establishing a company
The most common business enterprises:
- Private limited liability company (UAB)
- Individual enterprise (IĮ).
- Small partnership (MB).
More about Private limited liability company (UAB)
- Possible activities
Companies may engage in any activity; some activities are subject to licences (see FAQ question “What are general business taxes to pay?”).
- When can I get started?
- Company must be registered in the Register of Legal Entities (see more in FAQ question “How do you set up or register a business?”).
- Particular documents must be prepared and obtained (establishment act, statutes, shareholder’s decision, consent of the owner of the premises, etc.); most of them must be notarised. The process of setting up a business can take up to 3 weeks.
- Liabilities
UAB is a private legal entity of limited civil liability. This means that responsibility of a member for non-executed obligations is limited only to his contributed assets.
- Authorised capital
Must be at least EUR 2 500. Formed of contributions of shareholders. When authorised capital of more than EUR 2,500 is formed, shares can also be paid with non-monetary contributions (such as, vehicles, computers, and other property); non-monetary contributions must be valued by independent property valuers. Such contributions cannot constitute more than 75% of the authorised capital.
UAB can issue new shares and trade in them to attract more funds.
- Founders
UAB may be founded by one or more natural or legal persons.
- Management
Single-person management body – head of the company or a collegiate management body – the Board.
- The principle of voting during the process of decision making
If all the shares of the company granting voting rights are of equal nominal value, 1 share equals to 1 vote during the general meeting of shareholders.
- Employees
Two mandatory employees: director and accountant (or an accounting company).
- Shareholders
- May have up to 249 shareholders.
- The profit earned by UAB may be distributed to the shareholders only through dividends (if UAB is profitable) or salary.
- UAB shareholders may trade, donate or otherwise transfer their shares to other people. Shareholders may also leave their shares as legacy.
- Termination of activity
Regardless the legal form (UAB, IĮ, MB) and type of activity, liquidation and termination of the company is quite similar.
Company is liquidated at its own discretion as participants (shareholders, members, owner) decide to terminate the activity of a legal entity. Decision on liquidation must be adopted by at least 2/3 of the votes of all participants (shareholders, members).
Individual enterprise may be reorganized into a limited liability company, private limited liability company or small partnership.
- Personal income tax (GPM)
- From dividends paid by the company to a resident — 15%;
- From employee’s salary — 20% or 27%.
- State Social Insurance (VSD)
Employee’s taxes:
12.52% (additional 1.8% or 3.0% contributions are made if a person is involved in pension accumulation) from the remuneration for work.
Employer’s taxes: 1.77% to 3.75% from remuneration for work.
- Compulsory health insurance (PSD)
Employee’s taxes:
6.98% from the remuneration for work.
- State social insurance and compulsory health insurance contributions are not deducted from dividends.
- Company must pay all employee’s taxes from the remuneration for work.
- More about social insurance contributions.
- Value Added Tax (PVM)
Must be registered as a VAT payer.
Rate — 21%,
or a reduced rate — 5% or 9%.
- Corporate income tax
Rate — 15% or 5%;
UABs are subject to certain tax benefits. Company can also benefit from a reduced Corporate Income Tax rate of 5% instead of 15 %, if the company has less than 10 employees and its turnover during the financial year does not exceed EUR 300,000.
- Real Estate Tax
From 0.3% to 3% if a company has registered assets.
- Accounting
Accountant or an accounting company must be hired. Head of the company (director) shall not act as an accountant.
- Legislation and other references
Law on Companies of the Republic of Lithuania.
Law on Accounting of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/1fd977c249b611e68f45bcf65e0a17ee?jfwid=rivwzvpvg
Law on Value Added Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.175434?jfwid=ck9gybq1y
More about Individual enterprise (IĮ)
- Possible activities
Companies may engage in any activity; some activities are subject to licences (see FAQ question “What are general business taxes to pay?”).
- When can I get started?
- Company must be registered in the Register of Legal Entities (see more in FAQ question “How do you set up or register a business?”).
- Particular documents must be prepared and obtained (establishment act, statutes, shareholder’s decision, consent of the owner of the premises, etc.); most of them must be notarised. The process of setting up a business can take up to 3 weeks.
- Liabilities
The individual enterprise is a private legal entity of unlimited civil liability. This means that the owner of an individual enterprise covers his liabilities with his own assets, i.e. assets of the company are not separated from the assets of the owner of the company.
- Authorised capital
Not required.
Contributions are the personal property of the owner of an individual enterprise, property transferred to the IĮ and property acquired on behalf of the company.
- Founders
Only 1 person.
The owner of the individual enterprise shall not be the owner of another individual enterprise.
- Management
Managed by the owner or a person appointed by the owner.
- The principle of voting during the process of decision making
Decisions are made by the owner.
- Employees
Owner may as well be the only employee. Family members may help the IĮ owner without any employment contracts.
- Shareholders
The whole profit goes to the owner of the individual enterprise. The owner may take money in the cash register of the company as an advance payment, may take assets from the individual enterprise.
- Termination of activity
Regardless the legal form (UAB, IĮ, MB) and type of activity, liquidation and termination of the company is quite similar.
Company is liquidated at its own discretion as participants (shareholders, members, owner) decide to terminate the activity of a legal entity. Decision on liquidation must be adopted by at least 2/3 of the votes of all participants (shareholders, members).
Individual enterprise may be reorganized into a limited liability company, private limited liability company or small partnership.
- Personal income tax (GPM)
- From owner’s dividends — 15%;
- From funds withdrawn by the owner for personal use (as salary) — 15%.
- State Social Insurance (VSD)
13.83% (additionally deducting 1.8% or 3%, if a person is involved in pension accumulation) — from 50% of amounts withdrawn by the individual enterprise owner for own use.
- Compulsory health insurance (PSD)
6.98% — from 50% of amounts withdrawn by the individual enterprise owner for own use.
- State social insurance and compulsory health insurance contributions are not deducted from dividends.
- Company must pay all employee’s taxes from the remuneration for work.
- More about social insurance contributions.
- Value Added Tax (PVM)
IĮ shall register as a VAT payer, if its income exceeded EUR 45,000 over the last 12 months or the amount of all the intra-Community acquisitions of goods by a person during the preceding year was in excess of EUR 14,000.
Rate — 21%,
or a reduced rate — 5% or 9%.
- Corporate income tax
Rate — 15% or 5%;
UABs are subject to certain tax benefits. Company can also benefit from a reduced Corporate Income Tax rate of 5% instead of 15 %, if the company has less than 10 employees and its turnover during the financial year does not exceed EUR 300,000.
- Real Estate Tax
From 0.3% to 3% if a company has registered assets.
- Accounting
Accountant is not required.
- Legislation and other references
Law on Individual Companies of the Republic of Lithuania.
Law on Accounting of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/1fd977c249b611e68f45bcf65e0a17ee?jfwid=rivwzvpvg
Law on Value Added Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.175434?jfwid=ck9gybq1y
More about Small partnership (MB)
- Possible activities
Companies may engage in any activity; some activities are subject to licences (see FAQ question “What are general business taxes to pay?”).
- When can I get started?
- Company must be registered in the Register of Legal Entities (see more in FAQ question “How do you set up or register a business?”).
- Particular documents must be prepared and obtained (establishment act, statutes, shareholder’s decision, consent of the owner of the premises, etc.); most of them must be notarised. The process of setting up a business can take up to 3 weeks.
- Liabilities
MB is a private legal entity of limited civil liability. This means that a participant shall cover non-executed obligations with the small partnership assets.
- Authorised capital
Not established, but members must pay contributions (amount thereof and payment procedure is determined by the meeting of members).
- Founders
Only natural persons (1-10 persons).
- Management
Two management bodies of the small partnership are possible:
- Meeting of members. One of the members is appointed as the MB representative who basically is the head of the MB;
- Meeting of members of a small partnership and the single-person management body – head of the MB (civil agreement is required).
- The principle of voting during the process of decision making
Usually it is 1 member per one vote, however, when the small partnership is led by the head, the provisions of the small partnership may specify otherwise.
- Employees
Members may work for small partnership, but no employment contracts are concluded. Employment contracts can only be concluded with employees who work for the small partnership, but who are not members of the MB.
- Shareholders
- Profit is distributed proportionally according to the amount of the contributions made, unless the provisions of the small partnership provide otherwise.
- Small partnership members may voluntarily leave the business by withdrawing their contributions; may as well sell or otherwise transfer their membership rights to other persons.
- Termination of activity
Regardless the legal form (UAB, IĮ, MB) and type of activity, liquidation and termination of the company is quite similar.
Company is liquidated at its own discretion as participants (shareholders, members, owner) decide to terminate the activity of a legal entity. Decision on liquidation must be adopted by at least 2/3 of the votes of all participants (shareholders, members).
Individual enterprise may be reorganized into a limited liability company, private limited liability company or small partnership.
- Personal income tax (GPM)
- From dividends of MB members — 15%;
- From funds withdrawn by MB member for personal use (as salary) — 20%;
- From income for management services of the head of small partnership, who is a member of the MB, under a civil service contract — 15%;
- From income for management services of the head of small partnership, who is not a member of the MB, under a civil service contract — 20%.
- State Social Insurance (VSD)
- 83% (additionally deducting 1.8% or 3%, if a person is involved in pension accumulation) — from 50% of amounts withdrawn by the MB member for own use.
- From income for management services of the head of small partnership, who is a member of the MB, under a civil service contract — state social insurance contributions are not paid.
- 72% (additionally deducting 1.8% or 3%, if a person is involved in pension accumulation) — from income for management services of the head of small partnership, who is not a member of the MB, under a civil service contract.
- Compulsory health insurance (PSD)
- 98% from 50% of amounts withdrawn by the MB member for own use.
- From income for management services of the head of small partnership, who is a member of the MB, under a civil service contract — compulsory social insurance contributions are not paid.
- 72% (additionally deducting 1.8% or 3%, if a person is involved in pension accumulation) — from income for management services of the head of small enterprise, who is not a member of the MB, under a civil service contract.
- State social insurance and compulsory health insurance contributions are not deducted from dividends.
- Company must pay all employee’s taxes from the remuneration for work.
- More about social insurance contributions.
- Value Added Tax (PVM)
MB shall register as a VAT payer, if its income exceeded EUR 45,000 over the last 12 months or the amount of all the intra-Community acquisitions of goods by a person during the preceding year was in excess of EUR 14,000.
Rate — 21%,
or a reduced rate — 5% or 9%.
- Corporate income tax
Rate — 15% or 5%;
UABs are subject to certain tax benefits. Company can also benefit from a reduced Corporate Income Tax rate of 5% instead of 15 %, if the company has less than 10 employees and its turnover during the financial year does not exceed EUR 300,000.
- Real Estate Tax
From 0.3% to 3% if a company has registered assets.
- Accounting
Accountant is not required (members of a small partnership can administer the accounting in accordance with Business Accounting Standard No. 38).
- Legislation and other references
Law of Small Partnerships of the Republic of Lithuania.
Law on Accounting of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/1fd977c249b611e68f45bcf65e0a17ee?jfwid=rivwzvpvg
Law on Value Added Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.175434?jfwid=ck9gybq1y
What are the legal requirements?
There are many legal requirements in Lithuania that businesses must comply with.
More information:
Do I need a licence to start my business?
In the cases prescribed by law, legal persons may engage in particular activities only after obtaining a license issued in accordance with the procedures established by law. Legal person must hold all licences (permits) that are determined as necessary conditions for its activity.
What working conditions are required?
The employer must ensure the right of every worker to working conditions which respect his or her health and safety.
Occupational risk assessment must be performed: the likelihood of trauma or other damage to health due to harmful and/or hazardous work environment (chemical, physical, biological, ergonomic, psychosocial factor).
Employees working under occupational risk conditions must undergo periodical health examinations (during recruitment, during employment, changing work or workplace).
What is minimum salary in Lithuania?
Minimum monthly salary (MMA) in Lithuania — EUR 555 (since 01 01 2019).
MMA is set by the government. MMA stands for the minimum monthly amount to be paid by the employer to the employee (for 40-hour work week, not including overtime).
Personal income tax (GPM), compulsory health insurance (PSD) as well as pension and social insurance are deducted from the salary.
Can I work part-time?
Terms of part-time work must be included in the employment contract when the employee is recruited (when signing the employment contract), or later (by changing the employment contract).
Time for part-time working day or work week is determined by agreement between the employee and the employer (mutual agreement is mandatory) or, when this is required, as prescribed by Article 40 of the Labour Code of the Republic of Lithuania (Agreement for part-time work).
More information
Do I need a licence to start my business?
In the cases prescribed by law, legal persons may engage in particular activities only after obtaining a license issued in accordance with the procedures established by law. Legal person must hold all licences (permits) that are determined as necessary conditions for its activity.
Government of the Republic of Lithuania approves licensing rules for each type of licensed activity prescribed by law. These rules may be found on the website of a licensing institution.
Licence is issued for an indefinite period if the conditions listed in the licensing rules are met. License to engage in a particular activity or a written reasoned refusal to issue a license is submitted to the applicant within 30 days after provision of all documents required for a licence, unless otherwise provided by law.
Main activities requiring licenses or permits:
- Transportation of people;
- Cargo transportation;
- Public catering;
- Construction;
- Production and sale of alcohol and tobacco;
- Pharmaceutical activity;
- Production and sale of oil products.
List of licenses and permits is provided on the website of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania: http://www.vmi.lt/index.jsp?lang=en.
What working conditions are required?
The employer must ensure the right of every worker to working conditions which respect his or her health and safety.
Occupational risk assessment must be performed: the likelihood of trauma or other damage to health due to harmful and/or hazardous work environment (chemical, physical, biological, ergonomic, psychosocial factor).
Employees working under occupational risk conditions must undergo periodical health examinations (during recruitment, during employment, changing work or workplace).
More information:
Law on Safety and Health at Work of the Republic of Lithuania:
https://e-seimas.lrs.lt/rs/legalact/TAD/TAIS.249611/
Employees are prohibited to start work if they are not instructed and trained to work safely (or without making sure that they are able to do so). The procedure for briefing and training is determined by the employer.
Institutions responsible for occupational safety control in enterprises: State Labour Inspectorate, Ministry of Health and Ministry of Social Security and Labour.
Occupational health and safety is regulated by the following: Constitution of the Republic of Lithuania, Labour Code, Law on Occupational Health and Safety, other legislation:
- General Provisions for Installation of Workplaces approved by the Minister of Social Security and Labour of the Republic of Lithuania and Minister of Health of the Republic of Lithuania.
- Work environment assessment regulated by the Order on Approval of the General Provisions of Occupational Risk Assessment of the Minister of Social Security and Labour and Minister of Health.
- Minimum requirements for used equipment are approved by the order of the Minister of Social Security and Labour of the Republic of Lithuania.
What is minimum salary in Lithuania?
Minimum monthly salary (MMA) in Lithuania — EUR 555 (since 01 01 2019).
MMA is set by the government. MMA stands for the minimum monthly amount to be paid by the employer to the employee (for 40-hour work week, not including overtime).
Personal income tax (GPM), compulsory health insurance (PSD) as well as pension and social insurance are deducted from the salary.
Take-home pay depends on applied monthly non-taxable amount (NPD). Monthly NPD depends on the amount of remuneration for work, disability groups (for persons with disabilities), pension accumulation option.
For example, in 2019, an employee earning a minimum monthly salary of EUR 555, with no determined disability groups and not paying contributions to a pension fund, will receive EUR 395.78 after taxes.
Minimum hourly rate (MVA) in Lithuania — EUR 3.39 (since 01 01 2019).
Government decision on minimum salary of 16-10-2018, No. 1025, TAR, 16-10-2018, code 2018-16268
Can I work part-time?
Terms of part-time work must be included in the employment contract when the employee is recruited (when signing the employment contract), or later (by changing the employment contract).
Time for part-time working day or work week is determined by agreement between the employee and the employer (mutual agreement is mandatory) or, when this is required, as prescribed by Article 40 of the Labour Code of the Republic of Lithuania (Agreement for part-time work).
Part-time working hours may be determined by shortening the working week (hours) or shortening a work day (shift) or both. Terms for shortened work time shall be laid down in the employment contract.
Part-time workers are not subject to any restrictions for determining their annual leave, work experience, promotion, training or other rights compared to full-time employees working the same or equivalent work, in terms of work experience, qualification and other circumstances.
Work is paid according to hours worked or work performed.
How do you set up or register a business?
To start individual activity under a certificate or to obtain a business licence, one shall provide application form to the State Tax Inspectorate. A foreign national, who is not a resident of the European Union member state or a family member of a resident thereof, must submit a temporary residence permit to live in the Republic of Lithuania.
While establishing a company, it must be registered in the Register of Legal Entities.
More information:
Business without establishing a company — individual activity
To start individual activity under a certificate, one shall provide the State Tax Inspectorate (hereinafter — STI) with the following documents:
- Completed application form REG812;
- Identity papers (passport, identity card);
- Power of attorney is required when the application is submitted by an authorized person.
The certificate is issued for an unlimited period of time.
To obtain a business licence, submit the following documents to the county STI:
- Application for a business licence;
- identity paper (passport, identity card);
Other documents, if required.
When a foreign national, who is not a resident of the European Union member state, European Free Trade Association or a family member of a resident thereof, wants to apply for an individual activity certificate or a business licence, a temporary residence permit to live in the Republic of Lithuania must be submitted.
Documents may be submitted electronically via the State Tax Inspectorate, My STI area, or in person.
Business by establishing a company
A business entity — legal entity (hereinafter — LE) must be entered in the Register of Legal Entities.
Company registration covers the following stages, regardless of the legal form:
- Draft a Memorandum of Association (in case of more than 1 founder) or an establishment act (when there is only one founder). This document sets out the conditions for establishment of a legal entity.
- Choose a name for your legal entity and apply to the Register of Legal Entities with a 6-month reservation request.
- Prepare statutes/regulations. This is a document that establishes objectives and tasks of activities, management bodies, their competences, rights of shareholders, positions, etc.
- Choose a registered office. A consent of the owner of the premises is required, if the owner of the premises for a registered office is not the founder of the company. Companies specialising in business registration may help you to find premises for registered office.
- Form an authorized capital, determine contributions of stakeholders/members, deposit cash contributions into the bank account of legal entity (if required by the legal form).
Submit documents to the notary and the Register of Legal Entities (this may be performed electronically via the website of the State Enterprise Centre of Registers. Submitting documents electronically helps to avoid expenses for document preparation and notarisation).
More information
Business without establishing a company — individual activity
In Lithuania there are 2 ways of conducting individual activity:
- under a business licence;
- under an individual activity
The key difference: person working under a business licence shall pay a fixed fee in advance and may only engage in strictly defined activities. An individual activity certificate allows engaging in a variety of activities; income tax shall be paid from the actual income.
To start individual activity under a certificate, one shall provide the State Tax Inspectorate (hereinafter — STI) with the following documents:
- Completed application form REG812;
- Identity papers (passport, identity card);
- Power of attorney is required when the application is submitted by an authorized person.
The certificate is issued for an unlimited period of time.
To obtain a business licence, submit the following documents to the county STI:
- Application for a business licence;
- identity paper (passport, identity card);
Other documents, if required.
When a foreign national, who is not a resident of the European Union member state, European Free Trade Association or a family member of a resident thereof, wants to apply for an individual activity certificate or a business licence, a temporary residence permit to live in the Republic of Lithuania must be submitted.
Documents may be submitted electronically via the State Tax Inspectorate, My STI area (https://sso.vmi.lt/sso/login?TARGET=https%3a%2f%2fwww.vmi.lt%2fmanovmi%2flt%2fManoVMIep.aspx&locale=en), or in person.
For more information, please visit the STI website (http://www.vmi.lt/index.jsp?lang=en) or call 1882.
Business by establishing a company
A business entity — legal entity (hereinafter — LE) must be entered in the Register of Legal Entities (http://www.registrucentras.lt/jar/index_en.php).
Company registration covers the following stages, regardless of the legal form:
- Draft a Memorandum of Association (in case of more than 1 founder) or an establishment act (when there is only one founder). This document sets out the conditions for establishment of a legal entity.
- Choose a name for your legal entity and apply to the Register of Legal Entities with a 6-month reservation request.
- Prepare statutes/regulations. This is a document that establishes objectives and tasks of activities, management bodies, their competences, rights of shareholders, positions, etc.
- Choose a registered office. A consent of the owner of the premises is required, if the owner of the premises for a registered office is not the founder of the company. Companies specialising in business registration may help you to find premises for registered office.
- Form an authorized capital, determine contributions of stakeholders/members, deposit cash contributions into the bank account of legal entity (if required by the legal form).
- Submit documents to the notary and the Register of Legal Entities (this may be performed electronically via the website of the State Enterprise Centre of Registers. Submitting documents electronically helps to avoid expenses for document preparation and notarisation).
The most common legal entities:
Private limited liability company — UAB.
Private limited liability company’s authorised capital must be at least EUR 2500. It must be formed of initial contributions of founders.
- Private limited liability company may have from 1 to 250 founders.
- Private limited liability company must have a head of the company. Collegiate management body — the Board — may be formed.
- Two mandatory employees: director and accountant or an accounting company.
Individual enterprise — IĮ.
- The individual enterprise shall be established by a sole legally capable citizen of the Republic of Lithuania.
- The owner of the individual enterprise shall not be the owner of another individual enterprise.
- IĮ shall be managed by the owner or a person appointed by the owner.
- Owner of the individual enterprise may as well be the only employee of the IĮ. Family members may help the IĮ owner without any employment contracts.
- IĮ is not subject to a minimum initial authorised capital. Contributions are the personal property of the owner of an individual enterprise, property transferred to the IĮ and property acquired on behalf of the company.
Important: The individual enterprise is a private legal entity of unlimited liability. This means that the owner of individual enterprise covers his liabilities with his own assets, i.e. the assets of the company are not separated from the assets of the owner of the company.
Small partnership — MB.
- MB founders may only be natural persons.
- MB may have from 1 to 10 founders.
- Members may work for small partnership, but no employment contracts are concluded. Employment contracts can only be concluded with employees who work for the small partnership, but who are not members of the MB.
- Minimum initial authorised capital is not required, but members must pay contributions (amount thereof and payment procedure is determined by the meeting of members).
- Accumulation account in bank is not required.
- Two management bodies of the small partnership are possible:
- Meeting of members only. One of the members is appointed as the MB representative who basically is the head of the MB;
- Meeting of members of a small partnership and the single-person management body — head of the MB (civil agreement is required).
- guide “Establishment of Legal Entities”: http://www.registrucentras.lt/jar/e-gidas_en/
More information about establishment of legal entities: http://www.registrucentras.lt/jar/index_en.php
State Enterprise Centre of Registers Help Desk tel. No. (+370 5) 268 8262.
What are general business taxes to pay?
Business taxes depend on the activity and the form of business.
Main business taxes in Lithuania:
- Personal Income Tax;
- Compulsory Health Insurance;
- State Social Insurance;
- Corporate Income Tax;
- Value Added Tax;
- Real Estate Tax;
- Excise duty.
More information:
Main business taxes in Lithuania:
Personal Income Tax (GPM) — 20% or 27%
This tax is levied on the income of single persons. Personal income tax also applies for other work non-related income (sale of securities, received dividends, etc.).
More information:
Law on Personal Income Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.319033?jfwid=rivwzvpvg
Compulsory Health Insurance (PSD) — 6.98%
Deducted from the employee’s salary.
Guarantees free health care and treatment.
More information:
Law on Health Insurance of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/224f56c0507811e485f39f55fd139d01?jfwid=q8i88kxfa
State Social Insurance (VSD) — 12.52% (paid by the employee) and 1.77-3.75% (paid by the employer). Guarantees pension, sickness, maternity leave benefits, etc.
More information:
Law on Social Insurance of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/f85b15f062c011e5b316b7e07d98304b?jfwid=5sjolge5y
Corporate Income Tax — 15% or 5%
Is paid by companies from their net income.
Newly registered entity is subject to 0% corporate income tax rate during the first taxable period, under the following circumstances:
- The average number of employees during the first taxable period does not exceed 10;
- Income per the first taxable period does not exceed EUR 300,000;
- Participants are natural persons;
- Within three consecutive taxable periods, including the first tax period, entity’s activity is not suspended, the entity is not liquidated, reorganized, shares of the entity are not transferred to new participants.
More information:
Law on Corporate Income Tax of the Republic of Lithuania:
https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/1375cd60a50f11e8aa33fe8f0fea665f?jfwid=ck9gyaymo
Value Added Tax (PVM) — 21%
Tax is paid by Lithuanian and foreign natural and legal persons, engaged in any type of economic activity in Lithuania.
Companies must be registered as VAT payers, however a special scheme for small enterprises is implemented in Lithuania which exempts such undertakings from this duty (see Article 71 of the Law on VAT).
Some goods and services are subject to reduced VAT — 9% and 5% VAT rates.
0% VAT rate is levied on the goods and services listed in Articles 41-53 of the Law on VAT.
VAT exempt goods and services are listed in Articles 20-33 of the Law on VAT.
More information:
Law on Value Added Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.175434?jfwid=ck9gybq1y
Real Estate Tax (NTM) — 0.3-3%
Real estate tax is paid by natural and legal persons owning real estate.
More information:
Law on Immovable Property Tax of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.409446?jfwid=rivwzvpvg
Excise duty is a type of tax charged on certain goods:
Ethyl alcohol and alcoholic beverages;
Processed tobacco;
Fired tobacco products;
E-liquid;
Energy products;
Electricity.
More information:
Law on Excise Duties of the Republic of Lithuania: https://e-seimas.lrs.lt/portal/legalActPrint/lt?jfwid=-fxdp7gsr&documentId=TAIS.160467&category=TAD
https://www.vmi.lt/cms/en/akcizai
What happens to the integration payment when I start a business?
Funds allocated to an alien or his/her family granted asylum are not reduced if a person finds employment or establishes a company.
What will be the costs to set up the business and run it for the first few months?
Necessary investments depend on your business idea.
Making estimates on how much your business will cost you several first months, plan your expenditures on materials, lease of premises, advertising, wages for yourself and your employees, accounting company services, etc.
More information:
Starting-up an activity according to individual activity certificate is cost-free.
Business license costs only a flat income tax determined by the municipality. Tax depends on the type of activity and period covered by the activity.
Setting an individual enterprise (IĮ) does not require any authorized capital or other financial contribution. Approximate costs for establishing IĮ:
- reservation of IĮ name – EUR 16.22,
- IĮ registration – EUR 30.99,
- notary fee – approx. EUR 100,
Founding a small partnership (MB) contribution of individual member may be a mere 1 euro (size and form of contribution is chosen by members of MB). Approximate costs for establishing MB:
- reservation of MB name – EUR 16.22,
- MB registration – EUR 51.61,
- notary fee – approx. EUR 120,
Establishing a limited liability company (UAB) authorized capital is required – not less than EUR 2500. Costs for opening UAB:
- reservation of UAB name – EUR 16.22,
- UAB registration – EUR 57.34,
- notary fee – approx. EUR 130,
If you will set up a company electronically via self-service of Register of Legal Entities, you will save money from paying to notary. However, if you will purchase documentation preparation services, it will cost you 150-200 euros.
Please pay attention that upon carrying out certain activities you have to obtain licenses and/or permits (more information under FAQ What are the legal requirements?).
Making estimates on how much your business will cost you several first months, plan your expenditures on materials, lease of premises, advertising, wages for yourself and your employees, accounting company services, etc.
It goes without saying that you will have to pay various taxes each month (more information under FAQ What are general business taxes to pay? What type of business (business format) can you set up in this country and what are the differences? What kind of bureaucracy do I have to be aware of?).
Would it be a good idea to get a mentor to help me in my plans?
You will face certain difficulties when setting up a business or at its very beginning. Some of them can be solved with the help of mentors serving in institutions handling integration of refugees in municipalities.
More information:
Consultations for refugees and immigrants:
- Vilnius Archdiocese Caritas (Kalvarijų str. 39, Vilnius, tel. No. +370 699 31977)
- Lithuanian Red Cross Society (A.Juozapavičiaus str. A, Vilnius, tel. No. +370 5 2628037)
And branches thereof:
- Lithuanian Red Cross Centre INLT in Kaunas (Šv. Gertrūdos str. 18A, tel. No. +370 656 96766).
More information: https://www.facebook.com/www.redcross.lt/
- Lithuanian Red Cross Infocentre for Migrants in Klaipėda (K.Donelaičio str. 21 a, tel. No. +370 620 44701). More information: https://www.facebook.com/Infocentras/
More information about business advice could be found under FAQ Which local organisations can help free of charge?
If you decide to start a business enterprise, you will encounter difficulties that could be an issue to solve even with the help of mentor. Companies providing services of starting new businesses help save time and experience less stress, they provide advice not only in Lithuanian, but also in foreign languages (English, Russian) for a certain fee. You may easily find them entering “Setting up/starting a business”, “Registration of legal persons” etc. in the Google search box.
Running a business, you will have to pay various taxes, prepare reports, declare property and income. If you hire employees, you will have to pay monthly wages, taxes, and submit documentation of specific format to SODRA, etc. Besides, laws, orders and tax fees are often changing in Lithuania, therefore there is a risk to make a mistake and be bound to pay a fine. You will hardly succeed without a help of professional accountant. You may choose to hire an accountant or acquire accounting services from a person or accounting company.
What is the Business Model Canvas (BMC)?
The Business Model Canvas or BMC is a way of telling the story of your business in a handy A4 sized diagram. The diagram shows 9 sectors that anyone starting a business should be able to describe. That is why we called the project 9 Conversations. The word model is used because you should be able to explain how each sector of the picture relates to the others.
More information
Find out more about what the Business Model Canvas is in this video (German and Italian subtitles are available by clicking on the cog icon in the bottom right hand side).
