Starting A Business In Lithuania? Here's What You Need To Know

If you’re thinking about starting a business in Lithuania, you probably already know that it’s one of Europe’s fastest-growing tech hubs. Known for its great location, business-friendly policies and growing tech scene, it’s certainly becoming a popular destination for entrepreneurs.

In this guide, we’ll talk you through everything you need to know about setting up a business in Lithuania to make sure you’re fully informed before making the move.

Why Start A Business In Lithuania?

Lithuania is located in the centre of Europe, bordering Poland, Latvia, Belarus and the Russian Federation’s Kaliningrad area. This gives it access to some major markets across Europe – especially as it isn’t too far from anywhere.

With Vilnius named one of the new “silicon valleys of Europe”, it’s certainly an exciting economy to enter.

The Key Benefits Of Doing Business in Lithuania

There are a number of reasons that Lithuania is a good location for new businesses. Some of these include:

Business-friendly environment: Vilinius has been ranked 1st in Emerging Europe for being the most business-friendly city for the second time in a row. This is made even more clear by how easy it is to register a business there, even remotely (more on that later!).

Access to top talent: Lithuania has a highly educated population, with many speaking multiple languages like Lithuanian, English, Russian, and Polish.

Low corporate taxes: Corporate income tax sits at 15%, which is a much more competitive rate that other neighbouring economies.

Access to EU: Being part of the EU means that businesses in Lithuania benefit from easier trade and better VAT rates, helping to expand across the region.

Things To Think About Before Moving to Lithuania

Before setting up a business in Lithuania, it’s important to think about a few factors, such as:

Cost of Living

One of the benefits of living in Lithuania is relatively lower than other countries in Western Europe. The cost of a one bed apartment in the city centre sits around €633.23 on average according to Cost of Living.

This doesn’t just translate to living costs, but office rental too, which may be more affordable than in other hubs.

Language Barriers

The official language of Lithuania is Lithuanian, however locals also speak Belarusian (1.5%) Polish (7.7%) and Russian (8%). Whilst knowing the local language will help with networking and employing people, English is spoken in a business context.

Economy

Lithuania has a stable economy, pushed forward by business policies like Invest Lithuania and Go Vilnius – which are designed to bring more entrepreneurs to the country.

Because it is a growing tech economy, it’s a great place to invest in starting a business.

Taxes

The standard Corporate Income Tax (CIT) rate in Lithuania is a flat 15%, one of the lowest in the EU. This makes Lithuania an appealing for businesses that want to improve their cashflow.

New businesses also get a 0% CIT rate on their first year’s profit, provided they meet criteria such as employing fewer than 10 people and having an annual revenue under €300,000. This makes it incredibly appealing to start-ups, who can benefit from lower taxation. As well as this, sectors, like agriculture and other small businesses may qualify for a reduced 5% CIT rate.

The Value Added Tax (VAT) in Lithuania has a standard rate of 21%. There are exemptions for essential categories like healthcare and education. Businesses will need to register for VAT if their annual turnover is higher than €29,000.

A Step-by-Step Guide To Starting A Business in Lithuania

Step 1: Choose Your Business Structure

The first step to starting a business is to choose the structure. In Lithuania, you can choose from one of the following:

Private Limited Liability Company (UAB): Ideal for small to medium-sized businesses. Requires a minimum share capital of €2,500.
Public Limited Liability Company (AB): Good for larger businesses, but requires a minimum share capital of €40,000.
Small Partnership (MB): For small businesses with a maximum of 10 owners.
Individual Enterprise (IE): A sole trader with no need to provide any capital upfront.

Step 2: Register Your Company Name

Once you’ve decided on your business structure, you need to choose and reserve a company name. All you have to do is submit an application (Form JAR-5) to the Register of Legal Entities. The name will be reserved for six months.

Step 3: Open A Bank Account

If your business structure has a minimum share capital, you’ll need to deposit this in the bank. 25% of the share capital has to be paid upfront, with the remainder paid over the next 12 months.

Step 4: Prepare Your Documents

Prepare the Articles of Association and a Founding Act. These documents need to be registered at a notary’s office.

Step 5: Register Your Company

Next, submit the notarised documents to the Register of Legal Entities. Pay the registration fee and wait for confirmation – this usually takes 3 business days.

Step 6: Apply For An Electronic Signature

An electronic signature is important for online registration and allows you to run your business online in Lithuania. You can get it at a number of places, but just make sure you have it before your business starts.

Costs Involved in Setting Up A Business In Lithuania

The costs for setting up a business in Lithuania are relatively low, these include:

Company registration fee: €574
Notary fees: €102–€232
Electronic signature: Varies depending on the provider
Translation services: Approx. €20–€25 per page (if needed)
Total state charge: €290-580

Immigration and Visas

If you plan to live and work in Lithuania, you’ll need the right visa.

EU/EEA Nationals: You can stay in Lithuania for up to 90 days with just an ID card or passport. For longer stays, you must register with the Migration Department and get yourself a residency permit.

Non-EU/EEA Nationals: You’ll need a visa and possibly a work permit to live and work in Lithuania. There are a number of options available, including the Schengen Visa (C), a two-year residence permit or an EU Blue Card.

Employment Laws To Be Aware Of

If you are planning to hire employees, it’s important to know the local labour laws.

Lithuania has a 40-hour workweek, with workers able to get overtime pay. The minimum monthly wage is €924 per month as of January 2024, and employees are entitled to at least 28 days of paid annual leave, plus public holidays.