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Lithuania
We have a dedicated team of professionals ready to support all your business needs, so you can focus on driving growth and expanding your operations in Lithuania.
Why Lithuania?
Lithuania, a progressive member of the European Union located along the eastern coast of the Baltic Sea, has emerged as a thriving hub for innovation, digital entrepreneurship, and global trade. With its strategic location, investor-friendly regulatory framework, competitive tax policies, and high rankings for ease of doing business, Lithuania offers an attractive environment for multinational corporations, start-ups, and entrepreneurs alike. As a member of the European Union, Eurozone, Schengen Area, and the World Trade Organization, Lithuania ensures unrestricted access to over 30 internal EU markets and a customer base of more than 450 million. Whether setting up a holding company, a fintech enterprise, or a research and development facility, Lithuania combines opportunity with operational efficiency.
Advantages of Doing Business in Lithuania
- Strategic location: Positioned between Western Europe, the Nordics, and Russia, Lithuania offers seamless transport connectivity by road, rail, air, and sea. Klaipėda, the country’s seaport, is the northernmost ice-free port in the EU, enhancing trade logistics.
- Digitally advanced infrastructure:Lithuania ranks among the top five European countries for internet access, digital governance, and public e-services. It also offers one of the fastest internet speeds in the EU and hosts various government-supported digital innovation sandboxes.
- Cost-efficient operations: Lithuania provides a cost-effective environment for businesses, with competitive labor and real estate costs. High labor productivity further enhances the country’s appeal for companies seeking EU market access at lower operational expenses.
- Skilled and multilingual workforce:Over 90% of Lithuania’s young professionals speak English fluently. The country has a strong emphasis on STEM education and produces a consistent stream of graduates in IT, engineering, and related fields.
- Business-friendly legal environment: Lithuania offers a simplified and efficient company incorporation process that can be completed online within 2 to 4 working days. Foreign investors can own 100% of shares in a Lithuanian entity, with no residency requirement for shareholders or directors.
Types of Business Entities in Lithuania
- Private Limited Liability Company (UAB):The most widely used entity types for both local and foreign investors. Requires a minimum share capital of EUR 2,500, with 25% to be paid at incorporation. Shareholders have limited liability. The UAB structure is suitable for a wide range of business activities.
- Public Limited Liability Company (AB): Ideal for large enterprises or those planning to go public. Requires a minimum share capital of EUR 40,000 and the establishment of a Board of Supervisors. Suitable for companies seeking to raise capital or operate on a larger scale.
- Small Partnership (MB):Designed for start-ups and small businesses. It allows up to 10 individual members, with no minimum capital requirement. MBs benefit from simplified accounting and governance requirements, making them a preferred choice for freelancers and small teams.
- Individual Enterprise (IE):A sole proprietorship available to residents of Lithuania. It involves unlimited liability and is more suitable for self-employed professionals. Less commonly used by foreign investors due to its risk profile.
- Branch or Representative Office:A foreign company may establish a branch to carry out commercial operations in Lithuania. Though not a separate legal entity, it must be registered with the Register of Legal Entities and is subject to local tax obligations.
Taxation System
- The standard corporate income tax (CIT) rate is 15%, scheduled to increase to 16% in early 2025.
- Micro-enterprises with fewer than 10 employees and annual turnover under EUR 300,000 may qualify for a reduced 6% rate, and even 0% in the first year, subject to certain conditions.
- Companies conducting research and development can deduct up to 300% of eligible R&D expenses from taxable income.
- Income from intellectual property, such as patents or software, is taxed at a preferential rate of 5%.
- The standard value-added tax (VAT) rate is 21%, with reduced rates of 9%, 5%, and 0% available for specified goods and services.
- Withholding tax on dividends, interest, and royalties paid to non-residents is 15%, with possible reductions available under Lithuania’s 57+ double tax treaties.
- Companies located in Free Economic Zones (FEZs) benefit from a 0% corporate tax rate for 10 years, followed by a 50% reduction for the next 6 years, along with exemptions on real estate tax and dividend tax. Losses can be carried forward for five years.
Free Economic Zones (FEZ)
Lithuania has established seven Free Economic Zones across the country, including those in Kaunas, Klaipėda, and Panevėžys. These zones offer infrastructure-ready industrial space, logistical advantages, and substantial tax relief to eligible businesses.
- Benefits for companies operating in FEZs include:
Corporate income tax exemption for the first 10 years - 50% corporate tax reduction for the subsequent 6 years
- No tax on real estate or dividends
- Turnkey infrastructure and integrated logistics support
- Comprehensive support from local municipalities and Invest Lithuania
Government Support and Incentives
The Lithuanian government supports business development and foreign investment through dedicated agencies such as Invest Lithuania and Enterprise Lithuania. Incentives include:
- Start-up Visa and e-Residency programs for non-EU entrepreneurs
- Grants, subsidies, and innovation vouchers for R&D and innovation activities
- Access to EU Structural Funds for project-based funding
- Incubation and accelerator programs for start-ups
- Expedited licensing and regulatory approval for fintech and medtech businesses
- Public-private partnership frameworks for infrastructure and strategic sectors
Lithuania has become a leading jurisdiction for fintech firms, supported by a regulatory sandbox and streamlined licensing procedures managed by the Bank of Lithuania.
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