Solution for company
You have developed your business idea, realized its potential. You chose to launch your startup in Lithuania, open a branch or subsidiary company. Great!
Here are your next 3 steps to start business in Lithuania:
Any type of activity.
Suitable for small, medium and large-scale business.
Possibility to attract investment or venture capital.
Starting procedure for standard prices and may last from 2-3 days to more than a week.
Accountant highly recommended.
Limited civil liability for most company types in Lithuania.
Company seems a suitable form for your business? So it is time to choose COMPANY TYPE.
TYPES OF COMPANIES IN LITHUANIA
Private limited liability company (UAB) – the most popular type of company in Lithuania.
Possible to buy ready-made company or register a new company in Lithuania.
1-249 shareholders (natural persons and/or companies).
Represented by the director of the company.
Board and supervisory council may be formed as well.
CONTACT US for free advise or company formation services in Lithuania
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Small partnership (MB) is a type of company for small businesses usually run by the founders themselves.
1-10 members, only natural persons.
No minimal share capital requirement.
Limited liability.
Simplified accounting procedure.
Profit is distributed to the members “pro rata” according to their contributions.
May or may not have a single-person management body.
CONTACT US for free advise on formation of MB
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Individual company (IĮ) is the only type of company with unlimited civil liability.
Only 1 owner, only natural person.
No requirement for minimal share capital.
Managed by the owner himself or by hired manager.
Simplified accounting procedure.
CONTACT US for free advise on formation of IĮ
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Apart from the most popular UAB, MB and IĮ, there are other types of legal entities in Lithuania. Public limited liability company (AB) is the most common business vehicle for large companies.
Foreign companies may establish their representative offices and branches in Lithuania.
There also are specific types of entities: general partnership, limited partnership, cooperative company and agricultural company. For non-profit needs, there are non-governmental organizations, associations, charity funds.
CONTACT US for free advise on any specific type of legal entity
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Very easy to start.
Limited scope of activities.
Suitable for micro-businesses and individual service suppliers.
Unlimited liability.
Simplified bookkeeping and taxation.
Easy to close business.
Corporate income tax not applicable.
Individual activity seems suitable to you? CONTACT US for individual advise
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The EU Services Directive allows businesses to provide services in the European Economic Area (EEA) much easier. It requires all EEA countries to dismiss unnecessary legal and administrative barriers that hinder business from setting up or offering their services in another EEA country. Moreover it simplifyies formalities that service providers need to comply with.
CONTACT US for detailed review of your case and advise on specific requirements and permits you may need to open your business in Lithuania.
Are you planning to design webpages? In that case, you may want to protect your rights by getting the design registered in Lithuania or internationally. Will you have e-shop? You might want to read carefully and comply with retail trade rules. Will you administer personal data of your clients? You are bound to be registered as a personal data administrator.
Are you a lawyer, medic, translator or business consultant? In each of those cases (and many more) you may need to meet some specific requirements to rightfully operate in Lithuania.
In case your activity includes foodstuffs, you might need Approval Certificate of Food Business Operator. For example if you are manufacturing or selling alcohol products – you will need license for that. There are also special requirements applied for various activities and products.
Plan on opening a bar in Vilnius Old town? In that case Your business will have to meet food hygiene standards. You will have to be approved as Food Business Operator. You will have to acquire alcohol and tobacco licenses.
CONTACT US for detailed review of your case and advise on specific requirements and permits you may need for your business.
You have developed your business idea, realized its potential. You chose to launch your startup in Lithuania, open a branch or subsidiary company. Great!
With BusinessLT, company formation in Lithuania and running business is easier, quicker and cost-effective.
CONTRACTS
Many of agreements people and companies make are verbal. However, a written agreement makes things easier for the seller and purchaser, and reduces the risk of the parties interpreting the content of the agreement differently. There also are some types of contracts which must be in written or even notarized.
CORPORATE DOCUMENTS
The set of registration and other corporate documents is the “face” of the company. Accordingly, these documents must be comprehensively prepared and in compliance with the local statutory laws as the company’s future performance and business reputation depend on them.
OTHER CATEGORIES
There are many categories of documentation which must be prepared and confirmed depending on company’s activity. Whether they concern employment regulations, health and safety training of employees, evaluation of occupational risk or other categories – management of the company must take care of this.
INVOICING
Invoicing procedures in Lithuania have been harmonized with the EU directives: electronic invoices may be used, the buyer may issue invoices, and a favorable procedure of invoice storage has been introduced. If mandatory data is missing, such documents are not recognized for tax purposes.
BOOKKEEPING
It is necessary to follow all the applicable Lithuanian requirements for accounting and bookkeeping of other company documents. Documents must be kept in Lithuanian and, if necessary, they may be kept in two languages as well. Documents must contain certain mandatory data of the parties to the transaction. Having a qualified accountant in the company is highly recommended.
AUDIT
Audit is mandatory for all Lithuanian companies meeting two of the three below listed criteria: (1) Revenues from sales exceeded 3,500 kEUR over the past accounting year, (2) over the accounting year, the average number of employees was at least 50, (3) assets on the balance sheet exceeded 1,800 kEUR.
VAT
Lithuanian VAT rules on the format and information to be provided on invoices conform to the obligations of the EU VAT Directive and its VAT invoice requirements. VAT rate in Lithuania is 21%, VAT returns are processed every month.
TAX ISSUES FOR NON-RESIDENTS
Lithuania has concluded more than 50 treaties on avoidance of double taxation of income and capital and prevention of tax evasion. In order to claim relief from double taxation you may need to prove where you are resident and that you have already paid taxes on your income.
OTHER TAXES
Taxes in Lithuania are levied by the central government and local municipalities. Social security contributions are collected in a separate social security fund, outside the national budget. Taxes are administered by the State Tax Inspectorate, except tariffs that are administered by the Customs.
HIRING EMPLOYEES
Recruitment services in Lithuania are provided by the State Labour Exchange Office free of charge, or by private recruitment service providers. Employers also recruit by advertisements, recruitment agencies and personal contacts. Employment contracts are the most common form, though forms of independent contractors and agency workers are growing popularity. Some restrictions and requirements for non-EU residents are in force.
HAVING EMPLOYEES
Key terms of every employment contract are description of a position (function or profession) of an employee, his or her wage and work place. The parties can also agree on other benefits for employee, hours of work, confidentiality and non-competition and other provisions. In companies having 20 or more employees, labour Council must be elected.
DISMISSING EMPLOYEES
An employee is entitled to terminate employment contract by giving his employer written notice of at least 14 days. Employment contract may as well be terminated by a bilateral agreement. Employer may dismiss employee by noticing him or her 2 months in advance (or, sometimes, instantly). Special rules for dismissing group of people at once apply.
PRE-COURT PROCEDURES
Usually, disputes between companies or people are resolved by way of mutual agreement of the parties. However, in case this first and most simple option fails, each of the parties has a right to summon an action in court. In some cases, an obligatory pre-court procedure applies (for example, in cases concerning the protection of consumer rights).
DISPUTE SOLVING IN COURT
Unresolved disputes between different companies or between service providers and consumers, legal review usually take place in court. Civil cases are heard by the Common courts of which there are three instances, second court system is that of Administrative courts, which solve disputes against administrative (usually governmental/municipal) institutions. Litigation time in Lithuania largely depends on the case.
ARBITRATION AND MEDIATION
As investors tend to resolve disputes in arbitrations, as compared to national courts, the regulation of arbitration in Lithuania is becoming an important legal matter for international businesses. Alternatively, rather than going to court or arbitration institution, it is getting popular in Lithuania to solve dispute through mediation.
WHAT IS AML/KYC?
In short, AML stands for anti money-laundering means in general. Know Your Customer (KYC) is a set of rules and requirements in the process of adhering to the preventive measures necessary to monitor money laundering techniques used by suspected parties. Those rules are applicable to certain types of companies and businesses. Any institution with a good AML compliance department does well to keep their KYC information up to date.
AML/KYC COVERED ENTITIES
Banks, credit unions, financial leasing firms Insurance companies and brokers Lawyers, notaries Tax advisors, auditors, accountants Investment and management companies Real estate brokers and agents Gaming enterprises Postal services Dealers in art, antiquities, precious metals and stones, and high-value goods.
AML/KYC POLICY
AML policies must be in accordance with acts of law of the Republic of Lithuania, local and international legal acts and must include KYC procedures, customer identification, monitoring of the financial transactions and other means.
You have developed your business idea, realized its potential. You chose to launch your startup in Lithuania, open a branch or subsidiary company. Great!
With BusinessLT, company formation in Lithuania and running business is easier, quicker and cost-effective.
PREPARE BUSINESS FOR SELLING
Sooner or later you may want to sell your business. The first step towards finding the right purchaser is to ensure the company is in a saleable state. Are accounting records, agreements and administrative documents in good order? Are core business activities, the customer base and contact networks well documented? Are there any related-party liabilities and accounts which should be settled? Are there any ongoing disputes that should be resolved?
FIND PURCHASER
Your company is evaluated and ready for selling? Finding the right customer is your next step – and usually the hardest as anyone could be a prospect. A buyer can come from your employees, customers, suppliers or competitors. If your business is well known then word that it’s for sale may be enough to reach potential purchasers. But more than likely you will need to cast a wider net.
CLOSE THE DEAL
Once a company is ready for sale and a potential purchaser presents an offer of purchase, you may accept the offer, counter, or reject it entirely. You must decide whether sell the entire business entity or just assets; will you keep any assets; will the buyer likely retain or replace staff; will you maintain a minority stake of the ownership; will you be expected to put in a year of transition time after the business is sold. Usually, business in Lithuania are sold by signing share sale-purchase agreement at the notary, but there are various alternative options
WINDING UP YOUR BUSINESS
Planning on gradually winding up your business in Lithuania? The procedure of liquidation is applicable to companies with no uncovered debts and obligations. Closing down can take several months as it all depends on what type of company you have been running. It is crucial to close the accounts in the correct way, whatever the legal form of the business.
APPOINTMENT OF LIQUIDATOR
Liquidation of a business entity with no debts means the process of converting the economic entity’s assets into cash, settlement of all accounts and distribution of the remaining cash or property between owners. Together with announcing publicly about the start of liquidation procedure, company’s owners appoint a liquidator – one of the employees or outsourced professional who takes control of all the company’s documents, takes care of all the procedures and who is responsible rightful closing of accounts.
LIQUIDATION PROCEDURES
Tax authorities may carry our the inspection on a company being liquidated. All the employment agreements must be terminated, and all the salaries must be paid to the employees. All the relevant tax declarations must be submitted, Remining assets of a company must be transferred to the owners, bank accounts must be closed. All the documents are passed to the State Archive. Company can now be de-registered from the Register of Legal Entities.
FINANCIAL DIFFICULTIES
Economic entities with financial difficulties (not capable of settling accounts with all the creditors) have to options: restructuring or bankruptcy.
RESTRUCTURING
Restructuring gives businesses suffering temporary financial difficulties a possibility improve their financial state, avoid bankruptcy and get businesses to continue their activities, pay back to creditors, save jobs and simplify the termination of the business. Like in most jurisdictions, in Lithuania restructuring involves freezing of pending claims and can be arranged only if certain conditions are met.
BANCRUPTCY
The purpose of bankruptcy proceedings is: to ensure a uniform treatment of requirements of creditors and satisfy requirements of creditors after having realized a debtor’s assets in the order established by laws. Bankruptcy proceedings can be initiated by company’s creditors, owners or management. Bankruptcy proceedings usually take place in court, however, there might be alternatives.