RUNNING BUSINESS IN LITHUANIA
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.
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.
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 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
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 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.
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
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.
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.
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.
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.
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.
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)
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.
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.
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.
Banks, credit unions, financial leasing firms
Insurance companies and brokers
Tax advisors, auditors, accountants
Investment and management companies
Real estate brokers and agents
Dealers in art, antiquities, precious metals and stones, and high-value goods.
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.