Establishment of Companies

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> Establishment of Companies

Establishing a company in Lithuania involves several key steps:

  1. Choose Company Type: Decide on the type of company, such as a Private Limited Liability Company (UAB) or Public Limited Liability Company (AB), based on your business needs.
  2. Prepare Documents: Draft the company’s statutes and, if required, notarize them. Obtain a unique business name and a registered legal address in Lithuania.
  3. Register the Company: Submit the registration documents to the State Enterprise Centre of Registers, including proof of identity, address, and paid-up share capital.
  4. Tax and Social Security Registration: Register with the State Tax Inspectorate for VAT and other taxes, and with the State Social Insurance Fund Board (Sodra) for social security.
  5. Open a Bank Account: Set up a business bank account in Lithuania for financial transactions.
  6. Compliance: Ensure compliance with local accounting, reporting, and employment regulations.

With a streamlined process and supportive regulatory environment, Lithuania offers a favorable setting for starting and operating a business.

Establishing a company in Lithuania involves a series of steps and regulatory requirements. Lithuania is known for its business-friendly environment, and the process is relatively streamlined, particularly for EU and non-EU investors. Here is a comprehensive guide to establishing a company in Lithuania:

1. Understanding the Types of Companies

Private Limited Liability Company (UAB)

  • Description: The most common type of company for small and medium-sized enterprises. It requires at least one shareholder and one director. Liability is limited to the amount of the company’s share capital.
  • Share Capital Requirement: Minimum share capital of €2,500.

Public Limited Liability Company (AB)

  • Description: Suitable for larger businesses. It can be listed on the stock exchange and requires at least two shareholders and one director. Liability is limited to the amount of the share capital.
  • Share Capital Requirement: Minimum share capital of €40,000.

Sole Proprietorship (IĮ)

  • Description: Owned and operated by a single individual. The owner has unlimited liability.
  • Share Capital Requirement: None.

Partnerships

  • General Partnership (TĮ)
  • Limited Partnership (KĮ)

2. Pre-Registration Requirements

Business Name

  • Choose a Name: Ensure the chosen name is unique and not already in use. You can check availability via the Register of Legal Entities.

Legal Address

  • Address Requirement: The company must have a registered legal address in Lithuania. This can be a physical office or a virtual office service.

3. Company Registration Process

1. Drafting Documents

  • Prepare Statutes: Draft the company’s statutes (articles of association), which outline the company’s structure and operational rules.
  • Prepare Shareholder Agreement: For companies with multiple shareholders, a shareholder agreement may be needed.

2. Notarization

  • Notarize Documents: Certain documents, including the statutes, may need to be notarized by a Lithuanian notary.

3. Registering the Company

  • Register with the State Enterprise Centre of Registers: Submit the necessary documents to the State Enterprise Centre of Registers (Registrų Centras). This includes:
    • Completed registration form
    • Statutes of the company
    • Proof of address
    • Proof of identity of the founders
    • Bank confirmation of the paid-up share capital

4. Tax Registration

  • Register for Taxes: After registration, the company must register with the State Tax Inspectorate for VAT and other taxes. This includes obtaining a VAT number if applicable.

5. Social Security Registration

  • Register with Social Security: Register the company and its employees with the State Social Insurance Fund Board (Sodra) for social security contributions.

4. Opening a Bank Account

Business Bank Account

  • Open a Bank Account: Open a business bank account in Lithuania. This account will be used for all company financial transactions, including the deposit of the share capital.

5. Compliance and Reporting

Accounting

  • Set Up Accounting: Establish an accounting system and comply with Lithuanian accounting regulations. Consider hiring a local accountant or accounting firm.

Annual Reports

  • Prepare and File Annual Reports: Companies are required to prepare and file annual financial reports with the State Enterprise Centre of Registers.

Corporate Tax Returns

  • File Tax Returns: Submit corporate tax returns to the State Tax Inspectorate, including VAT returns if applicable.

6. Additional Considerations

Licenses and Permits

  • Obtain Necessary Licenses: Depending on the nature of your business, you may need specific licenses or permits to operate legally in Lithuania.

Employment Regulations

  • Comply with Employment Laws: Adhere to Lithuanian labor laws, including employee contracts, working conditions, and health and safety regulations.

Intellectual Property

  • Register IP: If applicable, register trademarks, patents, or copyrights to protect your intellectual property.

7. Legal and Advisory Services

Consult Professionals

  • Legal and Financial Advisors: Engage with local legal and financial advisors to ensure compliance with all regulations and to assist with the setup process.

8. Post-Establishment

Business Operations

  • Start Operations: Once all registrations and compliance requirements are completed, you can begin business operations in Lithuania.

Ongoing Compliance

  • Monitor and Maintain Compliance: Regularly review and maintain compliance with Lithuanian laws and regulations to ensure smooth business operations.

Establishing a company in Lithuania is generally efficient due to the country’s well-developed infrastructure and supportive regulatory environment. By following these steps and seeking professional advice when needed, you can successfully set up and operate a business in Lithuania.