Company formation

Company formation: deadlines, fees, real costs and key decisions

Company formation in Lithuania usually takes 1-3 business days when registration is done online, and 3-10 business days when documents are notarized, depending on the chosen legal form. Company formation can be carried out completely remotely if all founders have a qualified electronic signature.

Establishing a company includes not only registration in the Register of Legal Entities, but also the following decisions and actions:

• choice of legal form;
• Preparation of statutes/regulations;
• formation of the shareholder or member structure;
• appointment of a manager;
• choice of tax regime;
• determination of activity codes (EVRK);
• account opening;
• registration with the State Tax Inspectorate, Social Insurance Institution (Sodra) and the VAT payer register (if applicable).

Professionally performed company incorporation ensures that all these actions are implemented accurately and without additional comments from the Center of Registers or the State Tax Inspectorate.

Online company formation

Establishing companies online is the fastest and most cost-effective solution when standard incorporation documents are used and all founders have a qualified electronic signature.

When establishing electronically:

• no need to go to a notary if standard articles of association are used;
• documents are signed through the self-service system of the Center of Registers;
• registration is usually confirmed within 1 business day;
• The costs of establishment are reduced because there is no need to pay a notary fee.

The participation of a notary is necessary if:

• non-standard statutes are being prepared;
• the authorized capital is formed through non-monetary contributions;
• the founder does not have an electronic signature recognized in Lithuania;
• the company structure is more complex (for example, a holding model or investors are involved).

UAB establishment – structure, capital, taxes

A UAB (private limited liability company) is one of the most common legal business structures in Lithuania. This form is well-suited for investments, partnerships, and business expansion.

Key requirements for a UAB (private limited liability company):

• Minimum share capital — EUR 1,000.
• Limited liability applies.
• Founders may be both natural (individual) and legal persons.
• Shares may be transferred to other persons.
• A director (manager) must be appointed in the company.

Taxes applicable to a UAB:

• Corporate income tax — 17%.
• A reduced corporate income tax rate of 7% applies if:

• annual revenue does not exceed EUR 300,000;
• and under other conditions provided for by law.

• VAT registration is mandatory if turnover exceeds EUR 45,000 over the last 12 months.

When should you choose a UAB (private limited liability company)?

• Planned to attract investors.
• A clear share distribution is required.
• The activity is related to the financial sector.
• Expansion of the business abroad is planned.

Establishing an MB (small partnership) — flexibility without share capital requirement

A small partnership (MB) is a legal form suitable for small and medium-sized businesses, where the founders are natural persons and no share capital is required.

Key features of a small partnership (MB):

• Members are only natural persons, with a maximum of 10 members.
• Minimum contribution — EUR 1.
• Limited liability applies.
• A civil service agreement is concluded with the manager.
• Profit distribution is possible in advance.

Tax aspects:

• Corporate income tax — 17%, or 7% if the applicable relief criteria are met.
• Member payouts are subject to personal income tax (PIT) and social security contributions.
• VAT registration is possible if a legal obligation arises or if needed.

An MB is often chosen in the service sector, IT activities, and creative industries.

Company formation in Vilnius — is a physical address required?

Company formation in Vilnius does not require a physical office; however, a registered address in the Republic of Lithuania is mandatory for the company.

Possible registered office address options:

• owned real estate;
• leased premises;
• virtual registered office address.

Important: a company’s registered office cannot be registered without the consent of the property owner.

Steps after company registration

Company formation does not end with registration in the Register of Legal Entities. After the company has been registered, the following steps must be completed:

1. Enter into an agreement with an accountant or accounting firm.
2. Register as a VAT payer if an obligation arises or if needed.
3. Register a cash register if the activity involves retail trade.
4. Conclude employment contracts if employees are hired.
5. Submit notifications to Sodra regarding insured persons.
6. Prepare internal documents (work regulations, GDPR documentation).
7. Obtain permits or licenses if the activity is regulated or requires licensing.

Company formation for foreign nationals

Company formation in Lithuania is available to both European Union citizens and third-country nationals.

Main requirements:

• A Lithuanian personal identification code is required if the incorporation is carried out online.
• A qualified electronic signature is required if documents are signed remotely.
• A notarial procedure is required if electronic incorporation is not possible.
• For foreign legal entities — translations of the incorporation documents into Lithuanian and their legalization or Apostille certification.

Most common mistakes when establishing a company

In practice, the following mistakes most commonly occur:

• Failure to properly assess the tax burden of the planned activity.
• Incorrect choice of legal form.
• Inappropriately chosen or insufficiently assessed VAT regime.
• The company name was not checked in the EUIPO or WIPO registers.
• No shareholders’ or partners’ agreement was concluded.

Professional company formation helps prevent these mistakes in advance and ensures a smooth business start.