Overview
Lithuania is a full member of the European Union, the eurozone, the OECD and the Schengen area. It is not an offshore jurisdiction and never has been — which is precisely why a Lithuanian company works where an offshore vehicle no longer does: it opens EU bank and payment accounts, issues valid EU VAT invoices, contracts with EU counterparties without raising flags, and can hold an EU-passportable financial licence.
Reasons why foreigners proceed with company formation in Lithuania may vary. Some are looking at the residence permit, others at a genuine operating base inside the single market. What makes it commercially interesting is the combination: a UAB can be registered remotely in about three business days on €1,000 of share capital, and a qualifying new small company can pay 0% corporate income tax for its first two tax periods, then 7%.
Private Financial Services has been forming and supporting companies since 1997, with headquarters in neighbouring Estonia and deep Baltic experience. Below is what a Lithuanian company actually involves in 2026 — the structures, the real tax rates after the January reform, the process and the ongoing obligations.
Benefits of Company Formation in Lithuania
Lithuania is one of the smaller countries of the European Union, but it has prepared valuable advantages for businessmen. In particular, the process of company formation in Lithuania is known for several main benefits for your business:
Genuine EU status. Free movement of goods, services and capital across the single market. A Lithuanian VAT number is an EU VAT number, so your invoices, contracts and bank relationships carry EU credibility rather than requiring explanation.
Competitive corporate tax at small scale. 0% corporate income tax for the first two tax periods of a qualifying new small company, 7% thereafter for small taxpayers, 17% standard. For a profit-distributing founder, the 7% small-company rate is among the lowest effective outcomes in the EU.
Remote incorporation. No requirement for the founder or director to be a Lithuanian or EU resident, and no requirement to travel. The whole process runs on a notarised power of attorney.
The Baltic fintech licensing hub. The Bank of Lithuania runs an established authorisation route for payment institutions and electronic money institutions, plus direct SEPA access through the central bank’s CENTROlink rails. More than 260 payment and e-money institutions hold a Lithuanian licence — the largest such cluster in the EU outside the traditional financial centres.
One of the EU’s strongest R&D incentives. Qualifying research and development expenditure can be deducted at 300% — three euro of deduction for every euro spent. For software, product and engineering businesses this materially changes the effective rate.
An extensive treaty network of around 55 double taxation agreements, plus the EU Parent-Subsidiary and Interest & Royalties Directives.
A route to residence. An operating Lithuanian company can support a temporary residence permit application for the founder and key staff, subject to capital, employment and activity conditions that are assessed case by case.
What Lithuania
is not
Lithuania is a normal, fully transparent EU tax jurisdiction. Three points are worth stating before you plan a structure:
There are no zero-tax “Lithuanian offshore” companies. The 0% rate is a two-year startup relief with conditions attached, not a permanent exemption. The standard corporate income tax rate is 17%.
Ownership is on the public record. The Register of Legal Entities publishes the company, its director, its shareholders and its share capital. Ultimate beneficial owners must additionally be declared to the JANGIS beneficial-ownership subsystem.
The treaty network changed. Lithuania’s double taxation treaties with Russia and Belarus both terminated with effect from 1 January 2026. Any structure that relied on either is now taxed under domestic rules on both sides.
UAB or MB — Choosing the Structure
Almost every foreign founder ends up choosing between two forms.
UAB — private limited company
Minimum share capital: €1,000, of which at least €250 is paid before registration and the balance within 12 months.
Shareholders: one or more, individuals or companies, any residence. A corporate shareholder is permitted.
Director: at least one natural person, employed under contract and paid at least the statutory minimum monthly wage.
Suitable for scaling businesses, outside investors, holding structures and regulated activity in fintech, lending or crypto. Administrative weight is higher.
MB — small partnership
Minimum share capital: none.
Members: up to 10, natural persons only. A corporate shareholder is not possible.
Director: not mandatory — members can manage the business directly.
Suitable for solo founders, consultancies and early-stage projects. Administrative weight is lower.
Choose a UAB if you expect investors, need a corporate shareholder, plan an employee option pool, or intend to apply for any Bank of Lithuania authorisation — a share-based structure is effectively required for regulated activity.
Choose an MB if you are a solo founder testing a model. Converting an MB into a UAB later is possible without dissolving and re-registering. For larger or public structures, the AB (public limited company) requires €40,000 of share capital.
Note: older guides — including some still ranking on Google — quote €2,500 as the UAB minimum. That figure was reduced to €1,000 on 1 May 2023.
Specificity of
the registering
The requirements for a UAB, the form chosen by most foreign founders:
Share capital. €1,000 minimum; €250 payable before registration, the balance within 12 months. In practice, paying the full €1,000 upfront avoids a second round of bank confirmations and register updates.
Shareholders. At least one, individual or corporate, of any nationality or residence.
Director. At least one natural person, any nationality or residence, employed under a Lithuanian employment contract.
Registered address. A physical address in Lithuania is mandatory.
Company name. Must comply with Lithuanian naming rules and be cleared with the Centre of Registers. A good name is important to choose taking into account the spelling applicable in the country; the reservation is valid for six months.
Beneficial ownership. Must be declared to the JANGIS subsystem after registration.
Physical presence. Not required — the process runs on a notarised power of attorney.
Timeline. Three to five business days at the Centre of Registers once a clean file is submitted; two to three weeks end to end for a non-resident founder, including notarisation, apostille and translation.
The Registration Process, Step by Step
Structure and name. We confirm the form (UAB or MB), the shareholding, the director and the intended activity codes, then check and reserve the name with the Centre of Registers.
Due diligence. Passport copies and proof of address for every shareholder, director and beneficial owner. For corporate shareholders — constitutional documents, register extracts and the full ownership chain. A description of the intended business is collected here; it will be needed again by the bank.
Documents. Founding act or agreement, articles of association, director appointment and the registered address confirmation. Foreign documents are apostilled and translated into Lithuanian by a sworn translator.
Power of attorney. The founder signs a single notarised power of attorney in their own country. Everything after that is handled in Vilnius on their behalf.
Share capital. An accumulative account is opened, the share capital is deposited, and the bank issues the confirmation required for registration. The capital is the company’s own money — it is not a fee, and it can be used for operating costs once registration completes.
Notarisation and filing. Documents are notarised and submitted to the Register of Legal Entities. Registration is normally completed within three to five business days.
Post-registration. Conversion of the accumulative account into a settlement account, JANGIS beneficial-owner declaration, VAT registration where applicable, SoDra enrolment for the director, and the start of bookkeeping.
Documents
you will need
Certified and apostilled passport copies for each individual shareholder, director and beneficial owner;
Proof of residential address issued within the last three months;
For corporate shareholders — certificate of incorporation, articles, register extract, and evidence of the ownership chain up to the natural persons;
Proposed company name and a description of the intended activity;
Shareholding split and the share capital amount;
Signed power of attorney, notarised and apostilled where required.
Taxation
Lithuania’s 2026 tax reform changed most headline rates. The figures below apply from 1 January 2026.
Corporate income tax depends on the size and age of the company:
0% for new small companies in their first two tax periods, subject to conditions;
7% for small companies — revenue up to €300,000 and fewer than 10 employees;
17% standard rate;
22% for credit institutions.
The reduced and zero rates carry anti-abuse conditions: the company must not be part of a controlled group, activity must not be suspended, and shareholding must remain stable across the qualifying periods. The employee-count condition attached to the 0% startup rate was removed in the 2026 reform, broadening eligibility. Lithuanian companies are taxed on worldwide income, not on a territorial basis.
Dividends
Paid to an individual shareholder — 15% personal income tax, withheld at source.
Paid to a company — 17% from 1 January 2026, unless the participation exemption applies: the recipient has held at least 10% of the voting shares continuously for at least 12 months and the distributing entity’s profits are subject to corporate tax. Distributions within the EU meeting the Parent-Subsidiary Directive conditions attract 0% withholding.
The old idea that you can simply exempt yourself from dividend tax after a year is a distortion of this participation exemption. It applies to corporate shareholders meeting the 10% and 12-month test, not to individuals.
VAT and payroll
VAT — standard rate 21%. Reduced rates of 12% and 5% apply to specified categories from 2026; the former 9% rate was abolished. Registration becomes mandatory once turnover exceeds €45,000 in any 12-month period, with voluntary registration available earlier.
Personal income tax is progressive from 2026: 20% up to roughly €82,962 per year, 25% to roughly €138,270, and 32% above. Employee social insurance is 19.5%; the employer contribution is 1.77%.
A UAB director must be employed and paid at least the statutory minimum monthly wage, so budget for payroll from month one even if the company is pre-revenue.
Several further rules shape the effective rate:
R&D super-deduction — qualifying expenditure is deductible at 300%;
Free Economic Zones — corporate tax relief for qualifying investments in designated zones;
CFC rules apply to Lithuanian-controlled foreign subsidiaries in low-tax jurisdictions;
Transfer pricing — related-party transactions must meet the arm’s length standard.
And the point most providers skip: low Lithuanian tax is not the same as low tax for you. Your own country of residence may tax the company through controlled foreign company rules, or treat it as resident where it is actually managed. We assess both sides before recommending a structure.
Annual Compliance
Annual financial statements — approved and filed with the Centre of Registers. The filed accounts are public;
Corporate income tax return — by 15 June of the following year;
VAT returns — monthly, or quarterly depending on status, where the company is VAT-registered;
Payroll and SoDra reporting — monthly, for the director and any employees;
JANGIS beneficial-owner data — kept current after any change in ownership or control;
Statutory audit — only where the company exceeds the statutory size thresholds.
Bookkeeping must be maintained continuously and in Lithuanian accounting format. This is not optional and not something to postpone until year end — the tax authority works from filed data, and a company with disorganised books tends to discover the problem at the worst possible moment, usually during a bank review. This is the part that offshore owners are used to disregarding, and it is the part that causes the most damage when it is left undone.
Banking and
payment accounts
Lithuania has an unusual advantage here: alongside the traditional banks, it hosts the EU’s largest concentration of licensed electronic money and payment institutions. Where a commercial bank declines a young non-resident-owned company — which happens routinely — a regulated Lithuanian EMI with full IBAN and SEPA capability is often a workable and entirely legitimate alternative. Where the company sells online, a merchant account is usually needed alongside.
We will not promise a guaranteed account, and no honest provider will. What we do is prepare a coherent application, match your profile to institutions that actually serve it, and arrange the introduction. More on bank account opening.
What helps: a clear business model, named customers and suppliers, contracts or invoices, a genuine connection to the EU market, and a director who is contactable. What hurts: vague activity descriptions, no evidence of trade, and ownership structures that appear designed to obscure the beneficial owner.
Regulated Activity: Fintech, Crypto and Gaming
This is where Lithuania separates itself from every other small EU jurisdiction.
Payment institutions and electronic money institutions are licensed by the Bank of Lithuania, with EU passporting and direct access to SEPA through CENTROlink. Lithuania hosts the largest EMI cluster in the EU.
Crypto-asset service providers now operate under the EU MiCA framework, authorised and supervised by the Bank of Lithuania. The earlier light-touch registration regime has been replaced — existing operators have had to requalify, and capital, governance and AML requirements are substantially higher than they were. See the MiCA CASP licence in Lithuania.
Consumer credit and crowdfunding operate under established national regimes.
Licensing support for fintech, crypto and gaming projects is a core Private Financial Services practice area. If a licence is the actual objective, the company structure needs to be built for it from day one — retrofitting a shelf UAB into a licence application is slower and more expensive than doing it properly at incorporation.
Lithuania or Estonia?
The two come up in the same conversation constantly, and they solve different problems:
Lithuania suits businesses that want low tax on realised profits — 0% for two years, then 7% for small companies — and anything requiring a Bank of Lithuania financial licence. Profits are taxed as they are earned;
Estonia suits businesses that want to reinvest rather than distribute: corporate tax is deferred until profits are paid out. Combined with e-Residency, it is the more fully digital option for remote administration;
Cyprus suits EU-facing holding and intellectual property structures, regulated finance and shipping, and owners who intend to relocate personally under the non-domicile regime.
Put simply: if you intend to distribute profits regularly, Lithuania usually wins on cash tax. If you intend to retain and reinvest, Estonia usually wins. If you need an EMI or payment institution licence, Lithuania. The full list of European options is on our company registration page.
If your customers are outside the European Union, the calculation changes entirely — see company formation in Hong Kong for Asian operations, or our overview of crypto licensing jurisdictions for digital asset projects outside the EU.
Working with Private
Financial Services
We have been forming and supporting companies since 1997, from headquarters in Estonia with representative offices in five countries, serving entrepreneurs from more than 130 countries. Our team works in English, Russian, Estonian, Latvian, Finnish, German, Spanish and Chinese. For Lithuania we handle:
Structure and tax analysis before registration, including the position in your own country of residence;
Choice of form — UAB, MB, AB or branch — and activity coding;
Name reservation, documents, notarisation, translation and filing;
Registered address in Lithuania;
Share capital account and post-registration conversion to a settlement account;
JANGIS beneficial-ownership declaration;
VAT and SoDra registration;
Ongoing accounting, payroll and tax filing;
Bank and EMI account introductions;
Licensing support for payment, e-money, crypto and gaming projects;
Trademark registration and intellectual property protection;
Corporate restructuring, redomiciliation and liquidation.
Choose a name and our experts will take over the registration with the registry. Once the name is confirmed in the Register of Legal Entities, the client pays 50% for the services; the remaining 50% is paid as the documents are received. We pay all state duties and notary fees ourselves and arrange the registered address in the country. The complete document pack is couriered to any address worldwide.
Tell us what your business does, where your customers are, and whether you intend to distribute or reinvest profits — we will tell you whether Lithuania is the right vehicle before you spend anything. If you suppose that company formation in Lithuania is not the best option for you, then you can consider opening a company in Estonia.