Good to know
Good to Know
- A UAB can legally be 100% foreign-owned with a single person as both sole shareholder and sole director — no local partner or Lithuanian co-founder is required.
- The UAB minimum share capital was cut to EUR 1,000 in May 2023; a lot of older or unrevised guides online still quote the pre-2023 EUR 2,500 figure, so don't be surprised if you see both numbers cited.
- You only need to deposit 25% of the minimum share capital before registration — the rest can be paid in within 12 months.
- If your turnover is expected to stay under EUR 45,000/year you don't need to register for VAT immediately, which simplifies early-stage bookkeeping.
- Even though the registry process itself is fast, budget extra time for opening a real operating bank account — some traditional banks still want an in-person meeting, so many foreign founders use fintech providers for faster remote onboarding.
- Lithuania raised its standard corporate tax rate from 16% to 17% and its small-company reduced rate from 6% to 7% starting 1 January 2026, so any older blog post or advisor quote using the pre-2026 rates is now outdated.
- You don't need Lithuanian residency to own or even direct a UAB — non-EU founders often incorporate the company first, then handle their own personal residence permit as a separate process.
- If you plan to freelance solo as a non-EU citizen under individuali veikla, you'll need a residence permit in hand before you can register — this is a real sequencing issue to plan around, not just paperwork.
- The 0% startup corporate tax rate now lasts two full years (extended from one year in the 2026 reform), which is a meaningful runway if you're bootstrapping a new UAB.
- VAT rules and thresholds shifted in the 2026 reform — double-check the current registration threshold and reduced rate directly with the State Tax Inspectorate (VMI) rather than relying on a cost-of-living blog, since sources currently disagree slightly on the exact figures.
- Because Lithuanian business law is national, everything here applies the same way whether you incorporate in Kaunas, Vilnius, or elsewhere in the country — there's no Kaunas-specific tax break or hurdle.
Corporate Tax
- Standard Cit Rate
- 17% (increased from 16%, effective for tax periods beginning on or after 1 January 2026)
- Startup Zero Rate
- 0% CIT for the first two tax years for newly registered qualifying small companies (extended in 2026 from one year to two years)
- Cit Base
- CIT is charged on taxable profit after deductible expenses, not on turnover/revenue
- Capital Gains
- Generally taxed at 15% (20% on higher amounts) for individuals; company-level gains are folded into ordinary CIT
- Loss Carryforward
- From 2026, tax loss carryforwards are capped at 70% of a company's taxable income for a given year, a new limitation introduced in the 2026 reform
- Foreign Ownership Treatment
- A Lithuanian company owned by foreign shareholders is subject to the exact same CIT rules and rates as a domestically owned company; foreign ownership does not trigger a separate tax regime. Cross-border payments (dividends, interest, royalties) may attract withholding tax, though Lithuania's network of roughly 55 double tax treaties can reduce or eliminate this.
VAT
- Reduced Rates
- Reduced VAT rates apply to certain goods/services (historically 9% and 5%; one reduced rate was adjusted to 12% as part of the 2026 tax reform) — confirm the current specific reduced rate for your goods/services with the State Tax Inspectorate before invoicing
- Standard Rate
- 21%
- Registration Threshold
- Mandatory VAT registration once annual turnover exceeds a threshold in the EUR 45,000–55,000 range; sources disagree on the exact current figure, so confirm the live threshold directly with VMI (State Tax Inspectorate) before assuming you're under it
Reduced Small Company Rate
- Rate
- 7% (increased from 6% in 2026)
- Eligibility
- Companies with fewer than 10 employees and annual gross revenue under EUR 300,000, meeting additional conditions (e.g. not controlled by other corporate groups)
Company Formation Options
MB (Mažoji Bendrija / Small Partnership)
- Best For
- Small, flexible one-person or small-team service businesses, consultancies, or online shops
- Liability
- Limited liability for partners, similar protection to a UAB, without the same governance overhead
- Governance
- No board or formal shareholder-meeting requirement; owners manage directly
- Capital Requirement
- No minimum share capital
UAB (Uždaroji Akcinė Bendrovė / Private Limited Company)
- Best For
- International founders wanting a credible, scalable, EU-market-facing legal entity, especially if planning to hire staff, raise investment, or trade internationally
- Liability
- Limited liability — shareholders only risk their invested capital
- Registration
- Can typically be completed remotely via a notarised, apostilled power of attorney without the founder traveling to Lithuania; formal registration with a complete document package generally takes a few business days
- Tax Treatment
- Subject to standard 17% CIT, or the 7% reduced rate / 0% startup rate if it qualifies as a small company
- Capital Requirement
- Minimum share capital of EUR 1,000 (sources place this figure at EUR 1,000 in current guidance, though some older material cites EUR 2,500 — confirm the current figure with the Centre of Registers before budgeting); at least part of the capital must be deposited to a temporary/accumulation bank account before registration
- Foreigner Eligibility
- A foreign individual or foreign company can be the sole founder, sole shareholder, and director of a Lithuanian UAB; no local partner is required and there are no nationality/residency restrictions on shareholders. Note: if a foreign shareholder/director takes on an executive role that involves physically working in Lithuania, they will typically need to sort out their own residence/work permit separately, but this is a personal immigration matter, not a shareholding restriction.
Branch or Representative Office of a Foreign Company
- What It Is
- Lets an existing foreign company operate in Lithuania without incorporating a new local legal entity
- Note
- A branch can conduct commercial activity on behalf of the parent; a representative office is limited to non-commercial functions like marketing or research
Freelancer Sole Trader Options
Individuali Veikla (Individual Activity Certificate)
- VAT
- Required to register for VAT only once turnover crosses the registration threshold, or if the specific activity/client base requires it
- Liability
- Full personal (unlimited) liability — no separation between personal and business assets
- What It Is
- The standard self-employment/freelancer registration for one-person activity, filed with VMI before starting work
- Tax Treatment
- Personal income tax rather than corporate tax; under the 2026 reform, self-employed income up to EUR 42,500 is taxed on a lower band (roughly 5–20%), with income above that taxed under the standard progressive 20/25/32% personal rates, plus mandatory health and social insurance contributions
- Capital Requirement
- None
- Foreigner Eligibility
- EU/EFTA citizens have straightforward access; non-EU citizens need at least a residence permit to register and conduct individual activity through a permanent base in Lithuania
Verslo Liudijimas (Business Licence/Certificate)
- Liability
- Full personal liability
- What It Is
- A fixed-fee licence for a specific, pre-approved list of activities; you pay a flat municipally-set tax amount regardless of actual income
- Tax Treatment
- Fixed tax amount set by the municipality rather than income-based tax; only available for a defined list of eligible activities
- Capital Requirement
- None
- Foreigner Eligibility
- Same residence-document requirement as individuali veikla for non-EU nationals
Individuali įMonė (IĮ) — Sole Proprietorship Entity
- Liability
- Unlimited personal liability — owner's personal assets are not separated from the business
- What It Is
- A registered one-owner business entity (distinct from the individual activity certificate) used by tradespeople and small service providers
- Capital Requirement
- None
Common Legal Forms For Foreigners
- Form
- UAB (Uždaroji akcinė bendrovė) — private limited liability company
- Description
- By far the most common vehicle for foreign founders and functionally similar to an LLC/GmbH.
MB (Mažoji bendrija) — small partnership
- Description
- Lightweight structure for freelancers/solo founders with limited liability.
AB (Akcinė bendrovė) — public limited company
- Description
- Used for larger enterprises; requires a much higher minimum capital and a supervisory board.
Branch or representative office
- Description
- Not a separate legal entity; parent company retains liability. A branch may trade, a representative office may not.
Scope Note
Lithuanian company law and tax rules are set at the national level and apply identically in Kaunas as anywhere else in Lithuania; there is no city-specific business tax regime for Kaunas.
Filing Obligations
Filing Obligations
- Annual CIT return and annual financial statements filed with VMI (State Tax Inspectorate) and the Register of Legal Entities
- Periodic VAT returns if VAT-registered
- Payroll and mandatory social insurance (employer + employee contributions) filings if the company has employees
- Beneficial ownership and director/shareholder information maintained with the Centre of Registers (Registrų centras)
Practical Takeaway
For a foreigner testing the waters solo with modest income, individuali veikla is the fastest, cheapest way to start, but exposes personal assets to unlimited liability and non-EU citizens need a residence permit first. For anyone wanting liability protection, planning to hire people, invoice larger international clients, or eventually seek investment, forming a UAB (or an MB for a lighter-weight limited-liability option) is the more common route — and critically, a UAB can be 100% foreign-owned and even registered remotely without the founder holding Lithuanian residency.
Timeline
- Caveat
- Opening a fully operational corporate bank account (as opposed to the temporary capital-deposit account) can add extra time, especially with traditional banks, which usually want an in-person meeting; fintech providers often onboard remotely faster.
- Realistic End To End
- 3 to 14 business days is the range typically cited for the full process (name reservation, document drafting, notarisation/translation, capital deposit, filing, and receiving the company code), with some agencies quoting up to 1–4 weeks when a corporate bank account is also included.
- Registry Processing Only
- Once a complete document package is submitted, the Centre of Registers itself typically processes and issues the registration within about 3 business days.
Scope Note
Company registration in Lithuania is a national process handled by the same state registry regardless of which city (including Kaunas) the company's registered office is in — there is no separate Kaunas-specific procedure.
Typical Costs
- Name Reservation
- €20
- State Registration Fee
- €31
- Virtual Office Registered Address
- €200
Typical annual range cited is roughly EUR 100–300.
- Notarization Of Founding Documents
- €180
Typical range cited is roughly EUR 70–290 depending on complexity.
- State Registration Fee Alt Estimate
- €58
- Full Service Incorporation In Person
- €500
Approximate cost of using a local agent/lawyer if founder travels to sign in person.
- Certified Translation Into Lithuanian
- €290
- Full Service Incorporation Remote Poa
- €800
Approximate cost of using a local agent/lawyer to handle the entire process remotely via Power of Attorney.
- Fee Note
- Sources cite slightly different current state registration fees (roughly EUR 31–58); this reflects fee-schedule variation by legal form/filing channel rather than a single fixed figure — verify the exact current fee on the Registrų centras site before filing.
Official Registry
- Name
- State Enterprise Centre of Registers (VĮ Registrų centras) — Register of Legal Entities
Remote Incorporation
- Detail
- Foreign founders do not need to be physically present. Registration is typically completed by granting a notarised Power of Attorney to a local representative or law firm, who signs and files documents on the founder's behalf. Lithuania's e-Residency digital ID exists but, per recent reporting, cannot currently be used to complete online incorporation or bank account opening independently — a notarised signature on founding documents is still required.
- Possible Without Travel
- Yes
Steps To Incorporate
Steps To Incorporate
- Choose legal form (UAB is the default choice for most foreign founders) and decide on shareholder/director structure.
- Reserve a unique company name with the State Enterprise Centre of Registers (Registrų centras); the UAB suffix is mandatory and reserved words (bank, insurance, etc.) need prior authorisation.
- Draft the Articles of Association and, if there is more than one founder, a memorandum of association; a single-shareholder company instead signs a Constitutive Act.
- Secure a Lithuanian registered office address (virtual office is acceptable).
- Open a temporary 'accumulation' bank account in the company's name and deposit at least 25% of the minimum share capital; the bank or notary issues a deposit certificate required for registration.
- Sign the founding documents before a Lithuanian notary, or execute a notarised Power of Attorney so a local representative can sign and file on your behalf if you are not travelling to Lithuania.
- File the complete package (Articles of Association, founder/director/UBO details, proof of registered address, bank deposit certificate) with the Register of Legal Entities (Registrų centras), on paper, in person, or via the online portal.
- Receive the company registration code, then register with the State Tax Inspectorate (VMI) for a taxpayer ID, register for VAT if turnover is expected to exceed EUR 45,000/year, and register with SoDra (State Social Insurance Fund Board) if hiring employees.
- Convert the accumulation account into a full operating business bank account (traditional banks generally require an in-person meeting; some fintechs/EMIs allow fully remote onboarding).
Residency Requirements
- Directors
- Directors do not need to be Lithuanian residents. A single foreign individual can be both the sole shareholder and sole director.
- Shareholders
- No residency or nationality requirement for shareholders.
Registered Office Requirement
A physical Lithuanian address (a P.O. box is not accepted) is mandatory for the company's registered office; a virtual office is legally accepted and commonly used by non-resident founders.
Local Partner Or Sponsor Requirement
- Detail
- Lithuanian law does not require a local partner, imposes no restrictions based on founder nationality, and permits a fully foreign-owned structure.
- Required
- No
AI-generated estimateData refreshed July 2026
Sources cited for this category
These are the sources cited in this business permits & incorporation for foreigners research for this city. Individual figures may not each trace to one of them.
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Data last updated July 2026 · Verify anything important.