How To Register a Company in Lithuania

Register a company in Lithuania

Lithuania is located at the center of Europe. It is one of the fastest growing economies in Europe with a mass production in laboratory reagents, furniture, refined petroleum and wheat.

The country is labeled by the World Bank as a high income economy, with its agricultural and industrial services that dominate the country’s economy. The country’s strategic location on the Baltic sea which connects to Scandinavian, are some of the reasons why it is shortlisted by companies looking to set up a business in the European Union.

In order to set up a company in Lithuania, here are the guidelines for the company registration process.

Selecting a company name is quite simple, however, the name you decide on should not oppose the law of the public interest, give an insight to your business, must be unique to just your company, should not be offensive and it must be meaningful.

When choosing a name, it is best to keep it short and simple. You can decide to make use of abbreviations, symbols, alphabets and numbers. As long as it gives your market and customers a distinctive clue of what you are selling.

Also, it is advisable to check for existing trade names to avoid any confusion between two companies along the road. It is also a leverage to have your own unique name registered to you. A quick Google search can be beneficial at this point. Once you are sure that no other company bears the intended company name, you are allowed to register the name for your company.

A business structure simply means the type of company an individual owns. In Lithuania, there are four kinds of legal structures. They are;

-Public limited company (AB). This is the most common type of business for most medium and large companies. It has a minimum capital share of approximately €44,000. The minimum number of shareholders is one. You need at least one shareholder in order to register this type of company.

The company and its shareholders all have limited liability. That means, that debts that the company may have in the future will be limited to the company capital share. A board of management should also be appointed.

The necessary documents required to register a public company are; the company’s articles of association, confirmation of a Lithuanian bank account, the incorporation act, confirmation of share registration, and the minutes of the founding meeting.

-Private limited company(USB) . This type of company is applicable to smaller companies or smaller foreign investors. Its minimum share capital is approximately €2,900. The maximum number of shareholders for this business structure is 250. The company and its shareholders also have limited liability.

The following documents are required for registration of a private limited company: Act of incorporation, the company’s articles of association, the minutes of the founding meeting and the confirmation of the Lithuanian bank account.

-Partnership. This can either be a general partnership or limited partnership. General partnerships have unlimited liability and they have full control of a business. The limited partners have limited liability and do not take part in the company’s day-to-day activities.

-Branch. For this type of structure, the parent company is responsible for all liabilities. The representative offices are only allowed to promote the parent business but are not allowed to trade. At least a resident manager should be appointed.

Address registration in Lithuania is a legal formality that is needed for a successful company registration. It is however not necessary to rent a building at your registered address. You can decide to register an address for all your company mail, tax and so on, and have an online office. This would require your employees to work remotely from home.

But if not, you can go ahead and set up a company at your registered address.

Your company bank account can be opened online or in person. The purpose of this account is strictly to deposit the company’s share capital to complete the formalities of the company registration. As soon as your company’s registration is finalized with the State Enterprise Centre of Registers, the bank account will be converted into a current account.

To apply for a bank account electronically, you can easily submit a form on the website of any bank institution supervised by the Bank of Lithuania. However, in order to submit an application successfully, you are required to provide some information and documents such as your company’s articles of association, Lithuanian business address, a founding agreement, details of the appointed directors, and shareholders.

Before moving ahead with your company registration, you must submit the following documents to the notary for verification. The documents are

-The articles of association

-The incorporation act

-The company’s legal structure

-Details of the directors and shareholders such as age, gender, residence and experience

-Certificate of bank account and deposit of share capital and so on.

After the document relating to the company has been notarized, the company is then registered in the Register of Legal Entities. This administration registers businesses, institutions and NGOs. The register contains information about the institution’s legal structure, members of the institution, share capital etc.

The social security tax funds are mandatory payments made to the Lithuanian government who provide in return retirement pension, paternal leave, unemployment insurance, and medical care. The payments are made in the form of a payroll tax.

This is the final step. The company must be registered with the tax office in order to obtain their Value Added Tax identification number. This is used for all tax payments and annual returns. The Value Added Tax identification is required for companies who sell taxable goods and services.

However, registration for the Value Added Tax identification number is based on the legal structure of your company.

After completing all these steps, you can now commence your business activity in Lithuania.

Lithuania provides a low tax rates system and the ease of doing business through simple guidelines. Knowing the type of legal structure that best suits your business will make it easy for you to go through the registration process.