|JUST 3 DAYS TO START A BUSINESS||LOW LABOUR COSTS||NETWORK OF CLUSTERS||FREE ECONOMIC ZONE
(0% TAX ON PROFIT
|STRONG INDUSTRIAL COMPETENCES||SKILLED WORKFORCE||DEVELOPED TRANSPORTATION INFRASTRUCTURE (E.G. INTERNATIONAL CARGO AIRPORT)|
|INVESTMENT CLIMATE IN ŠIAULIAI|
|PROPERTY||LABOUR FORCE||FREE ECONOMIC
|LEGAL BASIS FOR INVESTMENT|
|STARTING A BUSINESS|
|Procedures||Time to complete||Associated costs|
|1. Check and reserve the name of the company (limited liability company)||1 day||approx EUR 16|
|2. Register at the Company Register, including registration with State Tax Inspectorate (the Lithuanian Revenue Authority) for corporate tax, VAT, and State Social Insurance Fund Board (SODRA)||1 day||approx EUR 57|
|3. Complete VAT registration||3 days||Free|
|ESTABLISHING A COMPANY|
|Most common types of entities for foreign investors:
|Main features of most popular entities|
|Assessment Criteria||Small Partnership (MB)||Private limited liability company (UAB)||Public liability company (AB)||Individual enterprise (IĮ)||Agricultural Company (ŽŪB)|
|Minimum number of stakeholdes||1 member||1 shareholder||1 shareholder||1 owner||2 members|
|Maximum number of stakeholders||10 members||249 shareholders||Unlimited||Unlimited||Unlimited|
|Minimum amount of capital||None (MB members define contributions)||EUR 2,900||EUR 43,440||None||None|
|Liability||Limited civil liability – shareholders are not held personally liable for MB obligations||Limited civil liability – shareholders are not held personally liable for UAB obligations||Limited civil liability – shareholders are not held personally liable for AB obligations||Unlimited civil liability – should business debts exceed the assets of the individual enterprise the owner is held personally liable||Limited civil liability – members are not held personally liable for ŽŪB obligations|
|Should setting up your own greenfield investment project be too risky, there are always other options to make your business happen in Lithuania:|
|Establishing a branch||By establishing a branch office and appointing a branch manager, a foreign company is able to reduce its costs. As far as Lithuanian law is concerned, the branch manager is the official branch office representative, and it is their responsibility to sign documents and organise the accounting of the branch office. Moreover, every branch office has to be registered with the Lithuanian Registry of Legal Entities, and is responsible for the maintaining of its own accounts. Contact us or see useful links for further information.|
|Mergers and acquisitions||When acquiring an existing business in Lithuania, you can either purchase its shares or its business assets. If the existing business is conducted through a partnership or a branch office, you can only acquire the business assets.Contact us or see useful links for further information|
|Partnerships||Partnerships can be created directly by establishing a joint venture, a limited liability company, a general partnership or a limited partnership; or indirectly by the appointment of a commercial agent or a distributor or by setting up a network of franchisees.Contact us or see useful links for further information|
Law on Companies of the Republic of Lithuania
|LABOUR MARKET REGULATION|
|Here are few general laws related to the employment affairs|
|Conclusion of employment contract||• Employment contract must be in writing; contain conditions of payment; place of work and work description
• Fixed-term contracts for newly created workplace are allowed, but they should not exceed 5 years
• Temporary employment contracts are allowed
|Termination of employment contract||• Employment contracts may be terminated for reasons related to qualifications, profesional competence or behaviour at work. Contracts may also be terminated for economic or technological reasons. In all situations, the employer must provide 2 months notice prior to contract termination.|
|Work hours, overtime work, remuneration||• The working week consists of 40 hours. A working day or shift can last up to 8 hours. A five-day workweek is standard, but it may be extended to 6 days.
• Overtime cannot exceed 4 hours over two consecutive days and 120 hours per year, unless this has been established collectively prior to the signing of the employment agreement. Notwithstanding, a maximum of 180 hours per year cannot be exceeded.
• Overtime and nightshift pay must be at least 1.5 times the hourly/monthly wage established for the employee.
• A three-shift working day is permitted by the Lithuanian Labour Code.
|Vacation||• Minimum annual paid holiday is 28 calendar days for employees but is extended to 35 calendar days for:
1. employees under age of 18
2. single parent employees, raising a child under the age of 14 or a disabled child under the age of 18
3. disabled employees
• Normally employees are entitled to paid vacation after continuous work of 6 months
|Work permits for non-residents||• „EU Blue Card“ (all-inclusive residency and work permit) may be issued for highly skilled professionals* from non-EU countries in a period from 15 days** and up to 2,5 months.
• Non-EU citizens who are skilled professionals*** not holding a university degree may be issued temporary work and residency permits in just slightly above 3 months.
For more information regarding the EU Blue card and its application procedure, please visit eubluecard.lt.
|Regulatory authorities||Including, but not limited: the Register of Legal entities; State Labour Inspectorate; LR Migration Department|
|* Highly skilled professionals must hold a university degree, their qualification must be in shortage in the Lithuanian labor market and they must be contracted for no less than twice the average Lithuanian salary.
** 15 day term is applicable when highly skilled professional is contracted for no less than three times the average Lithuanian salary and fast-track processing option is chosen for twice the regular fee.
*** Skilled professionals must hold a certificate of a specific qualification and have at least two years of professional experience. Applicant’s qualification must be in shortage in the Lithuanian labor market and they must be contracted for a salary equivalent to local co-workers. Processing time includes fast-track option when temporary residence permit is issued.
Sources and other useful links:
Labour code of the Republic of Lithuania
Law on Companies of the Republic of Lithuania
Departament of Migration
Lithuanian labour exchange
State Labour Inspectorate
|Below you will find the major business tax in Lithuania
For a quick and simple comparison to other major European countries please find the document attached
|Corporate profit tax||0-15%|
|Dividends (witholding tax)||0-15%|
|Personal income tax||15%|
|Social security tax||9% paid by employee 30.98% paid by employer|
|Real estate tax||0,3-3%|
|Other favourable tax conditions available to foreign companies:
• 0% corporate income tax for six years in free economic zones.
• If they meet certain conditions, entities can reduce their taxable profit up to 50% providing they are carrying out an investment project into qualifying assets.
• Expenses incurred by companies carrying out R&D projects can be deducted x3;
• 0% withholding tax on interest when the recipient of interest is established in the European Economic Area (EEA) or a country with which Lithuania has signed a treaty for the avoidance of double taxation;
• 0% withholding tax on royalties paid to related parties meeting requirements of the EC Interest and Royalty Directive;
• 0% percent withholding tax on dividends distributed to a foreign/Lithuanian entity where the recipient has held not less than 10% of voting shares for a continuous period of at least 12 consecutive months;
• 0% corporate income tax on dividends received from EEA countries if the dividends were distributed from profits which were subject to corporate income taxation;
• Advanced Pricing Agreements (APAs) and Binding Rulings available as from 1 January 2012;
Sources and useful links:
State Tax Inspectorate
PwC / Paying taxes, 2015 and Business Guide to Lithuania, 2015
Deloitte / Witholding tax rates, 2015 and Lithuania’s tax highlights, 2015
KPMG / Corporate and Indirect Tax Rate Survey 2014
EY/ Worldwide personal tax guide. 2014-2015
|Investments into R&D activities or infrastructure
SMART INVEST LT+
Grants for development of new or significantly improved products, services or processes. You can also get funding for investment into R&D infrastructure, and activities related to process and organizational innovations.
|Activity 1||Large Company||Medium Company||Small Company||Effective Collaboration*|
|Industrial Research||up to 50 %||up to 60 %||up to 70 %||+ up to 15%|
|Experimental development||up to 25 %||up to 35 %||up to 45 %||+ up to 15%|
|Funding for employees’ training and qualification
HR INVEST LT+
Foreign companies can apply for funding as long as they have or are planning to have a base in Lithuania.
|Large Company||Medium Company||Small Company||Micro-Enterprise|
|up to 50 %||up to 60 %||up to 70 %||up to 70%|
|THEY ARE ALREADY HERE:|
Senior specialist of
Department of investment and city development
Tel. +370 41 383 424