Lithuania, one of the three Baltic states, has transformed into a modern, business-friendly destination in Europe. Its strategic location between Western and Eastern Europe, combined with EU and Eurozone membership, makes it a natural hub for trade and investment.
The country is not only affordable compared to Western Europe, but it also offers stability, a highly skilled workforce, and a forward-thinking regulatory framework.
If you’re considering starting a business in Lithuania in 2025, this comprehensive guide is designed to give you clarity and confidence. You’ll discover why Lithuania is an excellent place for entrepreneurs, how to choose the right business structure, what the registration process looks like, what taxes apply, and what to expect as a foreigner entering the market.
Why Start a Business in Lithuania in 2025?
Lithuania offers a mix of strategic location, progressive regulation, and cost advantages that make it stand out in Europe. Here are the main reasons investors and entrepreneurs are drawn here:
Strategic Access to Markets
Lithuania is positioned at the crossroads of Northern and Eastern Europe, offering direct access to the EU single market of more than 400 million consumers.
Its ports, modern airports, and developed infrastructure make it a logistics hub, particularly for businesses targeting Scandinavian, Central European, and CIS markets.
EU and Eurozone Membership
Lithuania has been part of the European Union since 2004 and joined the Eurozone in 2015. This means businesses benefit from the stability of the euro, transparent EU regulations, and the ability to expand seamlessly into other member states.
Competitive Costs
Operating costs in Lithuania are among the lowest in the EU. Office rentals, salaries, and utilities are significantly more affordable than in Western Europe.
This makes the country especially attractive to startups, digital nomads, and SMEs looking for efficiency without sacrificing access to talent or infrastructure.
Skilled Workforce
Lithuania boasts a highly educated workforce with strong technical skills. English is widely spoken, particularly among young professionals, and multilingualism is common.
The country is known for its expertise in IT, engineering, and finance, making it ideal for tech startups and knowledge-based businesses.
Growing Innovation Ecosystem
Vilnius, the capital, is often referred to as the fintech hub of the Baltics. Supportive regulation, government incentives, and a thriving startup culture make Lithuania one of the most dynamic markets for technology-driven businesses.
Taken together, these advantages make Lithuania not just a convenient location, but a genuinely strategic one for international business.
Business Structures Available in Lithuania
When you start a business in Lithuania, choosing the right legal structure is one of the first and most important steps.
The form you select will determine your liability, tax treatment, credibility with partners, and how easily your company can scale. Lithuania offers several options, each serving different needs.
Private Limited Liability Company (UAB)
The UAB is by far the most popular business structure in Lithuania, both for locals and foreign investors. It requires a minimum share capital of €1,000 and limits shareholder liability to their contributions.
UABs are flexible enough for nearly any type of commercial activity, and they are considered the most credible and professional form by banks, partners, and clients. For entrepreneurs planning long-term growth, this is usually the best choice.
Small Partnership (MB)
The MB is a simpler and more flexible form, created primarily for smaller ventures or family businesses. It does not require any minimum share capital, and partners can contribute not only money but also services or know-how.
Contributions can start from as little as €1, making this structure one of the most accessible options for entrepreneurs starting with limited resources.
Unlike older business forms such as the individual enterprise, the MB offers the same limited liability protection as a UAB, meaning that partners are not personally responsible for company debts beyond their contributions.
This balance of simplicity, flexibility, and legal protection makes the Small Partnership one of the most popular and efficient legal forms in Lithuania, ideal for startups, freelancers, and small teams who want to operate professionally with minimal administrative burden.
Individual Enterprise (IÄ®)
An IÄ® is essentially a sole proprietorship, owned and operated by one individual. It is straightforward to set up and does not require share capital.
The main drawback is that the owner assumes unlimited liability, meaning personal assets may be used to cover business debts. This structure is typically chosen by freelancers, artisans, or very small businesses.
Public Institution (VĹ Ä®)
The VŠĮ is intended for non-profit activities. It is widely used for charities, NGOs, and associations. Unlike for-profit companies, any income must be reinvested into the organization’s objectives rather than distributed to members.
For those pursuing social, cultural, or educational goals, this is the preferred structure.
Branch or Representative Office
Foreign companies that want a presence in Lithuania without incorporating a new legal entity can establish either a branch or a representative office.
A branch can conduct commercial activity on behalf of the parent company, while a representative office is limited to non-commercial functions such as marketing, networking, or research.
For most international entrepreneurs, the UAB offers the ideal balance of liability protection, credibility, and flexibility. However, the right structure ultimately depends on your business goals, appetite for risk, and the scale of operations you envision.
Step-by-Step Company Registration Process in Lithuania
The company registration process in Lithuania is known for being efficient, transparent, and increasingly digitalized. In many cases, the entire procedure can be completed in less than a week, especially if all documents are prepared in advance.
Below is a breakdown of the main steps, including the authorities you will work with at each stage.
Step 1: Choose a Business Structure and Company Name
The first decision is selecting the legal form of your company – most commonly a UAB (Private Limited Liability Company), MB (Small Partnership), or another type depending on your needs.
Once you know the structure, you must reserve your company name through the State Enterprise Centre of Registers (RegistrĹł centras). This ensures that your chosen name is unique and complies with Lithuanian naming rules.
Step 2: Prepare Incorporation Documents
Next, draft the necessary incorporation documents, including the articles of association, shareholder agreements, and information about directors and beneficial owners. These documents may need to be notarized, especially if submitted in person.
Foreign investors often require certified translations into Lithuanian. At this stage, many businesses seek help from a legal firm like Lawhill to ensure compliance with Lithuanian corporate law.
Step 3: Deposit Share Capital
If you are establishing a UAB, you must deposit the minimum share capital of €1,000 into a temporary bank account. Lithuanian commercial banks and some electronic money institutions (EMIs) are authorized to accept these deposits.
After the company is registered, this temporary account is converted into a permanent corporate account, and funds become available for business use.
Step 4: Register the Company
The official incorporation of your business takes place at the Lithuanian Centre of Registers. You will submit all notarized and translated documents either in person or electronically through their online system.
Once the registration is approved, your company is officially recognized as a legal entity.
Step 5: Open a Permanent Bank Account
After registration, you must open a permanent corporate bank account with a Lithuanian financial institution. This account is required for daily transactions, paying employees, and meeting tax obligations.
Lithuania’s strong fintech ecosystem also allows entrepreneurs to consider licensed electronic money institutions if traditional banks are not suitable.
Step 6: Register for Taxes and Social Security
Every company must be registered with the State Tax Inspectorate (Valstybinė mokesčių inspekcija, or VMI). If your annual turnover is expected to exceed €45,000, you will also need to register for a VAT number.
In addition, all companies with employees must register with the State Social Insurance Fund Board (Sodra) to manage social contributions and employee benefits.
Timeline and Costs
In most cases, company registration takes only 3 to 5 business days once documents are in order. Government fees are modest, typically under €100 for basic registrations.
However, you should also budget for notary services, certified translations, legal consultations, and bank account opening fees.
Starting a Business in Lithuania as a Foreigner
Lithuania stands out for its openness to foreign investors. Here’s what makes the process appealing:
- Full Foreign Ownership: Foreigners can own 100% of a Lithuanian company. No local partners are required.
- Residency: EU/EEA citizens can establish companies without restrictions. Non-EU citizens may need a temporary residence permit to live in Lithuania, though company ownership itself does not require residency.
- Remote Setup: Foreigners often register companies remotely, using local legal firms like Lawhill to handle documentation, filings, and bank account opening.
- Banking: While banking due diligence is strict, Lithuania has a well-developed sector that includes both traditional banks and fintech-friendly electronic money institutions.
For non-residents, navigating local rules on taxation, documentation, and compliance can be complex. This is why most foreign entrepreneurs work with local experts.
Lawhill has extensive experience helping international clients establish businesses in Lithuania, offering full remote support, guidance on choosing the right company structure, and assistance with everything from registration to ongoing legal compliance.Â
With Lawhill’s support, starting a business in Lithuania as a foreigner becomes a smooth, reliable, and efficient process.
Business Taxes in Lithuania
Lithuania’s tax system is transparent, competitive, and aligned with EU directives. Here’s what entrepreneurs should know:
Corporate Income Tax (CIT)
- Standard rate: 16%.
- Reduced rate: 6% for small companies (fewer than 10 employees, turnover below €300,000).
- Newly established small companies may qualify for a 0% rate in the first year.
Value-Added Tax (VAT)
- Standard rate: 21%.
- Reduced rates of 9% and 5% apply to certain goods and services.
- Mandatory registration threshold: €45,000 turnover annually.
Withholding Taxes
- Dividends: 15%, often reduced under double-taxation treaties.
- Interest: 10%, with treaty reductions possible.
- Royalties: 10%, also reduced under treaties.
Personal Income Tax (PIT)
- Employment income: 20% up to a threshold, then 32% for higher incomes.
- Dividends: taxed at 15%.
Tax Incentives
- R&D costs deductible at up to 3x actual expenses.
- Profits reinvested into new technologies or equipment may be exempt.
Overall, Lithuania’s tax system is considered simple and attractive, especially for small to mid-sized companies.
Doing Business in Lithuania: Practical Insights
Successfully incorporating a company is only the first step. To thrive, entrepreneurs need to understand the day-to-day realities of doing business in Lithuania.
The country offers a supportive environment with modern infrastructure, competitive talent, and a reputation for transparency – but being familiar with the details makes operations smoother.
Banking and Financial Environment
Lithuania has built a reputation as one of Europe’s leading fintech hubs, thanks in large part to its openness toward electronic money institutions (EMIs). This makes it especially attractive for startups and international businesses in finance, payments, and digital services.
Traditional banks also offer a wide range of corporate banking solutions, though their compliance checks are often stricter for non-residents.
Having a well-prepared business plan and documentation can help speed up account opening. For those who need more flexibility, licensed EMIs provide a reliable alternative.
Workforce and Employment Market
The Lithuanian labor market is another strong asset. Salaries remain competitive by European standards, while education levels are high.
Professionals are particularly strong in IT, engineering, finance, and life sciences, making the country an appealing base for knowledge-driven industries.
Language skills are widespread, with English proficiency especially strong among younger generations. Russian, German, and Polish are also commonly spoken, giving companies access to a multilingual workforce that can support regional expansion.
Labor Regulations and Employment Law
Employment contracts are mandatory in Lithuania and must be registered with the State Social Insurance Fund Board (Sodra). The country’s labor code strikes a reasonable balance between protecting employee rights and allowing employer flexibility.
Standard working hours are capped at 40 per week, and overtime is regulated, but companies enjoy flexibility in structuring work agreements. Social contributions are clearly defined, and compliance is straightforward with proper accounting support.
Digital Government Services
Lithuania has invested heavily in e-government infrastructure, making business administration faster and more efficient.
From tax filings and social security reporting to company changes and annual returns, most procedures can be handled online through secure portals such as those provided by the State Tax Inspectorate (VMI) and the Centre of Registers.
This digital-first approach saves significant time and reduces the bureaucratic burden for entrepreneurs and their accountants.
Business Climate and Reputation
One of Lithuania’s biggest advantages is its reputation for transparency. The country consistently scores well in global corruption perception indexes, offering a secure and predictable business environment.
Foreign investors often highlight the ease of communication with local institutions and the clear legal framework that aligns with EU standards. This creates confidence for businesses operating locally while also strengthening credibility with international partners.
Why Work with Lawhill?
Lithuania may be one of the most straightforward places in Europe to establish a company, but for newcomers the legal framework, documentation requirements, and banking regulations can still feel complex. This is where Lawhill makes the difference.
With more than 13 years of experience, our team has guided hundreds of entrepreneurs through company formation, corporate law, and compliance. We work with clients from around the world, offering seamless cross-border solutions that make Lithuania accessible no matter where you are based.
One of our greatest strengths is the ability to provide remote services. Many of our international clients never need to travel to Vilnius – we prepare and submit all filings, draft and notarize legal documents, and even assist with opening a corporate bank account on their behalf. This approach saves time, reduces stress, and ensures that your company is operational quickly.
At the same time, we are deeply rooted in Lithuania’s legal and business environment. Our team combines international perspective with local expertise, giving you tailored guidance that accounts for the nuances of Lithuanian regulations. Whether your goal is to establish a UAB, purchase a ready-made company with an existing bank account, or restructure an existing entity, Lawhill provides the clarity and support needed to set up for long-term success.
