You’re setting up a company in Lithuania. You’ve come across the term “MB” and you’re not sure if it’s the right structure or whether you should go straight to a UAB.
This guide answers that. What an MB is, what it costs, how to register one, how it’s taxed in 2026, and when it’s the right structure for your situation.
What is an MB in Lithuania?
An MB (mazoji bendrija, literally “small partnership”) is a Lithuanian legal entity with limited liability. Members aren’t personally responsible for the company’s debts. Your personal assets stay separate from the business.
Lithuania introduced the MB in 2012 specifically for small, founder-run operations. Freelancers, consultants, service businesses, and early-stage ventures that want a real company without the administrative weight of a private limited company.
Four hard rules define it:
- 1 to 10 members (all must be natural persons; no corporate shareholders)
- No minimum share capital (members contribute what they agree to, even €1)
- Limited liability for all members
- No residency requirement (foreigners can fully own and manage an MB)
That last point is significant. International founders can register an MB in Lithuania entirely remotely, without visiting Vilnius.
MB vs UAB: which one fits your situation?
Most people researching MB Lithuania are also weighing the UAB (uzdaroji akcine bendrija), Lithuania’s private limited company. The table below lays out the key differences:
| MB | UAB | |
|---|---|---|
| Minimum share capital | None | €1,000 |
| Shareholders | 1-10 natural persons only | Natural persons and legal entities, no cap |
| Limited liability | Yes | Yes |
| Corporate shareholders | Not allowed | Allowed |
| Management | Members or designated head | Director required |
| Accounting | Simplified | Standard |
| Registration time | 3-5 business days | 3-5 business days |
Choose MB if you’re solo or in a small team, running a services or consulting business, and you don’t need outside investors or corporate shareholders any time soon.
Choose UAB if you plan to raise funding, bring in corporate shareholders, issue equity to employees, or need a structure that banks and enterprise clients recognize immediately.
Lithuania has four other entity types beyond these two. If neither fits cleanly, Lawhill’s company formation overview lays out all six side by side.
Benefits of registering an MB in Lithuania
No share capital requirement
You don’t need to deposit €1,000 before registering. Members agree on contributions in the founding agreement, as low as €1 if that’s what makes sense. For bootstrapped founders, this is a real structural advantage over the UAB.
Simplified accounting
MBs qualify for simplified bookkeeping under Lithuanian law. Monthly accounting costs stay lower than a UAB, especially in the early months when revenue is still building.
Flexible profit distribution
Members can distribute profits at any point during the year, not just after closing the financial year. The timing is controlled by the terms written into the founding agreement.
Limited liability
Liability stops at the company’s assets. Personal property, savings, and bank accounts aren’t at risk if the business takes on debt or faces a legal claim.
Full EU market access
An MB is a Lithuanian legal entity and therefore a full EU company. It can invoice EU clients, hold euro accounts, and register for VAT across EU member states via the OSS scheme. According to the EU Council, the EU single market covers 440 million consumers. Lithuania’s EU membership gives any registered company direct access to that.
Remote registration for non-residents
Foreigners can register an MB without visiting Lithuania. The process runs through Lithuania’s electronic government infrastructure and can be handled entirely by a local legal representative.
What does it cost to register an MB in Lithuania?
Registration costs depend on whether you use the government portal directly or go through a service provider.
| Cost component | DIY (approx.) | Via service provider |
|---|---|---|
| State registration fee | €30-60 | Included |
| Document preparation | Varies | Included |
| Virtual office / legal address | €200-500/year | Often included first year |
| Service provider fee | – | €149-700+ |
Lawhill’s small partnership (MB) service covers document preparation, registration with the Centre of Registers, and a Lithuanian legal address.
Ongoing annual costs after registration:
- Accounting: €50-150/month depending on transaction volume
- Legal address renewal (if virtual): €450/year
- Annual accounts filing
The MB is one of the cheapest legal entities to maintain in the EU. That’s a core part of its appeal for founders in the early stage.
How to register an MB in Lithuania: step by step
Step 1: Choose and verify your company name
MB names must end in “MB” or “mazoji bendrija.” Check name availability through the Centre of Registers public search, the official Lithuanian government registry. Names that are identical or confusingly similar to existing entities won’t be approved.
Step 2: Prepare founding documents
You’ll need:
- Founding agreement (steigimo sutartis): signed by all members, covering contributions, management structure, and profit distribution rules
- Member identification: passports and personal identification numbers for all members, or equivalent for foreign nationals
- Registered address in Lithuania: physical or virtual office; mandatory for registration
Step 3: Confirm member contributions
Unlike a UAB, an MB doesn’t require a pre-registration bank deposit. Members declare contributions in the founding agreement. No escrow account is needed before you register, a genuine simplification over the UAB process.
Step 4: Submit to the Centre of Registers
Documents are submitted electronically through the Centre of Registers or through a representative. Foreign nationals who can’t authenticate through Lithuania’s e-government system typically use a service provider for this step.
Registration completes within 3-5 business days.
Step 5: Complete tax registration
Once registered, the company receives a legal entity code. Tax registration with Lithuania’s State Tax Inspectorate (VMI) follows automatically in most cases. Corporate income tax obligations are governed by the rates covered in the PwC Lithuania corporate tax summary. VAT registration and social insurance registration for employees are handled separately, when needed.
Step 6: Open a business bank account
This is where international founders most often encounter friction. Lithuanian traditional banks (SEB, Swedbank, Luminor) have tightened non-resident onboarding. Expect due diligence questions, source of funds documentation, and potentially an in-person visit requirement.
EMI alternatives like Paysera, Revolut Business, and Wise Business are accessible remotely and widely used by MB owners at launch. Many founders start there and move to a traditional bank once the business has operating history. For broader cost context, the cheapest company formation options in Europe shows how the MB compares across EU jurisdictions.
MB taxes in Lithuania (2026)
Tax is where most guides leave things vague. Here’s the full picture, based on current Lithuanian legislation.
Corporate income tax (CIT)
| Rate | When it applies |
|---|---|
| 0% | Qualifying newly established small companies, for up to 2 early tax periods |
| 7% | Small companies meeting revenue and headcount thresholds |
| 17% | Standard rate (effective from January 2026) |
An MB in its first 2 years may qualify for the 0%. The conditions include revenue caps and employee count limits; your accountant confirms eligibility at year-end. The 2025 Investment Climate Statement published by the U.S. State Department notes Lithuania’s tax structure as one of the more competitive in the region for SMEs and new businesses..
Lithuania’s position on the lowest corporate tax rates in Europe shows where those rates sit against other EU options.
Personal income tax on member withdrawals (GPM)
This is the part most guides skip, and it matters most for how you take money out of the business.
When MB members withdraw funds, the tax treatment depends on how the payment is classified:
- Profit distributions: taxed at a flat 15% GPM (personal income tax)
- Salary or employment remuneration: taxed at progressive GPM rates (20% on income up to €82,962; 25% from €82,962 to €138,270; 32% above that, per PwC Lithuania’s 2026 summary)
- Civil contract remuneration: taxed at GPM with applicable deductions
An MB lets you choose how to structure member compensation. That flexibility is genuine, but it requires deliberate structuring from day one. Taking money out without correct classification can create unexpected tax liabilities at year-end.
For how profit distributions are taxed specifically, the dividend tax Lithuania guide goes deeper on the GPM treatment.
Social insurance contributions (Sodra)
For MB members who work in the company, Sodra contributions apply. The rate depends on whether compensation is paid as salary or via civil contract:
- Civil contract arrangements carry lower Sodra contributions than standard employment
- This is one of the main structural advantages of the MB for working founders
Get the compensation structure set up correctly with an accountant before you start withdrawing. The savings are real but only if the paperwork matches.
VAT
The Lithuanian VAT registration threshold is €45,000 in annual turnover for domestic businesses. Cross it and VAT registration becomes mandatory. For B2B services delivered to EU clients, the reverse charge mechanism typically applies and no Lithuanian VAT is charged regardless of your registration status.
MB limitations: when it’s the wrong structure
Be clear-eyed about this before registering.
No corporate shareholders. If any investor or co-owner will be a company rather than an individual, an MB can’t accommodate that. You’d need Lawhill’s UAB formation service.
10-member cap. The structure breaks if you need more than 10 members. There’s no way around this within the MB form.
Less recognition from banks and enterprise clients. UABs carry more international familiarity. Some payment processors and enterprise procurement teams default to requesting UAB documentation. It’s manageable, but it adds friction.
No ESOP or equity options. If employee equity incentives are part of your plan, an MB can’t support them.
Converting from MB to UAB
If you register an MB and later need to scale, conversion to a UAB is possible. The steps involved:
- A members’ decision to reorganize
- Preparing new Articles of Association
- Meeting the UAB’s €1,000 share capital requirement
- Registering the reorganization with the Centre of Registers
It’s not complicated, but it takes time and incurs legal and registration costs. Some founders plan for this deliberately: start with an MB to keep costs low in years 1-2, then convert once revenue justifies it. Lawhill handles both the initial MB formation and any subsequent corporate restructuring.
Who is the MB right for?
The MB works well for:
- Freelancers and consultants who want an EU legal entity with limited liability
- Solo founders or small teams running services, consulting, or early-stage B2B businesses
- International entrepreneurs needing a low-cost EU company without a large upfront capital commitment
- Lithuanian residents starting a side business or independent practice
If you’re planning to raise funding, bring in corporate shareholders, or scale a team, the UAB is the structure you’ll need. The UAB Lithuania guide covers the full UAB structure if you’re deciding between the two.
Frequently asked questions
Can a foreigner register an MB in Lithuania?
Yes. Lithuanian law places no residency requirement on MB members. Non-residents can fully own and manage an MB, and the registration process can be completed remotely through a legal representative.
How long does MB registration take?
3-5 business days after documents are submitted. Working through a service provider, total turnaround from first contact to a registered company is typically under 2 weeks.
What is the minimum share capital for an MB in Lithuania?
There is no statutory minimum. Members declare their contributions in the founding agreement; this can be as low as €1.
Can an MB have employees?
Yes. An MB can hire employees. Standard Lithuanian employment law applies: employment contracts, payroll, and Sodra contributions.
What is the difference between an MB and a UAB?
Both are limited liability entities. An MB (mazoji bendrija) is a small partnership capped at 10 natural-person members with no minimum share capital and simplified accounting. A UAB (uzdaroji akcine bendrija) is a private limited company that allows corporate shareholders, requires €1,000 share capital, and suits businesses planning to hire, raise investment, or scale.
What taxes does an MB pay in Lithuania?
Corporate income tax at 0% (qualifying new companies), 7% (small companies), or 17% (standard). Members also pay personal income tax (GPM) on withdrawals: 15% on profit distributions, or progressive rates of 20-32% on salary-type payments. Social contributions (Sodra) apply to working members.
Can an MB open a bank account remotely?
Traditional Lithuanian banks generally require in-person visits for non-residents. Paysera, Wise Business, and Revolut Business are remote-accessible alternatives widely used by MB founders.
What documents are needed to register an MB in Lithuania?
A founding agreement (steigimo sutartis), member passport copies, and a registered Lithuanian address. A service provider can prepare and file all of this on your behalf.
Conclusion
An MB is a practical, low-cost route to a legitimate EU company in Lithuania. No minimum capital, simplified accounting, flexible profit distribution, and remote registration make the structure genuinely accessible. Particularly for solo founders and small teams who want EU legal standing without the overhead of a UAB.
The constraints are real: no corporate shareholders, a 10-member cap, and less recognition from some banks and enterprise clients. Know those going in.
If you want to confirm which structure fits your situation, get in touch with Lawhill. With 13+ years of experience in Lithuanian company formation for international founders, they’ll tell you quickly which entity makes sense and handle the registration from start to finish.
