Choosing between UAB vs MB is one of the first structural decisions founders face when setting up a company in Lithuania. Both give owners limited liability, but they differ in ownership rules, capital, management and the ways owners can receive money from the business.
An MB, or maĹľoji bendrija, often suits an owner-managed business with a small number of individual founders. A UAB, or uĹľdaroji akcinÄ— bendrovÄ—, gives more room for corporate shareholders, outside investors and future ownership changes.
Tax deserves separate consideration. Both structures fall under Lithuania’s corporate income tax system, while the tax paid by an owner can vary significantly depending on whether income is received as salary, dividends, MB member withdrawals or other permitted payments.
UAB vs MB: key differences at a glance
The main difference between UAB and MB is the ownership structure. An MB may have up to 10 members, all of whom must be natural persons. A UAB can have one or more individual or legal-entity shareholders, with no general limit on the number of shareholders.
| Factor | MB | UAB |
|---|---|---|
| Legal form | Small partnership | Private limited liability company |
| Owners | 1–10 natural persons | 1 or more natural or legal persons |
| Liability | Limited civil liability | Limited civil liability |
| Minimum capital | Members determine contributions; minimum monetary contribution can start from €1 | €1,000 minimum share capital |
| Ownership model | Membership rights | Shares |
| Corporate shareholder | No | Yes |
| Management | Members’ meeting, with an appointed manager where the chosen structure provides for one | Director required |
| Corporate income tax | 17% standard; 7% or 0% may apply when statutory conditions are met | 17% standard; 7% or 0% may apply when statutory conditions are met |
| Owner income | Several MB-specific payment routes | Salary, dividends and other lawful payments |
| Outside investment | More limited by membership structure | Conventional share structure supports changing ownership |
| VAT | Determined by VAT rules and activity | Determined by VAT rules and activity |
| Conversion | Can be transformed into a UAB | Already uses the UAB corporate form |
Lithuania’s Innovation Agency currently lists the minimum monetary contribution for an MB at €1 and the minimum UAB share capital at €1,000. Both structures have limited civil liability.
What is the main difference between UAB and MB?
Under the Small Partnerships Act, an MB is limited to 10 individual members and uses membership rights rather than shares. A UAB can have individual or corporate shareholders and uses a conventional share structure. This usually makes MB suitable for closely held owner-managed businesses and UAB more practical when investors or changing ownership are expected.
What is an MB in Lithuania?
A small partnership in Lithuania is a private legal entity with limited civil liability. Under the Lithuanian Small Partnerships Act, it may have 1–10 members, and every member must be a natural person.
Lithuanian government business guidance states that the minimum monetary contribution can start from €1. MB members otherwise determine the wider contribution structure through the company’s formation documents.
This makes an MB a common option for consultants, small founder teams and owner-managed businesses where corporate investors are not expected.
Lawhill’s small partnership formation service includes document preparation, registration and Lithuanian legal-address support, and the process can be handled remotely for international founders.
What is a UAB in Lithuania?
Lithuania’s Innovation Agency describes a UAB as a private limited liability company. Shareholders normally risk the capital committed to the company rather than becoming personally responsible for the company’s ordinary obligations.
A UAB requires €1,000 minimum share capital. It can have one shareholder or multiple shareholders, and shareholders may be individuals or legal entities. The number of shareholders is not generally limited.
Current government guidance requires a UAB to have a director. Its share structure makes ownership transfers, new share issues and corporate investment easier to accommodate than under an MB structure.
Lawhill’s UAB company formation service covers incorporation documents, registry submission, registered-address support and related formation work.
UAB vs MB liability
Both structures provide limited liability.
Lithuania’s Small Partnerships Act defines an MB as a limited civil liability private legal entity. Government guidance gives the same limited-liability status to a UAB.
This means the company has its own legal obligations. Shareholders or members generally do not become personally responsible for company debts simply because the business cannot pay them.
Limited liability still operates within Lithuanian company, insolvency and civil law. Personal liability can arise in specific circumstances involving a person’s own conduct, breaches of legal duties or other grounds established by law. The exact exposure depends on the facts.
For founders making a UAB vs MB liability comparison, the bigger practical difference is therefore usually ownership and governance, since both structures start from limited civil liability.
UAB vs MB share capital
The capital requirement creates one of the clearest differences between the 2 structures.
UAB share capital
A UAB must have at least €1,000 in share capital. Lithuania’s Innovation Agency confirms the €1,000 minimum in its current UAB guidance.
Share capital is divided into shares. The number and ownership of those shares determines each shareholder’s position in the company and normally affects voting and profit distribution.
A UAB can later issue new shares when additional capital is raised, subject to company-law requirements. This can matter when a founder expects future investors.
MB contributions
An MB has no equivalent €1,000 statutory share-capital requirement. Members make contributions, which may consist of money or other permitted property.
Current Innovation Agency guidance states that the minimum monetary contribution may start from €1.
Low statutory capital does not tell you how much cash the business needs. A consulting company with few expenses may need little operating capital, while an e-commerce or logistics business may need substantial working funds regardless of whether it is formed as MB or UAB.
UAB vs MB ownership rules
Ownership is often the deciding factor for founders who expect the business to change over time.
An MB can have a maximum of 10 members, and every member must be an individual. A company, investment vehicle or other legal person cannot become an MB member.
A UAB can have both individual and legal-entity shareholders. Current government guidance places no general limit on the number of UAB shareholders.
This distinction matters in several situations:
- A foreign holding company needs to own the Lithuanian entity.
- A corporate investor may enter later.
- The founder expects multiple investment rounds.
- Ownership may be transferred between investors.
- The business may eventually have more than 10 owners.
A UAB is usually the more workable structure in these cases because ownership is represented by shares.
For a business that will remain owned by one person or a small group of individual founders, the MB membership model may be sufficient.
UAB vs MB tax in 2026
The UAB vs MB tax comparison needs to separate company tax from owner-level tax.
At company level, both MB and UAB fall within Lithuania’s corporate income tax framework. The legal form alone does not create a separate corporate tax rate for MB.
Corporate income tax
For tax periods beginning in 2026, Lithuania’s standard corporate income tax rate is 17%.
Qualifying small entities can apply a 7% rate when the statutory conditions are met. VMI states that the €300,000 annual income threshold applies to this reduced rate, together with the other conditions in the Corporate Income Tax Law.
Qualifying newly established small entities may apply a 0% corporate income tax rate during their first 2 tax periods. VMI lists conditions including annual income of no more than €300,000, ownership by natural persons and restrictions concerning restructuring, liquidation and ownership transfers during the relevant period.
These rules can apply to either legal form when the entity satisfies the statutory requirements.
Dividends and distributed profit
VMI’s 2026 personal income tax guidance states that income from distributed profit, including dividends, is taxed at 15% personal income tax regardless of the amount.
For a UAB shareholder, dividends are one of the conventional ways to receive profit after the company has earned distributable profit and the relevant corporate procedures have been completed.
MB members may also receive distributed profit, but MB rules permit other payment categories that can produce different personal tax and social-security treatment.
MB member payments
An MB member may receive money under several legal categories, including distributions of profit, amounts taken for personal needs and qualifying payments under civil contracts.
The Small Partnerships Act allows an MB member to enter into civil contracts with the MB for services or work, provided the arrangement does not have the characteristics of employment. The total value under these contracts cannot exceed €100,000 per calendar year.
VMI’s 2026 guidance also shows that the personal income tax rate applied to MB member payments under civil contracts can depend on the amount and the member’s other annual income.
Sodra contributions changed during 2026
The social-security treatment of money taken by MB members for personal needs changed on July 1, 2026.
Sodra states that during January to June 2026, VSD and PSD contributions for MB members were calculated from 50% of amounts withdrawn for personal needs. From July 1, the contribution base increased to 90% of those amounts.
Sodra lists a 20.81% contribution rate for this category, with additional pension accumulation contributions applying where relevant.
This change makes old MB tax comparisons particularly unreliable for founders making a decision in the second half of 2026.
How do you pay yourself from an MB vs UAB?
The amount a founder keeps personally depends heavily on how the payment is classified.
A UAB shareholder who works for the company may receive employment income under the applicable employment and payroll rules. Shareholders can also receive dividends when the company has distributable profit and the required corporate decisions have been made.
VMI distinguishes several ways an MB member may receive money, including distributed profit, amounts for personal needs and qualifying civil-contract payments. Each route has its own tax treatment.
This makes headline comparisons such as “MB has lower tax” unreliable without knowing:
- how much the owner plans to withdraw;
- which payment category applies;
- whether the owner has other taxable income;
- whether social-security contributions apply;
- whether the person participates in additional pension accumulation;
- when the payment is made.
For founders comparing expected take-home income, the calculation should be made using the planned payment structure rather than the company name alone.
Does an MB become restrictive as the business grows?
An MB can operate a successful business without converting simply because revenue increases.
The structural limits matter more. An MB can have no more than 10 members, and those members must all be natural persons.
Growth can therefore create a reason to move toward UAB when:
- a corporate investor wants an ownership stake;
- more than 10 owners may be needed;
- the company wants a conventional share-based investment structure;
- ownership transfers become more frequent;
- future financing depends on issuing shares.
There is no general MB turnover threshold that automatically forces a company to become a UAB under the MB ownership rules reviewed for this comparison. Tax thresholds can still change the tax treatment of the company as revenue grows.
Which structure is better for investors?
A UAB generally has the stronger ownership structure for outside investment.
Current government guidance confirms that UAB shareholders can be individuals or legal entities, and ownership is represented through shares. A UAB may issue new shares to raise capital under the applicable company-law procedures.
An MB’s membership model works differently. Membership is restricted to natural persons and capped at 10.
A founder expecting a venture fund, holding company or another corporate investor to acquire equity will therefore usually need the UAB structure.
This distinction also matters for international corporate groups. A foreign parent company can own shares in a Lithuanian UAB, while it cannot become a member of an MB because MB membership is limited to natural persons.
Do UAB and MB have different VAT rules?
VAT registration is determined by VAT rules and the company’s transactions. Both MB and UAB can become VAT-registered businesses.
VMI states that the domestic VAT registration threshold is €45,000 for relevant taxable supplies in Lithuania. Since May 1, 2025, the threshold is assessed using the previous or current calendar year rather than a rolling 12-month period.
Separate VAT obligations can arise from certain cross-border acquisitions or services even when domestic sales remain below €45,000.
A founder can therefore need VAT registration under either legal form. The choice between UAB and MB should be made on ownership, management, tax and business needs rather than an assumption that VAT belongs to one company type.
Businesses approaching the threshold or carrying out cross-border transactions may need VAT registration in Lithuania based on their turnover and transaction profile.
Accounting and administration
Both UAB and MB are legal entities with accounting, tax filing and financial reporting obligations.
An MB can have a lighter governance structure in a small owner-managed business. Its tax treatment can still become detailed when members receive different payment types, the business registers for VAT or employees are added.
A UAB uses a more formal corporate structure involving shareholders, a director, shares and the relevant company decisions. That structure can require more documentation as ownership and business activity become more complex.
For an international founder, accounting complexity should be assessed based on actual activity. A VAT-registered MB trading across several EU countries may require more accounting work than a simple UAB with a single shareholder and few transactions.
UAB vs MB for foreign founders
Both structures can work for an international founder, but the planned ownership structure can decide the question quickly.
Lawhill’s MB formation service supports non-resident members and managers and can be handled remotely for international founders.
A UAB is more suitable when a foreign company will own the Lithuanian business. Lithuanian government guidance expressly allows legal entities to become UAB shareholders.
For international founders, Lawhill’s company formation in Lithuania service includes document preparation, registry submission, registered-address support, bank-account assistance and VAT registration where required.
The founder’s nationality and residence can also affect banking, identification, tax residency and regulated-business requirements. Those issues should be checked separately from the basic UAB vs MB legal-form comparison.
Can an MB be converted into a UAB?
Yes. Lithuanian law expressly permits a small partnership to be transformed into a UAB.
The Small Partnerships Act states that an MB can be transformed into a public or private limited company according to the relevant provisions of the Lithuanian Companies Act.
Conversion requires a formal legal process. Existing obligations, assets, formation documents and the capital requirements of the resulting UAB need to be addressed.
Founders who already expect corporate investment or a conventional share structure may save future restructuring work by choosing UAB at formation.
Is UAB more credible than MB?
Both MB and UAB are recognised Lithuanian legal entities. A counterparty can check either company through the Lithuanian registers and perform the same types of commercial due diligence.
Some larger investors, banks or corporate counterparties may be more familiar with a conventional share-based company structure. That can make a UAB easier to understand in transactions involving equity ownership, financing or group structures.
The company type alone does not establish that a business is financially reliable. Revenue, accounts, payment history, management, beneficial ownership, licences and contractual performance can matter far more in commercial due diligence.
For most founders, ownership and financing requirements give a firmer basis for choosing between the structures than assumptions about image.
Is MB or UAB better for your business?
The best choice depends on who will own the company, how the owners expect to receive income and what the ownership structure may look like in several years.
| Business situation | Likely better fit | Main reason |
|---|---|---|
| Solo consultant | MB | Simple individual ownership |
| Small business owned by 2–3 individuals | MB | Membership model may be sufficient |
| Founder wants very low statutory starting capital | MB | Monetary contribution can start from €1 |
| Foreign individual starting a small company | MB or UAB | Depends on ownership and tax plans |
| Foreign company will own Lithuanian entity | UAB | Legal entities can hold shares |
| Startup expecting outside equity investors | UAB | Share-based ownership |
| Corporate investor expected | UAB | Corporate shareholders permitted |
| More than 10 owners expected | UAB | MB is capped at 10 members |
| Founder expects regular ownership transfers | UAB | Shares provide a conventional transfer structure |
| Small owner-managed company with no investors planned | MB | Membership restrictions may have little practical effect |
Choose MB when
An MB can fit a business that will remain closely held by a small number of individual owners.
It is particularly relevant where:
- all owners are natural persons;
- there will be no more than 10 members;
- corporate investment is not planned;
- the owners are comfortable with MB-specific payment rules;
- low statutory starting capital matters.
Choose UAB when
A UAB is generally better suited to a business that needs a conventional corporate ownership structure.
It becomes particularly relevant where:
- a legal entity will own part or all of the company;
- outside equity investment is expected;
- more than 10 owners could eventually participate;
- new shares may be issued;
- ownership transfers are expected;
- the company will sit inside an international corporate group.
A founder who is still comparing other Lithuanian structures can also assess the main company types in Lithuania before committing to an entity.
Conclusion
The UAB vs MB decision usually comes down to ownership, future investment and the way founders expect to receive money from the company.
An MB can suit a closely held company with up to 10 individual members and limited need for outside equity. A UAB provides a conventional share structure, accepts corporate shareholders and gives a business more room for future ownership changes.
Tax should be calculated around the founder’s expected income and payment structure, especially after the 2026 corporate tax changes and the separate MB social-contribution changes.
Founders who want the entity choice and incorporation structure checked before registration can contact Lawhill’s legal team to discuss their planned Lithuanian company.
Frequently asked questions
Is MB cheaper than UAB in Lithuania?
An MB requires much less statutory starting capital. Current government guidance lists an MB monetary contribution from €1, compared with at least €1,000 share capital for a UAB. Ongoing costs depend on accounting, transactions, employees, VAT status and how owners receive income.
Which pays less tax, MB or UAB?
There is no universal tax winner. Both fall under Lithuania’s corporate income tax system, including the 17% standard rate and qualifying 7% or 0% rates. Owner-level taxation differs according to how money is paid to the owner.
Can one person establish a UAB?
Yes. Current government guidance confirms that a UAB can have a single shareholder, and that shareholder may be an individual or legal entity.
Can a company own an MB?
No. Under the Small Partnerships Act, every MB member must be a natural person. A legal entity can instead become a shareholder of a UAB.
Can an MB register for VAT?
Yes. MB status does not prevent VAT registration. VAT obligations depend on taxable turnover and the company’s transactions. VMI currently applies a €45,000 domestic threshold for relevant taxable supplies, with separate rules for certain cross-border transactions.
Can an MB have employees?
Yes. An MB can employ staff. The Small Partnerships Act separately governs the relationship between the MB and its own members, including rules for civil contracts and member payments.
Can you convert an MB into a UAB?
Yes. The Small Partnerships Act expressly allows an MB to be transformed into a UAB under the applicable company-law process.
Is UAB or MB better for a foreign founder?
An individual foreign founder may use either structure when the relevant requirements are met. A UAB is required where a foreign legal entity needs to become an owner because MB membership is restricted to natural persons.
