Establishing your business in Lithuania will help enlarge your market share as you can reach consumers in Europe and Eurasia. These customer groups have high purchasing power and are projected to spend US$836.60 billion in 2024, according to Statista.
Despite the huge potential, many entrepreneurs still need to learn about the process for company registration in Lithuania – here.
The good news is – Lithuania is one of the most business-friendly countries in the world. That’s why we are here to help you start your venture in Lithuania and get acquainted with the country’s ecosystem and regulations.
Why should you register a company in Lithuania?
Here are a few reasons why you should proceed with company registration in Lithuania:
Strategic location
Located within the crossroads of Europe and Eurasia, Lithuania offers a lucrative opportunity for businesses looking to scale in both markets.
Europe and Eurasia are amongst the regions with the highest Gross Domestic Product (GDP) rates in the world, nodding to a strong consumption power by the 500 million customers who reside there.
Lithuania’s accelerated growth in supply chain development, coupled with its geographical location, will also help streamline transportation and logistics needs for businesses in domestic or international trade. Effective operations will also result in higher productivity.
Ease of business registration
Lithuania is ranked 11th in the World Bank’s Doing Business report in 2019, which measures the quality and efficiency of business regulations around the world.
The government of Lithuania has made tremendous reforms to boost entrepreneurship in the country.
For instance, Lithuania succeeded in improving its national attractiveness for luring investment in manufacturing by reducing procedural costs and steps.
What’s more, Lithuania has managed to improve its processes in contract enforcement, construction permit application, as well as property registration.
Competent workforce
One of the biggest advantages of operating a business in Lithuania is gaining access to its top-quality, bilingual, and global-minded workforce.
In the IMD World Talent Ranking, Lithuania ranks pretty high on the 23rd position among 64 countries.
Compared to other Western European countries, labor costs in Lithuania are much more reasonable.
Despite the global economic slowdown and uncertainty due to geopolitical wars, the Lithuanian labor market shows resilience and high productivity.
Especially for businesses in the Science, Technology, Engineering, and Mathematics (STEM) sector, Lithuanian citizens are one of the most educated and skilled in the world.
Progressive technological development
Lithuania is a leading startup hub in the EU. The number of startups has grown to 1000+ in the last decade, 20% of which are dominated by financial technology (fintech) companies – or the 2nd largest in Europe.
The tech sector is not only rich in expertise but also innovation across artificial intelligence (AI), software engineering, game development, as well as compliance and anti-money laundering (AML).
In terms of research and development (R&D), Lithuania is also ahead with its advantageous R&D tax incentives, next-gen research infrastructure in world-class universities, and expansive access to cross-sector sandboxes.
These sandboxes are beneficial for companies looking to build a minimum viable product (MVP), strengthen their technology, and validate their solution with the market.
Changes in Lithuanian Laws that have made it easier to do business
More and more business breakthroughs are happening in Lithuania.
Seizing this opportunity, local councils are working toward equal entrepreneurship access for both national and international participants.
Since then, more startups and growing enterprises have spread across the country.
To amplify its reputation and investment appeal on the domestic or global stage, Lithuania has implemented the following laws:
- Foreign nationals are permitted to enter and reside in the nation by initiating a new legal corporation or joining an incorporated management, such as by becoming a shareholder.
- Lithuania applies one of the lowest corporate taxes in Europe at just 15 percent. Moreover, businesses investing in R&D are granted a lower corporate tax of 5 percent, derived from the profits sourced through patents or commercial products.
- Some areas in Lithuania are also noted as “free economic zones” (FEZs), offering full or partial corporate, real estate, and land lease tax reliefs.
- Businesses incorporated in Lithuania are exempted from exchange regulations and can effortlessly open accounts with banking institutions.
- Lithuanian businesses are entitled to a VAT number and the right to use the VAT reverse procedure when partnering with EU firms.
- By establishing a corporation in Lithuania, you can easily sign up for a residence permit that will allow you to stay in Lithuania for unlimited time and the freedom to mobilize within the Schengen area.
How to start a business in Lithuania
No matter how simple it is to register a company in Lithuania, some bureaucracies still pose a challenge, especially without the right assistance.
So, to make your entrepreneurship journey a smooth one, make sure to prepare the following requirements:
- Company name. Check if the name of your company has not been yet registered through the Lithuanian Register of Legal Entities. If it’s available, you can directly proceed to the documentation phase.
- Share capital. Make sure that you have a minimum share of capital in your bank account when establishing a specific business structure in Lithuania. For instance, you will need to have at least 2,500 EUR for a Private Limited Liability Company (UAB).
- Memorandum of Association. This legal document entails the purpose and scope of your company. Contact details and commercial activities must also be described in depth.
- Board of Directors. Every Lithuanian business must employ a minimum of three directors. Thankfully, there are no restrictions regarding nationality.
If you are ready to register your company in Lithuania, please contact our experts here at Demire, and we will gladly ensure a smooth-sailing company formation process for you!
