Encouraged by a combination of a stable economy, low inflation, low labour costs and a liberal business environment, Lithuania, the biggest Baltic states, has impressively attracted significant foreign investments last years. Corporation tax is 15%, one of the lowest rates in the EU
What are the main types of company in Lithuania?
There are four main kinds of business entity for foreign investors, and they are as follows:
- public limited company (AB)
- private limited company (UAB)
- general partnership (TUB) or limited partnership (KUB)
- branch or representative office
Main features of an UAB company
- popular format for smaller foreign investors
- minimum share capital is LTL 10 000 (approx. €2,900), at least 25% to be paid-up upon incorporation
- maximum number of shareholders is 250
- company and its shareholders have limited liability
Lithuania used to be known as Soviet Silicon Valley, such was the reputation of its workforce for innovation and productivity. The Soviet era may now be over but its reputation remains intact. Lithuania's workforce is generally young, well educated and very highly motivated, while labour costs are among the lowest in Europe.
The Lithuanian government is committed to free-market economy liberal business environment. Member of the WTO, Lithuania has ratified most of international treaties and signed double-taxation agreements with many countries. Its flexible investment laws conform to European Union standards, the state offers unrestricted movement of capital and dividends and foreign investors are free to buy Lithuanian companies.
Investment incentives in Lithuania are centred on three Free Economic Zones in the cities of Klaipeda, Utena and Kaišiadorys. They include tax holidays and tax reductions for companies investing over €1 million, no taxes on dividends paid on foreign investments and EU support funds for companies setting up in Klaipeda.
An annual report of the manager (exemptions exist) and financial accountability should be filed to the Registrar of Companies. Every company must submit a tax return to the Tax Authorities within 6 months after the end of its tax year.
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