Company in Lithuania UAB

Setting up a UAB is the most popular way to start a business. MyTax’s team of specialists will take care of everything you need to set up and maintain your company, providing a wide range of accounting and legal services to suit your specific needs.

Setting up a private limited liability company (UAB) is the most popular way to start a new business in Lithuania. This type of company has many advantages over a sole proprietorship or small partnership.

What are the advantages of a UAB company in LIthuania?

First of all, it is a private limited liability company. Unlike a sole proprietorship, the owner or owners of a UAB are not liable for their personal assets if the company suffers losses.
Setting up a private limited liability company is particularly favourable if it is expected to attract investors from abroad as well as from Lithuania.
It is easy to increase the authorised capital by issuing additional shares. Alternatively, if you want to leave the business, you can simply transfer the shares or the business itself, or sell it to a UAB.

Setting up a UAB offers quite a wide range of possibilities. It can be set up by one person or just a few to run a small business. At the same time, it can be a large enough company with up to 250 shareholders, a large amount of capital, and investor support.

However, setting up a UAB has its drawbacks. For example, an authorised capital of €2,500 is required. Also, the owner (or owners) of the company can only receive the profits of the company in the form of dividends after the end of the tax period

Setting up a UAB company in Lithuania online

You probably already have a business idea and a business plan and are thinking of setting up a UAB? Great! Setting up a UAB is a relatively quick process, you just need to have all the necessary tools and meet the minimum requirements. Let’s take a look at what is important to consider to make setting up a company hassle-free.

The owner of a UAB must have a mobile electronic signature or other means of identity verification recognised by the State Enterprise Centre of Registers. Bank authentication with SMART ID is not suitable in this case.

A physical address in the territory of the Republic of Lithuania that can be considered as the company’s registered office is required. This address does not have to belong to the founder of the company, but the actual owner of the property must agree to the registration of the company’s registered office with the founder. Lithuanians do not need additional permits to start a UAB in Lithuania, while foreign residents need to present a residence permit.

UABs, like other legal entities, can be registered online or with a notary. Online set-up takes less time and the whole process can be done with a computer

Cost of setting up a UAB

€199.65 (with VAT)
If you wish to incorporate a company with more than one founder, an additional fee of €39 per additional shareholder applies.

*According to Order No. VA-189 of the Head of the Ministry of Finance of the Republic of Lithuania dated 15-12-2004, a legal entity registering a new company must submit the necessary data to the Tax Register within 5 days of the notification of the registration, where the person (company) managing the taxpayer’s accounts must be entered.

Accounting policy of a UAB

The accounts of a UAB are kept in accordance with the Accounting Law of the Republic of Lithuania. If the business does not have a turnover of more than €45,000 per year, the UAB is not obliged to register as a VAT payer. At the time of incorporation, it is appropriate to select and establish accounting policies, taking into account the company’s field of activity, partners, and other specificities.

Accounting policies include organisational instructions. The method of organising the accounts is chosen, the management functions of the accountants and the director are allocated, and the specifics of the work are defined. A strategy for the management of trade secrets and other sensitive information is determined.

The management of a company’s assets is methodically defined. The proportions promised to be invested in long-term assets, dividend policy, and borrowing strategy are decided. The definition of what is a fixed asset and what is current expenditure only is defined.

At the technical level, bookkeeping, accounting, warehouse, or other accounting systems are selected, synchronised, and linked. The accountants in the company or the contracted accounting firm familiarise themselves with the system and coordinate actions. At this level, the technological tools used and their compatibility with other systems have a major impact.

It is essential to set a tax policy. The most appropriate accounting methods are selected based on the specifics of the company’s activities and which are the most beneficial and legal to apply.

Legal forms of a UAB

Private limited liability company vs. other legal forms of legal persons

Are you hesitant about whether a UAB is the best choice of legal entity? It is worth comparing and evaluating other forms of legal entity to minimise the problems you face when starting your business.

If the purpose of the business is to make a profit, setting up a public enterprise (VšĮ) is unlikely to be appropriate, as it would not be able to pay out a profit, only salaries to employees. This business model is more suited to social businesses whose main objective is to meet the needs of society.

Setting up a sole proprietorship (IĮ) is also not a common choice these days. One of the biggest drawbacks is the unlimited liability of this legal entity and the fact that only natural persons can be owners of an IĮ. This means that the owner of the company must be personally liable for any unfulfilled financial obligations. IĮs lost their appeal when a new private legal entity — the small partnership (MB) — emerged. This new legal form can be said to have all the advantages of an IĮ, but none of the disadvantages, as an MB offers limited liability and the possibility of having up to 10 co-owners.

The most common choice is between setting up a small partnership (MB) and setting up a private limited company (UAB). Both forms have limited liability, so you won’t have to risk your own assets. There is no limit on the number of shareholders in a UAB, while an MB can have up to 10 founders. Almost always, at the start of an activity, this is more than sufficient. A limited liability company must have an authorised capital of at least €2,500, whereas an MB has no such requirement. So, if you don’t have enough money, perhaps an MB will be an easier choice, but on the other hand, it’s not worth setting up a legal entity without €2,500, because all the procedures, bookkeeping, and salaries require much more money.

Although there are differences in the taxation of these legal entities, bookkeeping requires similar skills and effort. In principle, the two legal forms are similar, but UABs have more advantages for large companies and MBs are more suitable for smaller ones, but in each case, the choice between the two forms requires an assessment of the growth plan and the prospects.

Information before setting up a UAB

What should I know before setting up a UAB?

You probably already have a business idea and a business plan and are thinking of setting up a UAB? Great! Setting up a UAB is a relatively quick process, you just need to have all the necessary tools and meet the minimum requirements. Let’s take a look at what is important to consider to make setting up a company hassle-free.

The owner of a UAB must have a mobile electronic signature or other means of identity verification recognised by the State Enterprise Centre of Registers. Bank authentication with SMART ID is not suitable in this case.

A physical address in the territory of the Republic of Lithuania that can be considered as the company’s registered office is required. This address does not have to belong to the founder of the company, but the actual owner of the property must agree to the registration of the company’s registered office with the founder. Lithuanians do not need additional permits to start a UAB in Lithuania, while foreign residents need to present a residence permit.

UABs, like other legal entities, can be registered online or with a notary. Online set-up takes less time and the whole process can be done with a computer

Frequently asked questions about setting up a UAB

What are the requirements for setting up a UAB?

Minimum authorised capital €2,500, a minimum number of shareholders 1, maximum 250.

Can I set up a UAB without authorised capital?

Authorised capital is required, but we can establish the company for you and you won’t have to pay out of your own pocket.

Where do I start if I want to set up a UAB company in Lithuania?

Come up with a name for your company, decide what your company will do, and contact us.

What are the documents required to set up a UAB company?

If the founder is a natural person, a passport or identity card. If a legal entity, the company name and number.

Company in Lithuania UAB — what taxes do I have to pay?

All taxes are included in the set-up price.

Can I register a UAB while abroad?

If you have a qualified mobile or fixed electronic signature, we can help you set up a company. If you do not have a qualified electronic signature, please contact us about the sale of an existing company.

Can a foreigner set up a company in Lithuania?

A foreigner can set up a company in Lithuania if they have electronic resident status and a qualified electronic signature, or through notaries. Otherwise, apply for the name of an existing company.

Establishment of UAB