Starting a Business in Lithuania: A 7-Step Guide 

Lithuania has become a prominent destination for entrepreneurs and investors looking to establish businesses in Europe. Its strategic location, modern infrastructure, and pro-business policies make it an attractive hub for startups and established enterprises alike. This guide provides a step-by-step overview of how to start a business in Lithuania, highlighting the business opportunities, processes, and challenges of entrepreneurship involved.

Lithuania as a business destination

Vilnius Central Business District © S. Bernotas

Lithuania boasts a robust business climate, supported by a growing economy and a highly skilled workforce. As of 2024, the Lithuanian GDP per capita stands at approximately $27,103, reflecting consistent economic progress. The country ranks highly in the World Bank’s Ease of Doing Business index, particularly for starting a business and registering property.

Key industries include technology, manufacturing, business services, and renewable energy, offering numerous business opportunities. However, understanding the local market and cultural nuances is crucial for navigating challenges and maximizing success.

Why start a business in Lithuania?

Lithuania offers unique advantages for entrepreneurs, including access to the EU single market and strong government support for innovation. Key benefits include:

• Business opportunities: Emerging sectors like fintech, green energy, and IT are driving growth.
• Startup ecosystem: Lithuania has a dynamic startup ecosystem, bolstered by programs like Startup Visa Lithuania, which simplifies the process for non-EU entrepreneurs to launch businesses.
• Incentives for businesses: Tax incentives, government grants, and a young, tech-savvy workforce make Lithuania an ideal location for innovation-driven ventures.

How to register a business in Lithuania

Company registration in Lithuania is a straightforward process, often completed in a matter of days. Here’s a step-by-step guide:

1. Choose a business entity: Lithuania offers several types of entities, including:

• Private Limited Liability Company (UAB): Most common for small and medium-sized businesses.
• Public Limited Liability Company (AB): Suitable for larger enterprises.
• Sole Proprietorship: For individual entrepreneurs.

1. Register the company name: Ensure the name is unique by checking the Register of Legal Entities.
2. Prepare documentation: Submit founding documents, including articles of association, to the Register of Legal Entities.
3. Open a bank account: Deposit the minimum share capital (€2,500 for UAB) into a local bank account.
4. Obtain a business license (if required): Certain industries, such as finance or healthcare, require specific business licenses.
5. Register for taxes: Obtain a tax identification number and register for VAT if your turnover exceeds €45,000.
6. Start operations: Once registered, the company can legally operate within Lithuania and across the EU.

Understanding business taxes in Lithuania

© Joana Burn Photography, lithuania.lt

Lithuania’s tax system is competitive and designed to encourage investment. Key business taxes include:

• Corporate income tax: Standard rate is 15%, but small businesses may qualify for a reduced rate of 5%.
• Value-Added Tax (VAT): Standard rate is 21%, with reduced rates for specific goods and services.
• Social security contributions: Employers contribute 1.77% of gross salaries, while employees pay 19.5%.
• Tax incentives: Startups and R&D-focused companies benefit from tax deductions and exemptions.

Understanding these taxes is crucial for maintaining compliance and optimizing your business finances.

Navigating the business climate

Lithuania’s business climate is generally favorable, but entrepreneurs should be aware of legal and cultural considerations:

• Legal framework: Lithuania adheres to EU regulations, ensuring transparency and legal clarity.
• Cultural factors: Business relationships in Lithuania emphasize trust and professionalism. Familiarity with local customs can enhance collaboration with partners and clients.
• Resources and support: Organizations like Invest Lithuania and Enterprise Lithuania provide guidance and support for foreign entrepreneurs, offering mentorship programs and market insights.

Lithuania’s startup ecosystem

Vilnius Tech Park © N. Tukaj

Lithuania’s thriving startup ecosystem is recognized as one of the most vibrant in the Baltics. Key features include:

• Innovation hubs and incubators: Facilities like Vilnius Tech Park and Kaunas Science and Technology Park offer coworking spaces and support for startups.
• Startup success stories: Companies like Vinted (an online marketplace) and Nord Security (cybersecurity solutions) have showcased Lithuania’s potential as a tech and innovation hub.
• Access to funding: Local and EU grants, venture capital, and accelerator programs provide ample funding opportunities for startups.

Conclusion

Starting a business in Lithuania is a promising venture for entrepreneurs seeking access to the EU market and a dynamic business environment. While the company registration process and business climate are investor-friendly, understanding business taxes and navigating cultural nuances are essential for success. With a supportive startup ecosystem and numerous business opportunities, Lithuania continues to attract forward-thinking businesses looking to thrive in Europe.