Company Formation & Entity Setup in Lithuania

UAB and AB incorporation, Centre of Registers filing, and post-formation compliance setup including small-company and startup rate eligibility assessment.

Lithuania Reviewed September 2026

Currency

EUR

Legal forms

UAB · AB

Minimum share capital

UAB: €2,500 (25% paid up before registration) · AB: €40,000

Registration body

Formation timeline

As little as 1–3 business days for a standard UAB

Corporate tax rate

17% standard (2026, up from 16%) · 7% for qualifying small companies · 0% for new small companies' first 2 tax periods

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How company formation works in Lithuania

Lithuania's standard corporate income tax rate rose from 16% to 17% from 1 January 2026, with the reduced rate for qualifying small companies (fewer than 10 employees, revenue under €300,000) increasing from 6% to 7%. The 0% rate for newly registered small companies was extended from one to two years in the same reform, and the employee-count condition for this startup rate was removed, broadening eligibility. The UAB, Lithuania's standard private limited company, requires €2,500 in minimum share capital with at least 25% paid up before registration.

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Matched to your business objective

UAB

Liability

Limited to company assets

Min. capital

UAB: €2,500 (25% paid up before registration) · AB: €40,000

The standard vehicle for an operating subsidiary of a foreign company — the default choice for most market-entry engagements in Lithuania.

Liability

Limited to company assets

Min. capital

UAB: €2,500 (25% paid up before registration) · AB: €40,000

Used for larger operations, more formal governance needs, or entities seeking to raise capital publicly.

Branch

Liability

None separate — the foreign parent company bears full liability

Min. capital

None — no separate capital requirement

Useful for testing the Lithuania market before committing to a subsidiary, or for keeping a single legal entity across borders. Creates a taxable presence — profits are generally taxed in Lithuania.

Representative office

Liability

N/A — not a registered legal entity in most cases

Min. capital

None

For market research and liaison activity only — cannot sign contracts, invoice, or trade locally in most jurisdictions.

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What it takes to register, and how long

Formation runs through the Register of Legal Entities, via the notary-assisted or online registration route, typically taking As little as 1–3 business days for a standard UAB.

2026 corporate tax increase — — standard rate to 17% (from 16%), small-company rate to 7% (from 6%), effective 1 January 2026
Extended 0% startup rate — — new small companies now qualify for two tax periods at 0%, up from one, with the employee-count eligibility condition removed
Progressive personal income tax transition — — moving to a three-tier 20%/25%/32% system on total income including employment, self-employment, rental and capital gains
Asymmetric Sodra contribution split — — employer pays only ~1.77%, employee pays ~19.5%, requiring clear gross salary communication to candidates unfamiliar with the structure

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Frequently asked questions

What changed with Lithuania's corporate tax rate in 2026?

The standard rate rose from 16% to 17%, and the reduced rate for qualifying small companies rose from 6% to 7%. The 0% rate for newly registered small companies was extended from one to two tax periods, and the employee-count eligibility condition for that rate was removed, broadening access for startups.

How does the 300% R&D deduction work?

For every €1 a company spends on qualifying research and development activity, €3 can be deducted from taxable income — among the most generous R&D incentives in the EU. This is available to any Lithuanian UAB regardless of whether founders are Lithuanian residents, making it particularly valuable for software and technology companies.

Why are Lithuanian employer social contributions so low?

Lithuania's Sodra social insurance system places most of the contribution burden on the employee (~19.5% of gross salary, covering pension, sickness and health insurance) rather than the employer (~1.77%). This asymmetric structure is the reverse of what employers from Western European markets typically expect, and should be communicated clearly when setting gross salary offers.

Should a solo founder choose a UAB or an MB?

A UAB offers more conventional limited liability structure and scales to larger operations, but dividend distributions are restricted to once per year after annual financial statement approval. An MB (small partnership, capped at 10 natural-person members) allows more flexible profit withdrawal without waiting for annual approval, often suiting solo founders or very small teams.

Talk to a Lithuania formation expert

Companies and online guides referencing Lithuania's "16%" corporate tax rate or "6%" small-company rate are using figures superseded by the 2026 reform. Business plans, dividend strategies and pricing built on outdated rates should be revisited against the current 17%/7%/0% structure before finalising any Lithuanian entity decision.

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