Lithuania (LT)
Lithuania is the largest and most southerly of the three Baltic states, a semi-presidential EU republic celebrated for its remarkably preserved Baroque capital Vilnius (UNESCO World Heritage), dramatic coastal dunes at Neringa (also UNESCO), vibrant startup and fintech ecosystem (home of Revolut HQ, Vinted, Nord Security, and Hostinger), rapidly rising living standards, and a resilient population with deep cultural roots stretching back to one of the last pagan civilisations in Europe to adopt Christianity.
Capital: Vilnius
Region: Europe
Language: Lithuanian
Currency: EUR (€)
Cost of living: Affordable (index 47)
Emergency: 112
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Business Setup
Start a business or go freelance in Lithuania.
🧑💻 Freelancer / Self-Employed Guide
Steps to register:
- 1 Choose your self-employment structure: Individualios veiklos pažyma (simplest, free, VMI registration) or MB/UAB for limited liability.
- 2 Register at VMI (vmi.lt) — for pažyma, complete the online form. For UAB/MB, register at Registrų centras (rc.lt).
- 3 Register for PVM (VAT) at VMI if annual turnover exceeds €45,000. Optional below this threshold.
- 4 Register for PSD (compulsory health insurance) contributions at Sodra (sodra.lt) — mandatory for all self-employed individuals.
- 5 Decide on 2nd pillar pension — strongly recommended. Register via Sodra portal.
- 6 Set up accounting: Lietuvos apskaitos standartas (LAS) applies. Use accounting software (Rivile, Standarta, Scoroboard, or cloud solutions like Mambu, Holded).
- 7 Open a business bank account — recommended even for individuals (Revolut Business, Paysera, Swedbank, SEB all offer business accounts).
- 8 Register for GPM (income tax) advance payments if expected tax exceeds €500/year.
Tax registration
Self-employed persons register at VMI (vmi.lt). Individualios veiklos pažyma income is reported in the annual GPM308 declaration. Under the pažyma system, 50% of gross income can be treated as deemed expenses (without documentation), reducing taxable income. The effective GPM rate on pažyma income is approximately 5% of gross (10% GPM on 50% of income). Higher income or legal entity structures (UAB) are taxed differently — consult VMI guidance or a tax advisor.
VAT threshold
€45,000 annual turnover. Upon reaching this threshold, VAT (PVM) registration is mandatory. Below this amount, registration is optional but can be beneficial if clients are VAT-registered companies. Standard rate: 21%. File PVM returns monthly or quarterly depending on turnover.
Invoicing
Invoices (sąskaitos-faktūros) must include: seller's name/company name and address, seller's PVM code (if VAT-registered) and company code, buyer's name and address, invoice date, sequential invoice number, description of services/goods, quantity and unit price, total ex-VAT, VAT amount, total including VAT. Invoices to public sector clients must be electronic (e-sąskaita system at e-saskaita.lt). Digital invoice storage is accepted.
Social security
Self-employed persons must pay: (1) PSD (health insurance) through Sodra — minimum monthly payment approximately €40–60/month depending on selected income base. (2) Sodra pension insurance contributions if desired for future pension rights. (3) Voluntary unemployment insurance also available through Sodra for self-employed. Without paying Sodra PSD contributions, you lose access to public healthcare as a self-employed person.
💡 Lithuania's self-employment system is flexible and one of the most affordable in the EU. The individualios veiklos pažyma (individual activity certificate) is extremely popular for IT and knowledge workers — particularly because the 50% deemed expense deduction combined with the 10% GPM rate (applied to 50%) results in a very low effective tax on consulting income. However, if working predominantly with one client in an employer-employee-like relationship, VMI may reclassify as employment, requiring full social insurance and GPM. Lithuanian fintech and startup ecosystem frequently uses UAB structures due to the €1 minimum capital and limited liability benefits — making Lithuania very attractive for new company formation.
🏢 Business Structures
IĮ · Individuali įmonė
Sole proprietorship / Individual enterprise
€0 (no minimum capital)
Min. capital
1–3 business days online via Registrų centras (rc.lt). CVR number (juridinio asmens kodas) issued promptly.
Setup time
Liability: Unlimited personal liability — the owner is personally responsible for all enterprise debts with their personal assets.
Setup cost: Registration fee: €45 at the Register of Legal Entities (Juridinių asmenų registras). Very low ongoing costs.
Best for: Small local businesses, traders, and craftspeople. Less commonly used by IT/tech freelancers who prefer individualios veiklos pažyma or UAB. The owner's personal assets are at risk.
UAB · Uždaroji akcinė bendrovė
Private limited liability company
€1 minimum share capital (since 2022 reform — previously €2,500)
Min. capital
1–5 business days online (simplified procedure using model articles of association). In-person notarial setup: 1–2 weeks.
Setup time
Liability: Limited — shareholders are not personally liable beyond their share capital contribution.
Setup cost: Registration fee: €57–100. Legal assistance: €300–1,500. Notarial fees may apply for complex setups. Plus minimum share capital of €1.
Best for: The most common business entity in Lithuania for SMEs, IT companies, startups, and foreign investors. Required for most serious business activities. Excellent for fintech EMI licenses (LLGA). €1 minimum capital since 2022 makes it accessible.
AB · Akcinė bendrovė
Public limited company (joint-stock company)
€40,000 minimum share capital
Min. capital
2–4 weeks including notarisation and registration.
Setup time
Liability: Limited — shareholders not personally liable beyond investment.
Setup cost: Notarial and registration fees: €500–2,000+. Legal drafting: €5,000–20,000. Plus €40,000 minimum capital.
Best for: Larger companies, those planning public share offerings, or companies requiring the AB structure for regulatory purposes (e.g., banks, insurance companies). Very few small businesses use this structure.
MB · Mažoji bendrija
Small partnership
€0 (no minimum capital)
Min. capital
1–3 business days online.
Setup time
Liability: Members are liable only to the extent of their contributions unless they personally managed the partnership.
Setup cost: Registration fee: €30–45. Can be established by 1–10 natural persons (not legal entities). Low administration burden.
Best for: Small service businesses and cooperatives. Popular among freelancers who want limited liability but simpler administration than a UAB. No share capital requirement. Only natural persons (not companies) can be members.
Individualios veiklos pažyma · Individualios veiklos vykdymas pagal pažymą
Self-employed individual activity certificate
€0
Min. capital
15 minutes online at VMI portal.
Setup time
Liability: Personal liability — not a separate legal entity. The individual acts in their own name.
Setup cost: Free registration at VMI (vmi.lt). No registration fee.
Best for: Freelancers, consultants, IT contractors, and creative professionals. The simplest and most popular self-employment structure in Lithuania. Income taxed at 5% GPM on 50% of income (if working with 3+ clients) OR at standard GPM rates depending on activity type. Must register for PSD health insurance separately via Sodra.
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