Expanding your company to Lithuania will open doors to relationships with other Eastern European countries. It’s also a great way to add talented new employees to your team and offer more products or services. However, setting up a Lithuania subsidiary to operate legally in the country can take weeks or even months.
G-P makes the expansion process easier with industry-leading Employer of Record (EOR) solutions. You don’t have to set up a Lithuania subsidiary when you partner with us. We enable you to begin operations starting in just minutes and in full compliance with local labor laws.
How to set up a Lithuania subsidiary
Learning how to set up a Lithuania subsidiary is different depending on your location and entity type. It’s a good idea to work with your other company executives to outline factors such as company goals, desired trading location, and more before diving into the subsidiary setup process.
Lithuania offers several different types of entities that companies can incorporate as, including a limited liability company (LLC), public limited company, stock company, general partnership, limited partnership, branch or representative office. Many companies looking to set up a Lithuania subsidiary choose to incorporate as an LLC because of its benefits for both parent companies and subsidiaries.
The steps to set up an LLC may include:
- Defining your business’ purpose and economic activities.
- Choosing the company name and entering it in the Lithuanian Register of Legal Entities.
- Designating at least 1 shareholder.
- Choosing a legal representative to be appointed as Director of the new company. Internationals can be appointed; however, a work visa may be required in certain instances and the appointee may be subject to personal tax liabilities.
- Obtaining a registered address in the selected location.
- Defining the share capital of the new company. The minimum statutory share capital is EUR 2,500.
- Drafting the Founding Act, along with additional incorporation documentation that must be prepared by a local attorney.
- Obtaining documents from the new company’s shareholders. These include certificates of registration, articles of association, tax registrations, and powers of attorneys, among others. Some of these documents may need to be notarized and apostilled.
- Opening a local bank account.
- Registering with the Unified Register of Legal Persons.
- Paying up the company’s capital at the Company Register.
- Receiving a VAT number, tax identification number, certificate of registration, and unique registration number.
- Obtaining the official seal of the subsidiary.
- Designating an auditor may also be required, depending on the expected yearly turnover.
Lithuania subsidiary laws
Lithuania’s subsidiary laws differ based on which subsidiary structure you choose. Although LLCs are the most popular, you still need to understand the laws that apply to your company. LLCs require 1 director, who must be a natural person, and 1 shareholder. You also need at least EUR 2,500 as share capital to go through the incorporation process.
It’s important to set up a Lithuanian bank account to stay compliant and deposit your share capital. Your company also needs to register with the Lithuanian Revenue Authority and make sure you submit all accounts and declarations for tax purposes. Once incorporated, your LLC is responsible for paying corporate taxes as a Lithuanian company.
Benefits of setting up a Lithuania subsidiary
The benefits of the subsidiary setup process include working legally in Lithuania and enjoying a limited liability status. Your parent company has limited liability from the subsidiary’s actions, and the subsidiary can operate independently with its own structure and culture.
However, the newly incorporated company won’t start to gain from these benefits until months after undertaking the Lithuanian subsidiary setup process. Additionally, failing to comply with Lithuania’s subsidiary laws could lead to fines and penalties.
Fortunately, G-P can help you expand with ease, without setting up an entity. As a global EOR, we can hire employees on your behalf, add them to an existing payroll, and ensure that they’re receiving the right compensation and benefits.
Other important considerations
Since the Lithuania subsidiary setup process can take a significant amount of time and energy. Start by learning Lithuania’s subsidiary laws or designating another team member to learn them. If no one in your company has the time, you should hire a lawyer, consultant, or other individual who’s an expert in Lithuania subsidiary laws.
You should also set aside the time you’ll need to fly back and forth to Lithuania to complete the setup process. We also recommend working with your accounting department to set aside the resources you’ll need so that you don’t have to worry about any unforeseen fees or costs.
Enter new markets with G-P — no new entities required.
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