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Establish a Branch in Lithuania

Updated on Wednesday 06th October 2021

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Branch in Lithuania.jpgForeign companies willing to perform business in the largest state in the Baltic region may open a form of business called a branch office. Although the permission for many actions must be received from the parent company, many entrepreneurs choose this form of business because of the small costs of registration and administration.
 
This is given by the fact that the branch office in Lithuania is not an independent entity (it is fully dependent on its parent company) and thus, it must develop the same business operations that the parent company develops. Below, our company formation agents in Lithuania explain how to set up a branch office in this country.

Features of the Lithuanian branch office in 2021 

 

A branch established in Lithuania is not considered a legal entity and its assets are not separated from the foreign company’s assets. The full liability for its actions is taken by the parent company. If the parent company is in process of liquidation, the assets of the branch are also subject to seizure. No permit is necessary before opening a branch but in certain domains, licenses are required, such as in banking, insurance, investments, restaurants, telecommunication, etc.

 

Steps to register a branch in Lithuania in 2021 

 

Before registration of a branch in Lithuania, a bank account must be opened (if in the future the branch will perform financial operations) but no minimal capital is requested. The procedure on opening a company in Lithuania as a branch office has not been recently modified, but investors should know that the Lithuanian Law on Companies was amended at the beginning of 2021, prescribing new regulations for opening bank accounts for local businesses.
 
Here, investors should know that starting with 2021, companies are also allowed to set up their bank accounts at e-money institutions, not only at commercial banks, as it was the case up until 2021. One can choose any of the 77 e-money institutions licensed in Lithuania. Also, a representative must be appointed in order to take the daily decisions and connect the branch with the foreign company.
 
It is also necessary to register the branch office with the Company Registrar – this is a mandatory procedure, imposed for all types of companies that can be set up here. The main difference between the local companies and the branches at registration are the documents submitted.
 
A branch must submit a standard application which contains the name of the foreign company and its registered address, the proof of existence in the foreign country, the name of the directors and their personal details, the decision of opening a branch, the decision of appointing a branch’s representative, the powers owned by this representative, the address of the branch, the passport copies of the representative.
 
The below-mentioned documents must also be included in the application and must be notarized in the country of origin: the certificate of registration, the foundation deeds and the minute of the meeting where the decision of opening a branch was taken.
 

Things to consider upon the registration of a branch office in Lithuania 

 
The registration procedure of a branch office registered in Lithuania is done following the steps required by the State Enterprise Center of Registers. Please mind that the institution that differentiates between structures which are branch offices and representative offices of companies incorporated in Lithuania, and between those set up by foreign companies. 
 
The process for company formation in Lithuania is similar, but the branch office set up by foreign companies will need to go through more procedures. Regardless, both entities are set up following the regulations of the Civil Code of the Republic of Lithuania (Book Two)
 
The establishment of the branch office, which is the procedure through which the branch gains legal recognition, is slightly different based on the residency of the parent company. In the case of a branch office set up by a Lithuanian company, only three steps have to be completed. 
 
First, the body that wants to establish the branch (the parent company) adopts the decision to set up a branch in accordance with its governing documents. Then, the regulations that will govern the branch will be set up by its founders. The last step is to establish a management structure for the branch and to appoint the representative. 
 
For foreign companies wishing to open a branch office, the procedure will follow the same three steps mentioned above, but it will have to go through additional steps, meaning that the branch must be registered with the Registrar of Legal Entities, as a part of the mandatory process of company formation in Lithuania
 
Prior to the registration itself, the investors must be sure that they have presented the registration documents with a local notary, who is the sole entity entitled to verify if the documents comply with all the requirements, and that the statuses of the branch office are done in accordance with the law in Lithuania
 
Then, the documents will be submitted with the local authorities, along with the required forms (there are different forms to be completed, based on the residency of the parent company and our consultants in company registration in Lithuania can present additional information).  
 
Then, the procedure is completed with the payment of the registration fee, which follows a different scheme, depending on the residency of the parent company. Thus, for branch offices of foreign companies, there is a standard fee of EUR 57,92, while for the registration of a branch of a local company, a percentage based fee is applied. Please contact us for more details.  
 
 

Accounting requirements for branch offices in Lithuania

 

Even if the parent company is liable for the Lithuanian branch office’s debts and obligations, being registered in this country also implies certain accounting requirements for the local legal entity. From an accounting point of view, a branch office in Lithuania must:
 
  • • register for tax and VAT purposes (VAT registration is different for branch offices of EU and non-EU companies);
  • • the branch must file monthly VAT returns with the Lithuanian tax authorities;
  • • the parent company must submit annual tax returns on behalf of the branch office;
  • • all accounting must comply with the regulations applied in the home country of the parent company.
 
 

What is the data on foreign investments in Lithuania?

 
Given that branch offices are generally registered by foreign companies, our team of consultants in company registration in Lithuania has decided to present important data on foreign companies and, more exactly, on the level of foreign direct investments concluded by foreign enterprises in this country: 
 
  • according to the Official Statistics Portal, by 31 December 2019, the foreign direct investment (FDI) was of EUR 18,6 billion; 
  • this accounted for an increase of 9,5% compared to 2018;
  • the most important investments were concluded in the city of Vilnius, which is the capital of Lithuania (investments per capita here accounted for EUR 16,321);
  • the most important investors of the country were Sweden (EUR 3,110.4 million) and Estonia (EUR 2,764.2 million);
  • the top economic sectors preferred by foreign investors were financial and insurance activities (EUR 4.7 billion) and real estate (EUR 2 billion), data available for the capital region. 
 

Common questions on opening a branch office in Lithuania

There are few specific questions that commonly appear when investors want to open a company in Lithuania. Due to this, below, we have prepared a set of answers to these very common questions. Foreign companies interested in setting up a branch office in Lithuania usually have the following questions:
 
  1. Why should we choose a branch office over a subsidiary company?

The branch office is easier and cheaper to establish than a subsidiary. Also, the parent company will have a greater control over than branch compared to the subsidiary. Although it has similar tax obligations as the ones of the subsidiary, the subsidiary may have to comply with more regulations. 
 
  1. Must the branch office have a local address in Lithuania?

Yes, a legal address is a mandatory requirement for opening a branch office in Lithuania. This is required as a part of the process of company formation in Lithuania for all company types, regardless of the preferences of the investors. Local authorities must be official notified on the company’s address. 
 
  1. Must the branch have a local director?

Yes, having a local representative is another requirement for opening a branch office in Lithuania. There are other requirements imposed to local branch offices and this is why we invite you to contact our team of consultants in company registration in Lithuania, who can offer more details on this matter.
 
  1. Are there any share capital requirements for opening a branch office in Lithuania?

No, the law does not impose any minimum amount of money to establish such entity. This is one of the advantages investors can have when opening a company in Lithuania, as for other company types, the capital requirement can apply (and it can vary, based on the selected legal entity).  
 
  1. How long does it take to register a branch office in Lithuania?

There is no minimum timeframe for setting up a branch office, as the process depends on how soon the documents related to its registration are ready. If you have any other questions or simply need assistance in setting up a branch office, please contact our company registration advisors in Lithuania.

 

 

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Call us now at +37061578743 to set up an appointment with our lawyers in Vilnius, Lithuania. Alternatively you can incorporate your company without traveling to Lithuania.

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