Foreign companies willing to perform business in the largest state in the Baltic region may open a limited 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 because the Lithuanian branch office is dependent on the parent company and must undertake the same commercial activities as the foreign business.
Below our company formation agents in Lithuania explain how to set up a branch office in this country.
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.
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.
The registration of the branch in the Company Registrar is mandatory as it is for every form of business performed in Lithuania. 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 bellow 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.
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:
Foreign companies interested in setting up a branch office in Lithuania usually have the following questions:
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.
Yes, a legal address is a mandatory requirement for opening a branch office in Lithuania.
Yes, having a local representative is another requirement for opening a branch office in Lithuania.
No, the law does not impose any minimum amount of money to establish such entity.
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.