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Establish a Subsidiary in Lithuania

Updated on Tuesday 22nd June 2021

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Subsidiary-in-Lithuania.jpgA Lithuanian company where the majority of capital is owned by a foreign company is called a subsidiary. Foreign companies choose this type of companies instead of branches because of the limited liabilities carried by the foreign shareholder and because of the tax incentives offered, especially for companies coming from countries which have signed double tax treaties with Lithuania. The withholding tax on dividends, interests and royalties paid to the foreign companies may be exempt or minimized by the provisions of such treaties.

Our company formation agents in Lithuania can help with the registration of a subsidiary in in this country.

Why open a subsidiary in Lithuania?

A subsidiary established in Lithuania is considered as legal entity, so it can acquire real estate property, hire personnel and conclude contracts without the approval of the foreign company.

The most common form a subsidiary takes in the Republic of Lithuania is the private company. It can be formed by one or more founders, but the maximum number of shareholders cannot exceed 250. A minimum share capital of 10,000 LTL must be deposited by this form of business in a bank account. The liability of the shareholders is limited by the contribution to the capital.

The management bodies’ members of the company are nominated by the general shareholders meeting.

The public companies are usually formed by one or more shareholders and consist in an unlimited number of shareholders. The minimum registered capital in a public company is 150,000 LTL that must be deposited in a bank account. The management of this type of company is assured by the management board, elected by the general meeting of the shareholders.

Documents related to opening a Lithuanian subsidiary

The following documents are necessary when opening a subsidiary in Lithuania:

  • - a declaration of the parent company’s owners acknowledging the opening of the subsidiary;
  • - information about the parent company issued by the Trade Register in its home country;
  • - the statutory documents of the subsidiary which must be drafted and notarized by a Lithuanian public notary;
  • - information about the legal address and the local representatives of the subsidiary.

Our Lithuanian company formation advisors can assist with the preparation of the documents needed to set up a subsidiary.

Steps for opening a subsidiary in Lithuania in 2021 

The registration of a subsidiary in Lithuania begins with opening the bank account and depositing the capital. The founder must deposit it at the Company Register, at the State Tax Inspectorate (for VAT and corporate tax) and at the State Insurance Fund Board.

As a result, the subsidiary opened in Lithuania will receive a VAT number, a tax identification number, a certificate of registration and a unique registration number.

Next, the company must open a bank account for the normal commercial operations and obtain the official seal of the subsidiary.

The process of registration a Lithuanian subsidiary takes about 22 days from the moment of opening the bank account to the moment of obtaining the company’s seal. 

With regards to the step on company formation in Lithuania that refers to setting up a bank account, local and foreign investors should be aware that the Company Law was recently modified and new provisions became applicable starting with 2021. Thus, one should know that, since January 2021, companies in Lithuania can also set up their bank accounts not only at local commercial banks, but also at the local licensed e-money institutions; at the moment, there are 77 such entities.  

Accounting requirements applicable to subsidiaries in Lithuania

From an accounting point of view, Lithuanian subsidiaries:

  1. must comply with the local legislation, as they are considered Lithuanian tax residents;
  2. they will be applied the corporate tax which is levied at a rate of 15%;
  3. they must register with the local authorities in order to be able to make and receive payments;
  4. they must file VAT returns on a monthly basis and tax returns annually.

 

For assistance in establishing a subsidiary, please contact our company registration consultants in Lithuania.

 

Partner: Firmengründung in LitauenРегистрация фирм Литва

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