Lithuania rewards new companies more consistently than almost any other EU country: a new small company pays no corporate tax in its first two tax years and 7% thereafter instead of the standard 17%. The 2026 reform extended this phase from one to two years and removed the former cap of ten employees. For company formation in Lithuania, founders can choose between the classic UAB and a lean partnership without minimum capital, and non-EU founders have a dedicated startup visa.
Tax tiers since 2026
Since 1 January 2026, Lithuanian corporate tax has three tax tiers:
| Company | Rate | Condition |
|---|---|---|
| New small company | 0% | first two tax years |
| Small company | 7% | turnover up to €300,000, shares held by individuals |
| Other companies | 17% | standard rate |
The reduced rates only apply if the company is not restructured, liquidated or sold for three years. Also new is immediate depreciation: since 2026, machinery, equipment and software can be written off in full in the year of acquisition. Taxes are administered by the State Tax Inspectorate (VMI).
UAB or MB
For corporations, the UAB is the standard form: minimum capital of €1,000, a quarter of it before registration, and a single shareholder is enough. Less well known but attractive for small teams is the MB, the small partnership. It needs no minimum capital, is open to up to ten individuals and is nevertheless liable only with its own assets.
| StandardUAB | MB | |
|---|---|---|
| Minimum capital | €1,000 | none |
| Members | individuals and legal entities | up to ten individuals |
| Liability | limited to company assets | limited to company assets |
| Ideal for | investors, growth, licences | freelancer teams, small service providers |
For tax purposes both forms are treated alike: the MB is also subject to corporate tax and can use the reduced rates for small companies. Both are registered with the Centre of Registers (Registrų centras); with Lithuanian e-residency or a qualified electronic signature, registration can be done online.
Startup visa and fintech
For founders from outside the EU, Lithuania offers a dedicated startup visa: anyone presenting an innovative business model that receives a positive assessment from an expert commission obtains a temporary residence permit to set up a company in Lithuania. Founders from the DACH region do not need it, but for international teams it is an important argument.
Lithuania is also one of Europe’s fintech centres. The Bank of Lithuania has licensed numerous payment and e-money institutions whose licences are valid throughout the European Economic Area. Anyone planning company formation in Lithuania with a view to a later financial licence will find an experienced supervisor and specialised service providers in Vilnius.
Reporting: digital and monthly
Reporting in Lithuania is entirely digital; the tax administration works almost exclusively electronically. VAT-registered companies file monthly VAT returns by the 25th of the following month and additionally transmit data on issued and received invoices to the VMI via the i.SAF system. The corporate tax return is due by the 15th day of the sixth month after the end of the tax year.
For founders, this means one thing above all: bookkeeping connected to the Lithuanian systems is essential from day one. In return, almost all dealings with the authorities can be handled without appointments.
Five steps to a UAB
Company formation in Lithuania involves five steps before the company is operational:
- Reserve the name: with the Centre of Registers, in advance if desired.
- Founding documents: articles and deed of formation, notarised or signed electronically.
- Pay in the capital: at least a quarter of the €1,000 before registration.
- Business address: a registered office in Lithuania.
- Registration and tax: registration with the VMI; VAT follows from €45,000 of turnover.
With complete documents, registration usually takes only a few working days.
Accounting and obligations
The key obligations for bookkeeping, accounts, audit and VAT at a glance – so you know from the start what running your company involves.
| Obligation | Rule |
|---|---|
| Statutory audit | From 2 of 3: revenue €4.5m, total assets €2.5m, 50 staff |
| Tax return | Corporate tax return by the 15th day of the sixth month after year-end |
| VAT: registration | From €45,000 annual turnover; rate 21% |
| VAT: returns | Monthly by the 25th of the following month |
As of 2026. Bookkeeping and filings are usually handled by specialised accountants in the target country.
Is Lithuania right for you?
Whether Lithuania is right for you depends mainly on whether the zero-tax phase applies in your case – turnover, ownership structure and planning horizon:
Suitable for
- New companies with turnover below €300,000
- Fintech and payment firms needing an EU licence
- Non-EU founder teams using the startup visa
- Small partnerships that want to use an MB
Less suitable for
- Companies owned by other companies aiming for the 7% rate
- Businesses with turnover well above €300,000 in year one
- Group structures with frequent reorganisations
- Ventures targeting Asian markets
If you want to keep profits in the company indefinitely, Estonia offers 0% on retained profits; for regular distributions at low rates, consider Bulgaria. The overview of all locations and the tax comparison provide the full picture; whether the zero-tax phase applies can be clarified in an initial call.
