Incorporation datasheet - Lithuania 2014

•  Full EU membership and strategic geographic location

•  Lithuanian market reforms are coordinated with World Bank and International Monetary fund

•  Corporate Tax (15%) and Value Added Tax (21%) are among the low/average rates of the

EU.

•  Corporate Tax for small companies (5%)

•  Personal Income Tax rate 15% is among the low/average rates of the EU

•  Fifty valid tax treaties (treaties on avoidance of double taxation) and a number of bilateral agreements on promotion and protection of investments

•  One centralised Register of Legal Persons allows for ease of registration facilities

•  Principle of free access to all legal sectors of economy is applied

•  Leadership in IT and the biggest network not only in EU but worldwide

•  Satisfactory telecommunications and transportation networks (air, sea, roads, railways)

•  Harmonised invoicing procedures

•  Accessibility to the qualified labour power

•  Accessibility to the real estate

•  Free economic zones

•  Arbitral procedures allowed, three permanent Arbitrage institutions in Lithuania

•  Implemented international and European laws on trade marks

2Disadvantages

•  Audited accounts must be filed annually if the company satisfy the income, assets and employee criteria established in laws

•  Necessary to follow all the applicable Lithuanian requirements for accounting and bookkeeping. Documents must contain certain mandatory data of the transaction

•  Tax laws are strict (especially about transactions with associated persons)

•  Relatively small market

•  Recent economic and tax reforms

•  Possibly delayed payments

3   Company Status

Public limited liability company or Private limited liability company, also individual entity, small community and partnership (general, limited or small) available.

4   Corporate legislation source

Civil Code of the Republic of Lithuania (as amended from 19 December 2013), Law on

Companies (as amended from 14 November 2013)

5   Company name

The company must have its name which must include the words “akcinė bendrovė” (public limited  liability  company),  “uždaroji  akcinė  bendrovė”  (private  limited  liability company) “mažoji bendrija” (small community) or their respective acronyms (“AB”, “UAB” or “MB”).

6   Time taken to incorporate

Registration takes 5 working days, incorporation takes approximately 15 working days for private limited liability company and 30 working days for public limited liability company. Private limited liability company, individual entity, small community or partnership may be incorporated online and than registration takes about 2-3 days (electronical ID and signature is essential)

7   Are shelf companies available?

No, but can be formed quickly

8   Usual minimum capital

At least LTL 10,000 (app. EUR 2,900) for private limited companies. At least LTL 150,000 (app. EUR 43,450) for public limited companies. Not required for small communities.

9   Capital Duty

No

10 Minimum number of shareholders

Private company – minimum 1, maximum 249. Public company minimum 1, maximum not limited. Small community – minimum 1, maximum 10.

11 Are bearer shares / shares of no par value possible?

Yes / No

12 Directors: minimum number / corporate directors allowed / location

One / No corporate directors allowed / Resident or non-resident (Non-European citizens must have the Temporary residence permit in the Republic of Lithuania). Nominees are not available under the laws

13 Secretary: mandatory / corporate secretary allowed / location

Not provided for in law

14 Is there a requirement for a Registered Office / Registered Agent?

Yes / No

15 Is any inforequired by the authorities prior to incorporation or prior to tax status being granted?

Prior to incorporation – no. Information and documents on would-be activity and a few transactions is necessary to get a VAT number.

16 What information is available on the public file?

All information compiled in Register of Legal Persons  is public (Director, the Sole Shareholder, List of Shareholders, Members of Other Bodies, Registered Office, Company Status, Mortgages & Charges, Authorised Capital, Balance Sheet, Annual Report, all other documents submitted to the Register, etc.)

17 What documents must be kept at the Registered Office?

Certain financial books, registers, all necessary licenses and certificates

18 Corporate books &

seal

Corporate books required, usually retained at the Registered Office; seal - non compulsory, Manager of the Company is responsible for the safety and use of it.

19 Are accounts required / filed?

Yes/yes

20 Is an annual return required?

Yes

21 Where are meetings to be held?

No restrictions

22 Branches and subsidiaries

Available, registered in the Register of Legal Entities.

The branch or subsidiary shall provide documents of annual financial accountability, including consolidated balance sheet, in cases where such accountability is mandatory. Registration takes

5 work days, in overall registration takes approximately 20 work days.

23 Mergers and acquisitions, joint ventures

Available. All foreign mergers and acquisitions are subject to the Law on the Competition of the Republic of Lithuania. Joint ventures are available in contract, partnership and company forms

24 Free economic zones

(FEZ)

FEZ’es are in 7 cities: Kaunas, Klaipeda, Siauliai, Panevezys, Kedainiai, Akmene and Marijampole. Companies incorporated in FEZ’s do not pay any real estate tax and dividends received from these companies are tax exempt under corporate income tax. Companies that exceed investments of EUR 1 million do not pay income tax for 6 tax periods and other 10 tax periods pay 50 per cent of it

25 Termination of the company/branch

Two means of closure are available: bankruptcy and liquidation. In the case of liquidation, liquidation is available also on the decision of the shareholders. These procedures may last approximately 1 year and longer on the case of complexity. Reorganisation is also available.

26 Annual fees payable to the government: Tax / Annual Return Filing Fee

Corporate Income Tax rate 15%, for small companies Corporate Income Tax rate 5 %

In general, profits sourced in Lithuania and received by foreign entities otherwise than through their permanent establishments in Lithuania are levied by the 10% (e.g., interest, royalties, compensations for violation of copyrights or related rights) or 15% (e.g., for transfer or lease of immovable property, located in Lithuania, distributable profits, including dividends, annual bonuses for the members of supervisory or management board) tax on corporate profits. Tax exemptions may apply.

No annual return Filling Fee

27 Possibilities for

Income tax reduction

Base of Corporate income tax may be reduced by allowable deductions and deductions of limited amount.

With respect of dividend taxation, participation exemption may apply.

From 1 January 2009 the taxable profit of the entity may be reduced by deducting expenses, incurred during 2009-2018 for acquisition of long-term property, used by the entity in the investment project as it is provided by the law. The taxable profit of the entity may be reduced by 50% at the maximum per one taxation year. The part of expenses, not deducted during the first year, may be used to reduce the taxable profit of the entity during four succeeding taxation years. Provided the specific conditions prescribed by the law are met, transfer of losses within the group of legal entities, including the cross-border transfers, and are available. Profits of small entities satisfying the requirements prescribed by the law are taxable by 5% tax on corporate profits. The law prescribes other

possibilities for reduction of taxes as well.

28 Taxation of dividends

Dividends paid by the Lithuanian entity to the non-resident entity in general are subject to 15% withholding tax on corporate income. Still dividends paid by the Lithuanian entity to a foreign entity that incessantly for at least twelve months controls not less than 10% of voting shares/member shares in the Lithuanian entity shall not be subject to taxation, except for cases where the foreign entity receiving the dividends is registered or otherwise organised in target (“tax haven”) territories.

Dividends paid to the natural person are taxable by tax on personal income at the rate of 15%, except cases, if treaty on avoidance of double taxation provides more favourable regime.

29 Are there any exchange controls?

No

30 Double tax treaties

Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Czech Republic, Denmark, Estonia, Finland, France, Germany, Georgia, Greece, Hungary, Iceland, India, Ireland, Israel, Italy, Kazakhstan, Kyrgyzstan, Latvia, Luxembourg, Macedonia, Malta, Mexico,   Moldova,   Netherlands,   Norway,   Poland,   Portugal,   Romania,   Russia,   Serbia, Singapore, Slovakia, Slovenia, South Korea, Spain, Sweden, Switzerland, Turkey, Ukraine, United Kingdom, USA and Uzbekistan.

31 White List Countries

Armenia, Austria, Azerbaijan, Belarus, Belgium, Bulgaria, Canada, China, Croatia, Czech Republic, Cyprus, Denmark, Estonia, Finland, France, Germany, Georgia, Greece, Hungary, Iceland,  India,  Ireland,  Israel,  Italy,  Kazakhstan,  Latvia,  Luxembourg,  Malta,  Mexico, Moldova, Netherlands, Norway, Poland, Portugal, Romania, Russia, Singapore, Slovakia, Slovenia,  Spain,  Republic  of  South  Africa,  South  Korea,  Sweden,  Switzerland,  Turkey, Ukraine, United Kingdom, USA and Uzbekistan.

32 Black List Countries

Andorra, Anguilla, Antigua and Barbuda, Aruba, the Azores, Bahamas, Bahrain, Barbados, Belize, Bermuda, Brunei Darussalam, Cayman Islands, Costa Rica, Cook Islands, Dominica, Djibouti, Ecuador, Bailiwick of Guernsey, Sark, Alderney, Gibraltar, Grenada, Guatemala, Hong Kong, Jamaica, Bailiwick of Jersey, Kenya, Kuwait, Lebanon, Liberia, Liechtenstein, Macau,   Madeira,   Maldives,   Marshall  Islands,  Mauritius,  The  Isle  of  Man,  Monaco, Montserrat, New Caledonia, Nauru, Niue, Netherlands Antilles, Panama, Samoa, San Marino, Seychelles,  Saint  Pierre  and  Miquelon,  Saint  Kitts  and  Nevis,  Saint  Vincent  and  the Grenadines, Saint Helena, Tahiti, Turks and Caicos Islands, Tonga, United Arab Emirates, Uruguay,  Vanuatu,  Venezuela,  British Virgin Islands (BVI),  Virgin Islands of the United States.

33 Employment and firing

The written agreement is compulsory for the employment, probationary period is optional. The termination of contract is available on strictly regulated grounds.

34 Employment costs:

taxes, insurances

The employer shall pay:

- 30,98% social security contribution;

- 0,2% contribution to the employees guaranty fund;

- gross salary (incl. net salary to the employee; also 15% of personal income tax and 9% social security contribution to be deducted from the gross salary).

35 Labour lease

Possible, regulated by the laws.

36 Employment and residence of foreign employees

EU citizens may come to and work in Lithuania with no restrictions. The residence shall be declared.

The non- EU citizens may come to Lithuania in order to work only on the basis of work permit and temporary residence permit. The principle of priority of employees already residing in Lithuania is applied.