Business start-up procedures
Once you have decided to start up a business and have chosen the form of the business – on the basis of individual activities or by setting up a legal entity – it is also important to know the ways in which a business can be established and the procedures for setting one up.
Registration of individual activities
In order to obtain an individual activities certificate, you should submit a completed registration application using Form REG812 to the State tax inspectorate (STI). Data and documents can be submitted at the tax inspectorate in person, by post or by email. Individual activities can also be registered online. An individual activities certificate is issued online by filling in an application electronically via the the My STI/Mano VMI area. You can log in to this system using online banking or a mobile signature. The application for a certificate must be submitted no later than the day on which the activities commence. If you decide to cease your activities, an application must be submitted to the STI no later than within 5 working days after the date on which you stop.
Registration/deregistration/change of information regarding the activities of natural persons in the Taxpayers Register can be found here.
This activities certificate is issued for an unlimited period of time. However, at the end of a tax period, an annual income tax declaration must be submitted to the district STI and personal income tax on the income from individual activities received during the calendar year must be paid.
Registration of a business licence
In order to obtain a business licence, you must first check whether business licences are issued for the activity you have chosen. The list of activities which can be carried out under a business licence can be found here. The amount of the business licence fee may depend on the choice of activity type or sub-type. This amount also depends on the period of validity of the business licence.
You must submit the following documents to the territorial State tax inspectorate (in person, by post or by email):
- an application for a business licence;
- identity document;
- other documents required in individual cases (a document on the basis of which a lower income tax established by the municipality council may be applied, a copyright licence agreement concluded with producers of audiovisual works and producers of phonograms, etc.).
The business licence is issued within 4 working days from the date of the submission of documents.
Business licences may be issued for a desired period of a calendar year, which may not extend beyond the end of the same calendar year. Commercial business licences are issued for a desired period of a calendar year, calculated in days. The shortest possible period is one day. Service and production business licences are issued for a desired period of a calendar year (calculated in days) but not for more than one calendar year and not for less than 5 calendar days, which do not have to be consecutive.
Income earned from a separate activity under a business licence is subject to income tax at the established rate payable before the date of issue of the business licence. The rates of the fixed income tax are determined by the council of each municipality annually.
*All information about individual activities certificates and business licences, activity registration procedures, income from activities, allowable deductions, accounting, declarations of income, etc. is provided on the STI website (Tax Information Centre tel. 8 700 55 882 or 8 5 255 31 90, short number 1882).
Registration of a company
The setting up of a legal entity covers the process from the decision to establish a legal entity (‘LE’) in the chosen legal form to its entry in the Register of Legal Entities. Several stages in establishing a company, typical of a LE of any legal form, can be distinguished:
- A clear choice of goals and objectives for the business.
- Selection of the most appropriate legal form of the company (according to future business).
- Selection of premises for the registered office; the consent (notarised) of the owner of the premises to provide the premises to the registered office of the LE if the owner of the premises is other than the founder.
- Selection and registration of the name of the LE. There is an option of submitting a request to the registrar of the Register of Legal Entities for the temporary entry of the name in the Register of Legal Entities (JAR-5).
- Drawing-up of the constituent documents (document of incorporation when there is a single founder, or memorandum of association when there are more than one founder).
- Opening of an accumulation account. The founders have the right to select the bank of their choice. The persons authorised by the LE who are opening a bank account on behalf of the LE must have an identity document and the constituent document (memorandum of association or document of incorporation). Later, after registering the LE, the accumulation account is changed to a current bank account (upon presentation of the registration certificate of the LE, the document certifying the appointment of the manager, the identity document of the manager, and the stamp of the LE).
- Payment of required initial contributions (if any). Initial contributions can only be paid in cash to the savings account.
- Drawing-up of articles of association / regulations. It is the document by which the LE will be guided in its business activities.
- Convening of the constituent meeting. During this meeting, the articles of association are approved, the management and supervisory bodies (manager, board, supervisory board, etc.) are elected, and authorisations for representation in the Register of Legal Entities is granted. If there is one founder, the decision of the sole founder is drawn up. The constituent meeting may not be convened if the memorandum of association or the document of incorporation includes the management bodies, persons authorised for representation.
- Completion of JAR forms required for the Register of Legal Entities (JAR-1 and others, depending on the legal form).
- Submission of the documents to a notary and the Register of Legal Entities.
Establishment, management, operation, transformation, liquidation of companies, rights and obligations of the owners of these companies, rights and obligations of management bodies, responsibility, disposal of assets, accounting, provision of information to interested parties, and other matters are regulated by the Civil Code, the laws of the Republic of Lithuania applicable to the respective legal form of the company (the Law of the Republic of Lithuania on Companies, the Law of the Republic of Lithuania on Individual Enterprises, the Law of the Republic of Lithuania on Public Institutions, the Law of the Republic of Lithuania on Associations, etc.) and other legal acts.
Depending on the legal form of the company, only a natural person with active legal capacity or either a natural person or an LP can be the founder.
The constituent documents of companies can be drawn up by the founders themselves or by persons, companies or institutions providing consultancy/legal services.
When establishing a small partnership, individual enterprise, private limited liability company, association or public institution, documents may be submitted electronically directly to the Registrar through the electronic self-service system of the Centre of Registers, provided that:
- the founder has a qualified electronic signature which is currently possible to use:
- a qualified certificate issued by the Certificate Centre of the State Enterprise Centre of Registers;
- qualified certificates issued by mobile operators – Bitė, Telia and Tele2;
- an identity card issued by the Identity Documents Personalisation Centre Under the Ministry of the Interior of the Republic of Lithuania, which contains certificates of personal identification in the electronic space and a qualified signature;
- the founder of a legal entity is a natural person with active legal capacity;
- the constituent documents are prepared in accordance with:
- the standard regulations of an individual enterprise;
- the standard articles of association of a private limited liability company, the form of a document of incorporation or a memorandum of association;
- the standard statutes of an association and the form of a memorandum of association;
- the standard statutes of a public institution, the form of a document of incorporation or a memorandum of association;
- the standard regulations of a small partnership.
- there is no intention to use the short country name ‘Lithuania’ in the name of the individual enterprise, private limited liability company, association or public institution being established;
- the registered office premises do not belong to the founder, the owners of the premises must have given their consent and the authorisation must be signed with an electronic signature;
- the seizure of property is not registered in the Real Property Register for the premises being provided for the registration of the registered office;
- in the case of establishing a private limited liability company, payment for the shares is made in cash;
- the name has been temporarily entered in the Register of Legal Entities.
Information about the establishment of companies and the documents to be filled in and submitted to a notary and the Register of Legal Entities can also be found on the website of the State Enterprise Centre of Registers (VĮ Registrų centras). All the JAR forms to be filled in can also be found on this page. (Consultancy Service of the Centre of Registers, tel. 8 5 268 8262, short number: 1637).
Important to know:
- Registration of a company in the Taxpayers Register. A legal person is automatically registered in the Taxpayers Register, i.e. the Register of Legal Entities transmits the information to the Taxpayers Register. There is therefore no need to go to the State tax inspectorate. The STI will provide information regarding entry in the Taxpayers Register and request any additional necessary data.
- Registration as a policyholder. Upon registration, a company also becomes a payer of state social insurance contributions (policyholder). When a company is registered as a taxpayer, it is also registered as a policyholder, and the data on the company is transferred to the State Social Insurance Fund Board. Therefore, it is not required to additionally visit the State Social Insurance Fund Board.
- Opening of the company’s bank account. Legal acts do not provide for a specific period within which you must open the company’s bank account. The accumulation account of a limited liability company (AB) or private limited liability company (UAB) opened when establishing companies of these legal forms becomes the company’s bank account.
- Obtaining of licences and permits. Certain economic activities may only be carried out upon obtaining of the respective licence or permit. If the laws provide that this requirement applies to the activities you are planning to pursue, do not hesitate to contact the licensing or permitting authorities, refer to the business instruction sheets or contact consultants of Enterprise Lithuania directly and receive a free consultation.
- Safety certificate. You must prepare for certification in occupational health and safety either at an educational institution or on your own and pass examinations. After the certification, you will be issued a work safety certificate. It is mandatory for managers and some specialists.
- Company stamp. Stamps are mandatory only for institutions that perform functions of the state or municipal functions. The obligation for a legal person to attest a document with a stamp is not mandatory, unless when the requirement to have a stamp is provided for in its constituent documents or articles of association.
For more information about the forms of business and business start-up procedures, please visit the website of Enterprise Lithuania at https://www.enterpriselithuania.com/en/start/types-of-companies/
For more information about business expansion opportunities, please visit the website of Enterprise Lithuania at https://www.enterpriselithuania.com/en/grow/