Lithuania

EU member state — single market access: A Lithuanian UAB has automatic rights to operate across all 27 EU member states under the principle of freedom of establishment. This includes EU VAT registration, EU contract eligibility, EU public procurement access, and EU employment rights — 450 million consumers from one EUR 1,000 company.

0% CIT for qualifying new companies in first 2 years: New companies with fewer than 10 employees and under EUR 300,000 in gross annual revenue pay zero corporate income tax for their first two years of operation. This is one of the most competitive startup tax regimes in the EU.

7% ongoing small company CIT rate: After the first two-year 0% period, qualifying small companies (same criteria) pay 7% CIT — significantly below the standard 17% rate.

R&D patent box at 7%: Lithuania offers a 7% reduced CIT rate on income from qualifying patents and copyright-protected software from January 2026. R&D expenses may also be deducted at 3x the actual amount — a triple deduction for qualifying research expenditure.

7 Free Economic Zones: FEZs across Lithuania offer 0% CIT for 10 years and 50% reduction (8.5%) for 6 years after, for companies with minimum EUR 1M investment (or EUR 100K + 20 employees). Proven special economic zones used by established manufacturers.

EU fintech licensing: Lithuania (via Lietuvos Bankas, the Bank of Lithuania) is Europe's leading jurisdiction for Electronic Money Institution (EMI) and Payment Institution (PI) licensing. Revolut, Monese, and 100+ fintechs hold their EU licences in Lithuania. A Lithuanian UAB enables access to EU financial services passporting.

Fast digital incorporation: Online registration via Registrų centras takes 1–3 business days with EUR 57 fee. No need to visit Lithuania to register.

EU investment protection: As an EU member, Lithuania provides investors full EU law protections — stable property rights, contract enforcement, and access to EU court dispute resolution.

Competitive workforce at below-Western-EU cost: Lithuania has an engineering and IT talent pool with significantly lower salary costs than Germany, France, or the Netherlands. High English proficiency among university graduates.

Baltic logistics and port access: Klaipėda is a significant Baltic Sea port; Lithuania connects Scandinavia, Poland, Germany, and the Baltic states via major road and rail corridors.

CIT increased to 17% from January 2026: Lithuania raised its corporate income tax from 15% to 17% effective January 1, 2026. This is a material, recent change that directly affects investor financial models. Companies that planned at the 15% rate need to recalculate. The rate increase cannot be assumed to be the last adjustment.

Mandatory i.SAF monthly invoice data reporting: Every invoice issued or received by a VAT-registered Lithuanian company must be reported monthly to the tax authority's i.SAF system. This is a higher ongoing compliance burden than most non-EU jurisdictions.

Complex payroll contribution structure: Social security contributions are multi-layered — employee, employer, Guarantee Fund, and Long-term Employment Fund components — and require accurate monthly calculations. Higher compliance burden than a simple payroll tax.

Small domestic market: Lithuania's population is approximately 2.8 million and declining due to emigration to Western EU. The domestic market is limited; Lithuania's value is as an EU gateway, not a local consumer market.

Russia removed Lithuania from DTT network from January 2026: Lithuania borders the Kaliningrad exclave and is a front-line NATO state. Russia removed Lithuania from its double taxation treaty network effective January 2026. For Russian or CIS-connected investors, this is material.

Loss carryforward capped at 70% of annual taxable profit: While the carryforward period is indefinite, only 70% of current-year taxable profit can be offset by carried-forward losses. Losses can take longer to utilise than in jurisdictions with no cap.

DAC6 and full EU tax transparency reporting: All cross-border tax arrangements involving Lithuania must be reported under DAC6 rules. Lithuania's EU membership means maximum regulatory transparency — unsuitable for structures relying on opacity.

Non-EU founder banking difficulty: Traditional Lithuanian banks (SEB, Swedbank, Luminor) are cautious with non-EU beneficial owners. Account opening times can run 4–6 weeks and rejections are not uncommon. Fintech/EMI alternatives (Paysera, Revolut Business) work but lack full corporate banking services.

Notary fees on share transfers and AoA amendments: Notary involvement is required for share transfers and certain Articles of Association amendments, adding transactional cost not present in simpler jurisdictions.

FEZ minimum investment is high for SMEs: The EUR 1,000,000 (or EUR 100,000 + 20 employees) threshold for FEZ eligibility excludes most small and medium-sized businesses from the most favourable tax incentives.