Business Forms and Independent Professional Statuses in Lithuania
Lithuania offers a range of business structures and independent professional statuses, each with its own legal and operational framework. Understanding these options is crucial for entrepreneurs and professionals seeking to establish their presence in the country.
Business Forms
1. Private Limited Liability Company (UAB)
- Characteristics: A separate legal entity with limited liability for shareholders. Requires a minimum of one shareholder and one director.
- Benefits: Limited liability, separate legal entity, flexibility in ownership and management.
- Legal Obligations: Filing of annual returns, financial statements, and other statutory documents.
- Liability: Limited to the company's assets.
- Tax Implications: Subject to corporate income tax.
2. Public Limited Liability Company (AB)
- Characteristics: Similar to a private limited liability company but with shares freely tradable to the public.
- Benefits: Access to public capital markets, enhanced credibility.
- Legal Obligations: Compliance with company law and listing rules.
- Liability: Limited to the company's assets.
- Tax Implications: Subject to corporate income tax.
3. Partnership
- Characteristics: A business structure involving two or more individuals carrying on a business together.
- Benefits: Shared management and responsibility.
- Legal Obligations: Agreement among partners, registration with the Register of Legal Entities.
- Liability: Unlimited liability for partners.
- Tax Implications: Partners taxed individually on their share of profits.
Independent Professional Statuses
1. Freelancer/Independent Contractor
- Characteristics: Self-employed individual offering services to clients on a contractual basis.
- Criteria: Engaged in a profession or trade independently, without being employed by a specific employer.
- Rights: Flexibility in choosing clients and projects.
- Responsibilities: Managing own business operations, including marketing, invoicing, and tax compliance.
- Tax Considerations: Subject to income tax and social security contributions.
Registration Process and Costs
Private Limited Liability Company:
- Registration: Submit incorporation documents to the Register of Legal Entities.
- Costs: Registration fee of approximately €245, plus additional fees for name reservation and other optional services.
- Timeframe: Typically 1-2 weeks for incorporation.
Freelancer/Independent Contractor:
- Registration: Register with the State Tax Inspectorate for tax purposes.
- Costs: No registration fee, but may incur costs for professional advice or accounting services.
- Timeframe: Immediate registration, but ongoing compliance requirements apply.
Legal References
The establishment and operation of business forms and independent professional statuses in Lithuania are governed by various laws and regulations, including:
- Law on Legal Entities (No. XII-2400)
- Law on Income Tax (No. IX-1023)
- Law on Value Added Tax (No. IX-1815)
- Law on Social Insurance (No. VIII-1987)
These laws provide the legal framework for business formation, registration, operation, and tax obligations in Lithuania.
If navigating the complexities of Lithuanian business structures and independent professional statuses seems daunting, consider seeking professional guidance. Heavnn offers a comprehensive suite of services to help you establish and manage your business in Lithuania, ensuring compliance and maximizing your potential.
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