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Lithuania

Partners

Updated 10/2010

Legal requirements

Types of cooperation

Finding business partners in the European Union can be understood in several ways:

  • Acquisition of shares of a Lithuanian legal entity by a natural person or legal entity of a foreign state.

A natural person or legal entity of a foreign state may acquire a part or all of a company's shares.

In accordance with Article 37(12) of the Law on Companies, when all shares of a company are acquired by one person or the holder of all shares of a company transfers all or a part of the shares of the company to other persons, the head of the company must notify the Manager of the Register of Legal Entities about it within 5 days of the day of receipt of the notification indicated in Article 14(4) of this Law.

  • The lists of shareholders are stored in the Register.

When registering the data of a shareholder in the Register, the following request forms are to be submitted respectively:

  • Cross-border reorganisation of legal entities

In accordance with Article 2.97 of the Civil Code, the following are the possible types of reorganisation of legal entities by means of a merger:

  • Joining is a merger of one or more legal entities to another legal entity, which becomes the successor to all rights and obligations of the reorganised legal entity.
  • Consolidation is a merger of two or more legal entities into a new legal entity, which becomes a successor to all rights and obligations of the reorganised legal entities.

A reorganised legal entity is removed from the Register in accordance with the procedure provided in the Rules.

  • Formation of a European company or a European cooperative society

In accordance with the Law on European Companies and Article 2 of the Council Regulation (EC) No. 2157/2001 of 8 October 2001 on the Statute of a European company (SE):

  •  Public limited liability companies such as referred to in Annex I, formed under the law of a Member State, with registered offices and head offices within the Community may form an SE by means of a merger with other companies provided that at least two merging companies are governed by the law of different Member States;
  •  Public and private limited liability companies such as referred to in Annex II, formed under the law of a Member State, with registered offices and head offices within the Community may promote the formation of a holding SE provided that each of at least two of them:
  •  is governed by the law of a different Member State, or
  •  for at least two years had a subsidiary company governed by the law of another Member State or a branch situated in another Member State.

In accordance with the Law of the Republic of Lithuania on European Cooperative Societies and Article 2 of the Council Regulation (EC) No. 2157/2001 of 22 July 2003 on the Statute of a European Cooperative Society (SCE):

A European cooperative society (SCE) may be formed as follows:

by five or more natural persons resident in at least two Member States,

  • by five or more natural persons and companies and firms within the meaning of the second paragraph of Article 48 of the Treaty and other legal entities or other organisations governed by public or private law, formed under the law of a Member State, resident in at least two different Member States or governed by the law of at least two different Member States,
  • by companies and firms within the meaning of the second paragraph of Article 48 of the Treaty and other legal entities or other organisations, governed by public or private law and formed under the law of a Member State, which are governed by the law of at least two different Member States,
  • by a merger between cooperatives formed under the law of a Member State with registered offices and head offices within the Community, provided that at least two of them are governed by the law of different Member States,
  • by conversion of a cooperative formed under the law of a Member State, which has its registered office and head office within the Community if for at least two years it has had an establishment or subsidiary governed by the law of another Member State.

Registering a legal entity's status as 'Initiating formation of a European company by means of a merger', 'Initiating formation of a European company by means of a holding' or 'Initiating formation of a European cooperative society by means of a merger':

No later than on the first day of making a public announcement on the terms of merger or terms of formation, data providers shall submit to the Manager of the Register the documents indicated in Item 116 of the Rules of the Register of Legal Entities:

  • a request to register or record the legal status of a legal entity as 'Initiating formation of a European company by means of a merger', 'Initiating formation of a European company by means of a holding' or 'Initiating formation of a European cooperative society by means of a merger';
  • draft terms of merger or draft terms of formation;
  • an assessment report for the (draft) terms and a report prepared by the managing bodies, if the submission of such reports is mandated by law;
  • a permit from a state supervisory institution, if the issuance of such a permit is mandated by law;
  • a document confirming payment of the registration fee.

Forming a European economic interest grouping

In accordance with the Law of the Republic of Lithuania on the European Economic Interest Grouping and Article 4 of the Council Regulation (EEC) No. 2137/85 of 25 July 1985 on the European Economic Interest Grouping (EEIG), only the following may be members of a European economic interest grouping:

  • companies or firms within the meaning of the second paragraph of Article 58 of the Treaty and other legal entities governed by public or private law, which have been formed in accordance with the law of a Member State and which have their registered or statutory office and central administration in the Community; where, under the law of a Member State, a company, firm or other legal entity is not obliged to have a registered or statutory office, it shall be sufficient for such a company, firm or other legal entity to have its central administration in the Community;
  • natural persons who carry on any industrial, commercial, craft or agricultural activity or who provide professional or other services in the Community.

Other options for expanding your business are taking over an existing one, merging with another company or opening a branch in another EU country.

Administrative procedures

Cross-border reorganisation of legal entities

Registration in the Register of Legal Entities of the legal status of a legal entity as 'Being reorganised' or 'Participating in reorganisation':

No later than on the first day of making a public announcement on the terms of reorganisation, data providers shall submit to the Manager of the Register the documents indicated in the Rules of the Register of Legal Entities.

The Manager of the Register, upon receiving the documents indicated in the Rules, registers the legal status of the legal entity as 'Being reorganised' or 'Participating in reorganisation' within 3 business days.

In accordance with Item 120 of the Rules, document and data providers, within 5 days of making of the decision to approve the draft terms of reorganisation, shall submit this decision to the Manager of the Register, who shall enter the information in the Register within 3 business days.

Registration of the data of a legal entity following the completion of reorganisation:

In accordance with Item 122 of the Rules, when reorganising a legal entity by way of joining, after the terms of reorganisation have been implemented, the document and data providers of the legal entities continuing to operate after the reorganisation shall submit the following documents to the Manager of the Register within the term provided by law and the terms of reorganisation:

  • a request to register changed Register data;
  • the amendments to the founding document and the entire amended text of the founding document (2 copies);
  • a property valuation report, if it is necessary to determine the value of property in accordance with law;

When reorganising a legal entity by way of consolidation, the document and data providers shall submit the following documents to the Manager of the Register:

  • a request to register a new legal entity signed by document and data providers of all legal entities being reorganised;
  • the founding documents of the new legal entity (2 copies);

Formation of a European company or a European cooperative society

The Manager of the Register, upon receiving the documents indicated in the Rules, registers or records the legal status of the legal entity as 'Initiating formation of a European company by means of a merger', 'Initiating formation of a European company by means of a holding' or 'Initiating formation of a European cooperative society by means of a merger' within 3 business days.

Registering the data of a European company or a European cooperative society:

When forming a European company in Lithuania, the following documents are to be submitted to the Manager of the Register:

  • a request to register a legal entity;
  • the terms of merger, if the European company is being formed by means of a merger; or terms of formation, if the European company is being formed by means of a holding; 2 copies of the articles of association are to be submitted;
  • a licence, if a licence has to be issued before the formation of the European company in accordance with law;
  • a property valuation report, if a promoter pays for shares partially with a non-monetary contribution;
  • a statutory report;
  • an assessment report for draft terms of merger or draft terms of formation, if the European company is being formed by way of a merger or holding;
  • certificates issued by the competent institutions of European Union Member States or other states of the European Economic Area, if the European company is being formed by way of a merger;

The Manager of the Register, upon receiving the documents indicated in the Rules, registers the data in the Register within 3 business days.

Having registered a European company, the Manager of the Register notifies the Publications Office of the European Union of this within a month. The Manager of the Register also sends this notification to the state register in which the limited liability company that formed a European company in Lithuania by way of a merger was registered.

When forming a European cooperative society in Lithuania, the following documents are to be submitted to the Manager of the Register:

  • a request to register a legal entity;
  • the memorandum and the articles of association; the terms of merger, if the European cooperative society is being formed by way of a merger; 2 copies of the articles of association are to be submitted;
  • a licence, if a licence has to be issued before the formation of the European cooperative society in accordance with the law;
  • a property valuation report, if a promoter pays for shares partially with a non-monetary contribution;
  • an assessment report for the draft terms of merger, if the European cooperative society is being formed by way of a merger;
  • certificates issued by the competent institutions of European Union Member States or other states of the European Economic Area, if the European cooperative society is being formed by way of a merger;

The Manager of the Register, upon receiving the documents indicated in the Rules, registers the data in the Register within 3 business days.

  • Forming a European economic interest grouping

Registering a European economic interest grouping:

In accordance with Items 54 and 541 of the Rules of the Register of Legal Entities, when forming a European economic interest grouping, the following documents are to be submitted to the Manager of the Register:

  • a request to register a legal entity;
  • founding document - agreement for the formation of a European economic interest grouping (2 copies);
  • a licence, if a licence has to be issued before the formation of the legal entity in accordance with laws;

After registering a European economic interest grouping, the Manager of the Register notifies the Publications Office of the European Union of this within a month.

Relief from double taxation

Corporate income tax       

If a Lithuanian entity, during a tax period, received income in a foreign state, from which corporate income tax or an equivalent tax was deducted in that foreign state upon paying it out, or received income not through its permanent establishment located in that state, on which it paid in that foreign state corporate income tax or an equivalent tax, then the following has to be indicated in a document confirmed by the tax administrator of the foreign state:

  • the person who received the income (the Lithuanian entity);
  • the amount of income received;
  • the amount of tax deducted from (or paid on) that amount;
  • the name of the tax deducted (or paid);
  • the date or the tax period on or during which the income indicated in the document was received.

If a Lithuanian entity operates through permanent establishments situated in the states of the European Economic Area or states with which Lithuania has concluded and is applying a convention for the avoidance of double taxation, the income from activities of these permanent establishments is not attributed to a tax base of the Lithuanian entity if the income from the activities carried out through these permanent establishments is subject to income tax in accordance with the procedure or an equivalent tax in those countries. Given the fact that the income tax on the said income would not be paid in Lithuania, the calculated annual amount of income tax due by entity in Lithuania may not be reduced by the amount of tax paid on the income received through permanent establishments in such foreign states.

Permanent establishments of a foreign entity shall, by 1 October of the year following the tax period, submit an Annual Corporate Income Tax Declaration PLN204U (the following shall be declared in the Form PLN204U: the taxable profits of and the corporate income tax on the permanent establishments of the foreign entity; also a table of assets used in the activities of the permanent establishment, and the liabilities of the permanent establishment shall be given), and relief from double taxation shall be applied in that foreign state.

In respect of a foreign entity, when deducting tax at the source, a Lithuanian entity may apply the concessions of a convention for the avoidance of double taxation, provided that it has an FR0021 (DAS-1) form request of a resident of a foreign state to reduce tax deducted, filled out by the foreign entity. DAS-1 forms are to be submitted together with annual financial statements and annual corporate income tax declarations (by 1 October of the year following the tax period).

If the foreign entity does not have a DAS-1 form request, tax is deducted in accordance with the provisions of the Law on Corporate Income Tax, and the foreign entity may ask the tax administrator for a recalculation by submitting a DAS-2 form request.

Forms, whose rules of usage are set by an order of the Head of the State Tax Inspectorate under the Ministry of Finance of the Republic of Lithuania, are used for the application of the concessions provided in conventions for the avoidance of double taxation.

Personal income tax

Income (except interest, dividends and royalties) received by a permanent resident of Lithuania in a foreign state, which is a European Union Member State, or with which Lithuania has concluded and is applying a convention for the avoidance of double taxation, and on which an income tax or an equivalent tax has been paid in that foreign state in accordance with its internal tax laws, to eliminate its double taxation, is exempted from income tax in Lithuania only in the event that the resident, together with an annual income tax declaration (to be submitted by 1 May of the year following the tax period) submits a document about the income received in that foreign state and the amount of income tax or an equivalent tax paid on them. Such a document can be issued to a permanent resident of Lithuania by their employer in the foreign state or another person from whom the resident received income, or by the tax administrator of that foreign state.

In order for a permanent resident of Lithuania who received dividends, interest and/or royalties during a tax period (a calendar year) in a foreign state, which is a European Union Member State, or with which a convention for the avoidance of double taxation has been concluded and is being applied, and on which an income tax or an equivalent tax has been paid in that state, to be able to deduct the amount of income tax or an equivalent tax paid on that income in that foreign state from the calculated amount of income tax to be paid, eliminating the double taxation of such income, the resident must have a document about the amounts of dividends, interest and/or royalties received in that foreign state during that tax period (a calendar year) and the amount of income tax or an equivalent tax paid on them. The resident has to submit this document together with the annual income tax declaration (by 1 May of the year following the tax period).

Resources

Information about legal entities can be found on the website of the Centre of Registers.

Help & advice

Help & advice

E-mail a business organisation near you

The EU runs a network (Enterprise Europe Network) of local business organisations in most European countries that may be able to help you.

Choose your country and town and enter your enquiry below.

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