The legal framework is predictable, licensing is aligned with EU directives, and operational infrastructure such as SEPA access is available to non-bank payment institutions via the central bank’s rails. The result is a jurisdiction where incorporation and authorisation can be staged efficiently without compromising regulatory substance.
For most operating companies and fintech platforms, the private limited liability company (UAB) is the default structure. The minimum share capital is 2,500 euros, and a sole director model is permitted, with optional supervisory bodies. Public limited companies (AB) signal scale and are designed for capital markets or broader investor bases; the minimum share capital is 40,000 euros. Both are separate legal persons under Lithuanian law, allowing ring-fencing of risk within corporate groups.
From an investor diligence perspective, predictable governance matters. UABs can implement shareholder agreements alongside articles to address reserved matters, drag/tag and anti-dilution. ABs are subject to more prescriptive governance under the Law on Companies, including stricter rules on general meetings and disclosures. For cross-border investors, both forms support EU-cross border mergers and freedom of establishment under the Treaty on the Functioning of the EU.
The standard corporate income tax rate is 15 percent. A reduced 5 percent rate may apply to small companies that meet statutory employee and revenue thresholds; careful monitoring is required to avoid inadvertent loss of eligibility. Lithuania has implemented the EU Anti-Tax Avoidance Directive interest limitation rule, which generally caps net borrowing costs at 30 percent of EBITDA with a 3 million euro de minimis threshold. This matters for leverage-funded acquisitions and intra-group financing.
The standard VAT rate is 21 percent. Mandatory VAT registration generally applies when Lithuanian taxable turnover exceeds 45,000 euros within a rolling 12-month period. For cross-border B2C supplies within the EU, the 10,000 euro one-stop-shop threshold can trigger OSS registration even at low volumes. Early assessment of VAT place-of-supply and digital platform obligations reduces downstream remediation costs.
Participation-exemption rules based on the EU Parent-Subsidiary Directive can eliminate withholding tax on outbound dividends to qualifying corporate shareholders holding a material participation for at least 12 months. Confirm beneficial ownership and substance to avoid treaty shopping challenges.
Electronic money institutions require initial capital of at least 350,000 euros under the Electronic Money Directive framework. Payment institutions follow the Payment Services Directive tiers with initial capital of 20,000, 50,000 or 125,000 euros depending on the services provided. Own funds must be maintained via the applicable method, and client funds must be safeguarded via segregation at a credit institution or via an insurance/guarantee mechanism.
The Bank of Lithuania is an active supervisor and provides pre-application engagement. EU law sets a three-month decision period from the point an application is deemed complete; in practice, information requests and governance enhancements often extend the calendar timeline. Authorised institutions can passport services across the EEA, which is a core efficiency benefit for scaling payments and e-money models.
Investment firm licensing follows the EU Investment Firms Regulation and Directive. Classification and initial capital depend on services and K-factors. Early alignment of the business model, order handling, client asset protection and prudential consolidation is essential to avoid reclassification mid-process.
The supervisor expects real decision-making in Lithuania. Senior management and control functions must be effective, independent and suitably resourced. For fintechs, this typically means a locally present CEO or executive directors, heads of compliance and AML, and robust risk and internal audit frameworks proportionate to scale. The EU outsourcing and ICT risk rules require an up-to-date register of outsourcing arrangements, documented exit plans and oversight of critical providers, including cloud.
AML/CFT controls must align with EU rules transposed into Lithuanian law, with the Financial Crime Investigation Service acting as the FIU. A risk-based approach, customer due diligence, sanctions screening, transaction monitoring and prompt suspicious transaction reporting are mandatory. Weak AML frameworks are the most common cause of licensing delay and post-licence remediation.
Lithuania offers direct access to SEPA via the central bank’s infrastructure, enabling EMIs and PIs to clear euro payments without routing through correspondent banks. This materially improves speed-to-market for EU payments propositions. Safeguarding accounts should be diversified, and reconciliation processes must be automated and auditable to withstand supervisory inspections.
Incorporation using standard articles and qualified e-signatures can be completed in two to three business days, subject to timely verification of documents by the Centre of Registers. Non-EEA directors or complex shareholder chains may necessitate notarisation and apostille, extending timelines. UBO information must be filed with the legal entities register and kept current. Annual financial statements are filed with the Centre of Registers, with statutory audit thresholds tied to size criteria and public-interest status.
Founders who require coordinated setup, including articles, UBO and VAT registrations, and regulatory readiness, should consider specialist support for company formation in Lithuania .
Passporting under PSD2 and EMD2 enables EEA-wide service provision once the Lithuanian entity is authorised. Groups often use a Lithuanian UAB as the licensed operating entity with holding companies elsewhere in the EU to accommodate investor rights, tax treaties and equity incentive plans. Cross-border mergers and conversions under EU directives simplify reorganisations when scale requires relocation of assets or consolidation of licences. Maintain substance at the licensed entity to avoid letterbox concerns and to preserve passporting integrity.
Regulators focus on financial crime controls, safeguarding architecture, IT and cyber risk governance, and board independence. Tax authorities and auditors scrutinise transfer pricing, interest limitation under ATAD and VAT place-of-supply for platform models. Investors examine shareholder protections and the scalability of governance from seed stage to multi-country operations. Addressing these areas upfront compresses timelines from incorporation to revenue, and reduces the probability of conditional authorisations that restrict commercial rollout.
Read more:
Lithuania for EU Incorporation and Fintech Licensing: Legal-Operational Essentials
