Lithuania has combined EU single-market access, a pragmatist observer status and eurozone stability to become a preferred jurisdiction for EU entrepreneurs, fintech founders and investors.
The legal framework is predictable, licensing is in line with EU directives, and operational infrastructure such as SEPA access is available to non-bank payment institutions through the central bank's rails. The result is a jurisdiction where incorporation and authorization can be conducted efficiently without compromising regulatory content.
Choosing the Right Vehicle: UAB vs. AB and Investor Signaling
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 with alternative supervisory bodies is allowed. Public limited companies (ABs) are designed for signal scale and 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 articles as well as shareholder agreements to address reserved matters, drag/tag, and anti-dilution. ABs are subject to a more prescriptive regime under the law on companies, including strict 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.
Tax and VAT triggers that affect the structure
The standard corporate income tax rate is 15 percent. A lower rate of 5 percent may apply to small companies that meet statutory employee and revenue limits; Careful monitoring is required to avoid inadvertent loss of eligibility. Lithuania has implemented the EU Anti-Tax Avoidance Directive interest cap rules, which generally limit net borrowing costs to 30 percent of EBITDA with a floor of EUR 3 million. This matters for leveraged-financed acquisitions and intra-group financing.
The standard VAT rate is 21 percent. Mandatory VAT registration generally applies when Lithuanian taxable turnover exceeds EUR 45,000 within a 12-month period. For cross-border B2C supplies within the EU, a one-stop-shop threshold of EUR 10,000 can trigger OSS registration even for small quantities. Prompt assessment of VAT-supply location and digital platform obligations reduces downstream treatment costs.
Participation-exemption rules based on the EU Parent-Subsidiary Directive could eliminate withholding tax on outbound dividends to qualified corporate shareholders who have held a material participation for at least 12 months. Verify beneficial ownership and content to avoid treaty purchasing challenges.
Fintech Authority: EMI, PI and Investment Services
Under the Electronic Money Directive framework electronic money institutions are required to have an initial capital of at least EUR 350,000. Payment institutions follow the Payment Service Directive tiers with an initial capital of 20,000, 50,000 or 125,000 euros depending on the services provided. Own funds must be maintained through the applicable method, and customer funds must be secured through segregation in the credit institution or through an insurance/guarantee mechanism.
The Bank of Lithuania is an active supervisor and provides pre-application engagement. EU law sets a decision period of three months from the point when the application is considered complete; In practice, information requests and governance enhancements often extend the calendar timeline. Authorized institutions can offer passport services throughout the EEA, which is a key efficiency benefit for scaling up payments and e-money models.
Investment Firm Licensing follows the EU Investment Firm Regulation and Directive. Classification and initial capital depend on services and K-factors. Early alignment of business models, order handling, customer asset protection and prudent consolidation is essential to avoid reclassification midway through the process.
Governance, essence and outsourcing requirements
The observer is expected to take actual decisions in Lithuania. Senior management and control functions must be effective, independent and appropriately resourced. For fintechs, this usually means a locally present CEO or executive director, heads of compliance and AML, and strong risk and internal audit frameworks commensurate with the scale. EU outsourcing and ICT risk regulations require an updated register of outsourcing arrangements, documented exit plans and monitoring of critical providers, including cloud.
AML/CFT controls must be in line with EU rules applicable to Lithuanian law, with the Financial Crimes Investigation Service acting as the FIU. A risk-based approach, customer due diligence, sanctions checks, transaction monitoring and prompt reporting of suspicious transactions are essential. Weak AML frameworks are the most common cause of delays in licensing and post-licensing remediation.
Payment for Operating Profit
Lithuania provides direct access to SEPA through the central bank's infrastructure, enabling EMIs and PIs to clear euro payments without having to route them through correspondent banks. This improves speed to market for EU payment offerings. Account security should be diversified, and reconciliation processes should be automated and auditable to withstand supervisory oversight.
Formation, filing and deadlines
Incorporation using standard articles and qualified e-signatures can be completed in two to three business days, provided the documents are timely verified by the Register Centre. Non-EEA directors or complex shareholder chains may require notarization and apostille, extending the deadline. UBO information must be entered into the Legal Entity Register and kept up to date. Annual financial statements are filed centrally in registers, with statutory audit limits linked to size criteria and public-interest status.
Founders who require coordinated setup including articles, UBO and VAT registration and regulatory readiness should consider expert support for company formation in Lithuania.
Cross-Border Mechanics and Group Structure
The passport under PSD2 and EMD2 enables EEA-wide service provision once the Lithuanian entity is authorised. Groups often use Lithuanian UABs as a licensed operating entity with holding companies elsewhere in the EU to accommodate investor rights, tax treaties and equity incentive schemes. Cross-border mergers and conversions under EU directives simplify restructuring when scale requires the transfer of assets or consolidation of licenses. Maintain the abstract in the licensed entity to avoid letterbox concerns and maintain passporting integrity.
Quickly resolve common pressure points
Regulators focus on financial crime control, security of architecture, IT and cyber risk governance and board independence. Tax authorities and auditors examine transfer pricing, interest limits under ATAD and VAT-based place of supply for the platform model. Investors examine shareholder protection and governance scalability from early stage to multi-country operations. Addressing these areas upfront shortens the timeline from incorporation to revenue, and reduces the likelihood of conditional authorization restricting commercial rollout.