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Setting up a representative office or a branch in Lithuania
Part of businessmen who wish to start a business in Lithuania need to decide, whether they should set up a company or a representative office of a foreign company. Both options have their benefits and drawbacks.
Setting up a company is a simpler, cheaper and faster process that requires less founders' effort and participation in the process. It is enough to have a copy of passport of the founder, filled-in forms and authorisation to establish a company in Lithuania. Establishing a company takes 5-7 business days. Upon setting up a company, the authorised capital of the company must be placed in the accumulative account at a bank. The authorised capital currently in Lithuania should be no less than 3,000 EUR (in case of a Private Limited Liability Company). In case of a Sole Proprietorship or Small Partnership, the authorised capital is not created or the size of contribution is established by partners themselves. In the case when the company is purchased, the authorised capital of the company is already created.
The process of establishing a representative office or a branch is much longer. It lasts for approximately a month and is more complicated because far more documents need to be prepared and transferred to competent persons, e.g. establishment documents of the foreign country, annual financial statements end other documents that must be translated into Lithuanian. The documents issued by foreign institutions, according to the procedure established by laws, should be legalised or certified with Apostille, in case not established otherwise in the international agreements of Lithuania or legislation of the European Union. It is not necessary to come to Lithuania to set up a representative office or a branch, as it is also the case with setting up a company. It is possible to establish a company, a representative office or a branch on the basis of the mandate. Liability and property matters should not be forgotten either. The company is liable with its own property for the company duties. The property that belongs to the company by property rights is the property of the company. Meanwhile, the foreign company is liable for the duties of a representative office or a branch, and the immovable or movable property is transferred to the representative office or the branch by the foreign company.
A representative office or a branch is not a legal entity – it is a structural branch of a legal entity. However, a representative office or a branch may represent the interests of the legal entity and defend the interests, enter into transactions, and carry out other activities on behalf of the legal entity.
Steps of setting up a representative office or a branch:
- Collection of documents of the foreign company, their translation into Lithuanian, legalisation or certification with Apostille, in case not established otherwise in the international agreements of Lithuania or legislation of the European Union;
- Preparation of establishment documents;
- Certification of the establishment documents by a Lithuanian notary;
- Registering the representative office at the Register of Legal Entities of Lithuania;
- Production of a stamp.
Expenses of setting up a representative office or a branch: 1320 EUR.
Term for setting up a representative office or a branch: up to 3-4 weeks.
Arrival at Lithuania: It is not necessary to come to Lithuania to set up a representative office or a branch.
Expenses of maintaining the indicated representative office or the branch:
Taxes off an employee's wage every month – approximately 200 EUR when the wage is minimum (400 EUR).
Minimum wage of one employee – 400 EUR.
Office lease – starting with 200 EUR a month / Virtual office – 200 EUR a year.
Accountant – 950 EUR a year or 100 EUR a month.
After tightening the conditions of immigration in Lithuania in 2014, it became more difficult for the company shareholders and members to obtain a permission to live in Lithuania: more investments and time were needed to comply with the new statutory requirements. Since 01 November 2014 the permission to temporarily live in Lithuania may be issued to a company shareholder if his/her capital of the company that belongs to him/her is no less than 28,000 EUR, 14,000 EUR is the foreigner's investment, the value of the foreigner's shares is no less than 1/3 of total value of shares, there are no fewer than 3 citizens of Lithuania or permanent foreign residents of Lithuania working in the company, and before the documents to obtain the permission to live in Lithuania were submitted, the company had been active for no less than 6 months.
The permission to live in Lithuania is given to the director or employee of the representative office or the branch in case the documents that confirm that the person's professional knowledge or high professional qualification is necessary for the business of the branch and the person had worked in the foreign company for no less than 1 last year. In this case the foreigner's family members immigrate together with him/her. The permission to live in the country is issued for the period of working in the company.
While attempting to obtain the permission to temporarily live in Lithuania, as an employee of the representative office or the branch of the foreign company, to the application for the permission to temporarily live in Lithuania the foreigner should also add the following:
- Copy of passport;
- Mediation letter;
- The certificate of the foreign company that confirms that the foreigner had worked in the foreign company for no less than 1 last year and his/her professional knowledge and high professional qualification is necessary for the business of the branch or the representative office set up in Lithuania;
- The document that confirms that the foreigner has enough money to make a living;
- The document regarding a place to live in Lithuania;
- Certificate of good conduct;
- Health insurance.
Preparation terms of the documents regarding the permission to temporarily live in Lithuania: 5-10 business days.
Price of document preparation: 1100 EUR.
Place of issuing documents: A Lithuanian diplomatic mission or a consular office in the foreign country or Migration Services in Lithuania.
Arrival at Lithuania:
In case the documents regarding the permission to live in Lithuania are submitted through the Lithuanian diplomatic mission or the consular office abroad, there will be 1 necessary visit to Lithuania – to formalise the card.
In case the documents regarding the permission to live in Lithuania are submitted through the Migration Services in Lithuania, there will be 2 necessary visits to Lithuania – to submit the documents regarding the permission to live in Lithuania and to formalise the card, after the Migration Department has decided to issue the permission for you to live in Lithuania.
The term for making a decision – 2-4 months.