Expanding a Latvian Company Into Lithuania

Lithuania is the largest of the three Baltic markets and the one whose tax model is least like Latvia's, which makes it the expansion that needs the most thought and gets the least. The single market means you can sell there from Riga with no Lithuanian company. This sets out where that stops, and what changes when it does.

Two warnings. This covers a Latvian company selling into, hiring in, or establishing in Lithuania, and is not advice on a specific arrangement. And the Lithuanian figures here carry a weaker guarantee than the Estonian ones in the companion guide, for reasons set out in the last section before the questions. Read that before quoting a number.

Do You Need a Lithuanian Company to Sell in Lithuania?

No. A Latvian company can sell goods and services to Lithuanian customers under the freedom to provide services, invoicing from Riga, with no Lithuanian entity. What changes that is employing someone resident there, holding goods there, or a permanent establishment. Selling, by itself, does not.

The reasoning is identical to Estonia's and the conclusion is the same, so the useful question is not whether to incorporate but what your first Lithuanian obligation will actually be triggered by.

• Services to Lithuanian businesses put the VAT on the customer under the reverse charge, and the sale on your EU sales list. Doing this obliges you to register for Latvian VAT whatever your turnover, which is the VAT guide rather than a Lithuanian matter.
• Sales to Lithuanian consumers run through the One Stop Shop, filed from Latvia at the Lithuanian rate.
• A person working in Lithuania is the usual first real trigger, and has the same three answers it has in Estonia.
• Goods in a Lithuanian warehouse create obligations fastest, and are the case where advice is worth buying early.

When Does Selling Into Lithuania Force You to Register for VAT There?

When nobody else is accounting for the tax. The domestic registration threshold belongs to businesses established in Lithuania, so it is not available to a Latvian company without a Lithuanian establishment, and a foreign business making a taxable supply there registers from the first one rather than at some level of turnover.

This is the single most useful thing in the guide, and it is the opposite of what a turnover threshold implies.

• For ordinary business-to-business services, nothing happens. The Lithuanian customer accounts for the tax and no Lithuanian registration arises for you.
• Where the customer cannot account for it, you register. Supplies to Lithuanian private individuals outside the distance selling regime, and supplies connected with Lithuanian property, are the common cases.
• The threshold figure is deliberately not quoted here. Lithuania's domestic registration threshold is under active revision, the proposals in circulation differ from one another, and the primary sources cannot be read automatically. Printing a number we cannot re-check every month would be worse than sending you to the authority, so check it with the State Tax Inspectorate if you become established there. It is in any case not the threshold that applies to you.

When Does Working in Lithuania Create a Permanent Establishment?

When there is a fixed place of business, or someone habitually concluding contracts for you. Then Lithuanian corporate income tax reaches the profit attributable to it at 17%, charged on profit as it is earned rather than when it is distributed, which is where Lithuania stops resembling Latvia.

That difference is the one that costs money, and it is easy to miss because the two countries look alike in every other respect.

• Latvia and Estonia defer tax until profit leaves the company. Lithuania does not. A Lithuanian establishment or subsidiary pays on its annual taxable profit whether or not anything is distributed.
• So reinvested profit is taxed in Lithuania and untaxed in Latvia. A company that retains everything it makes is in the worst position this comparison offers, and it is precisely the profile of a growing startup.
• The treaty decides the boundary. Latvia and Lithuania have a double taxation convention, and it governs which country may tax what.
• A fixed place, a place of management, or a dependent agent are the usual triggers, as they are everywhere.

The Baltic comparison guide sets out all three regimes from the statutes, and is worth reading before committing to a Lithuanian entity rather than after.

Should You Open a Branch or a Subsidiary in Lithuania?

A subsidiary, on the same reasoning as in Estonia, with one extra wrinkle. A branch is your Latvian company under a Lithuanian registration, so liability reaches the parent. A Lithuanian UAB is separate and needs EUR 1,000 of share capital, which is the one place Lithuania asks for more up front than Estonia does.

• A branch suits an extension you expect to unwind, or a customer who wants a local registration rather than a local company. It does not contain liability and it does not give you something separable to sell later.
• A UAB is the ordinary answer where you will employ people, sign leases, or take local risk. Its capital requirement is real money but modest, and lower than a standard Latvian SIA's.
• The MB is the form Latvia has no equivalent of. The mažoji bendrija, a small partnership, is cheap to run and popular enough that it makes up most Lithuanian company formations, which is why international comparisons of Baltic formation rates disagree with each other so wildly. The Baltic formation report takes that apart. It is rarely the right vehicle for a foreign parent's operating arm, and it is worth knowing it exists when you read a Lithuanian statistic.

How Do You Employ Someone in Lithuania?

The same three ways, and the arithmetic differs. Post an existing employee and they stay in Latvian social security for up to 24 months on an A1. Use an employer of record for a first hire. Or set up a UAB, at which point Lithuanian employment law applies in full and Lithuanian pay levels apply with it.

• Posting suits a defined project with an end date, on the conditions in the employer of record guide, including the rule against posting someone to replace another posted worker.
• An employer of record is the fast route to one person without an entity, and the wrong route to a team.
• Your own UAB brings Lithuanian employment law, which is its own body of rules rather than a variation on Latvia's, and needs local advice rather than an assumption.
• Pay is higher than at home. Lithuanian average gross monthly wages reached EUR 2,628.20 in the second quarter of 2026, above the Latvian average, and Vilnius sits above the national figure. The tech pay guide has the three capitals together.

Which Lithuanian Events Are Worth the Trip?

Startup Fair in Vilnius, for most companies, held each September with a separate investor day before it. The funds in the room invest across all three countries rather than only at home. LOGIN, in October, is larger but broader: an innovation festival rather than a startup conference.

The events calendar carries its dates, its ticket tiers, and the attendance the organisers publish, beside the Latvian and Estonian events. The test is the same as for any conference: something to show, and people you have arranged to meet.

Why Are the Lithuanian Figures Here Less Certain?

Because Lithuania's primary sources cannot be read automatically. The tax authority answers scripted requests with a 404, the company register with a 403, and consolidated statutes load inside a frame whose address carries a session token that fails for anyone else. So Lithuanian numbers here are read by a person and marked as such.

This matters more than it sounds, and we would rather say it than let the page imply a guarantee it does not have.

Every other figure on this site is hashed to the sentence in the source that carries it and re-checked automatically each month, so a changed rate is caught whether or not anybody was paying attention. For Lithuania that is impossible, and the dishonest options were to hash a page that never changes, which would report the number as verified forever while it moved, or to drop the country. The third option is this one: the ledger at the end of the page marks each Lithuanian entry as needing a human, names the edition it was read from, and the review asks a person to re-read it once a quarter rather than pretending to have checked it.

It is the same treatment the Baltic comparison guide gives its Lithuanian cells, and the reason this guide quotes no VAT threshold at all.

When Is Expanding to Lithuania the Wrong Move?

When you are retaining profit. Lithuania taxes profit as it is earned at 17%, while Latvia taxes it only when distributed, so a growing company that reinvests everything moves from paying nothing to paying annually. Expand because the customers are there, which for the largest Baltic market they may well be.

Two further cases where the answer is no, or not yet.

You have not sold there yet. The first two sections exist because a Latvian company can invoice Lithuanian customers today with no Lithuanian registration of any kind. Proving the demand costs nothing; a UAB costs capital, an accountant, and a second set of deadlines.

And you are treating three small countries as one market. They share a currency, a fund base, and a conference circuit, and they do not share a language, a tax model, or a legal system. The Baltics are a region for investors and three separate markets for operators, which is the distinction that decides whether this expansion is worth its overhead.

Frequently Asked Questions

Can a Latvian Company Sell in Lithuania Without a Lithuanian Company?

Yes. The freedom to provide services lets a Latvian company sell to Lithuanian customers with no Lithuanian entity, and for business customers no Lithuanian VAT registration, because the customer accounts for the tax under the reverse charge. Employing someone there or holding goods there changes that.

Does a Latvian Company Have to Register for VAT in Lithuania?

Only where the reverse charge does not cover the supply, and then from the first taxable supply rather than above a threshold. The domestic registration threshold applies to businesses established in Lithuania, not to a Latvian company without a Lithuanian establishment, so the turnover figure people quote is not yours.

Is Lithuanian Corporate Tax Higher Than Latvian?

It is charged differently, which usually matters more than the rate. Lithuania taxes profit as it is earned at 17%; Latvia taxes it only when distributed. A company reinvesting its profit pays annually in Lithuania and nothing in Latvia until it takes money out.

What Is a Mažoji Bendrija?

A Lithuanian small partnership, a cheap and popular form with no Latvian equivalent. It makes up most Lithuanian company formations, which is why Baltic formation comparisons disagree so sharply depending on whether they count it. It is rarely the right vehicle for a foreign parent's operating arm.

How Much Share Capital Does a Lithuanian UAB Need?

EUR 1,000, which is more than an Estonian OÜ, since Estonia removed its minimum in February 2023, and less than a standard Latvian SIA. It is the one part of Lithuanian setup that asks for real money before you start.

Sources

• Pelno mokesčio įstatymas, the Lithuanian Law on Corporate Income Tax, article 5, for the rate. Read by hand; see the section above on why.
• Akcinių bendrovių įstatymas, the Law on Companies, article 2, for the minimum share capital of a UAB. Read by hand.
• Valstybinė mokesčių inspekcija, the State Tax Inspectorate, for VAT registration as it applies to a business established in Lithuania.
• LRT, reporting the State Data Agency's wage figures for the second quarter of 2026.
• Regulation (EU) 883/2004, article 12, for the posting rule and the A1 certificate.
• The Baltic formation report, for how the mažoji bendrija distorts cross-country formation counts.