From 2026, the taxation of many business forms is changing, a progressive personal income tax rate is being introduced, so it is important to assess which business form is more financially beneficial.
Only natural persons can be founders of MB. Both natural persons and legal persons can be founders of UAB. The number of founders (members) of MB is limited. The maximum number is 10.
MB does not have an authorized capital. MB members themselves set the MB membership fee (from 1 EUR). The minimum authorized capital of UAB is 1000 EUR.
Until 2025, the salary of the MB manager is taxed at the personal income tax rate of 15 percent. VSD and PSD contributions are not paid. From 2026, progressive personal income tax rates apply – 15 percent, 20 percent, 25 percent and 32 percent, depending on the amount of annual income (according to the limits of 36 and 60 average salary).
Until 2025, the salary of the head of a UAB is taxed at a personal income tax rate of 20 percent, PSD – 6.98 percent, employee Social Security contributions – 19.5 percent, employer Social Security contributions 1.77 percent. From 2026, a progressive personal income tax is applied to employee income (according to the limits of 12–60 average salary), however, the employer, as before, calculates 20 percent personal income tax – the employee will additionally declare it himself.
VAT tax, corporate income tax, dividend rates for both MB and UAB are the same.
Standard VAT rate – 21 percent.
Corporate income tax – 16 percent (a preferential rate of 6 percent may be applied if: average number of employees ≤10 people; annual income does not exceed 300,000 EUR). From 2026, a 17 percent and a preferential 7 percent corporate income tax rate are applied.
Dividends are taxed at a 15 percent corporate income tax rate.