One of the advantages of buying a company (UAB, MB, etc.) in Lithuania is a low profit tax rate.
After purchasing a company (UAB, MB) in Lithuania, you can take advantage of various tax privilege that are applicable to newly established companies.
In the first tax year, companies can apply 0% profit tax rate if the company meets all of the following 5 conditions:
- Annual income does not exceed 300 000 Eur;
- The average number of employees does not exceed 10;
- The controlling shareholder (member)/shareholders (members) together do not control more than 50% of other companies shares (parts) and does not have an individual enterprise;
- Shareholders (members) only natural (physical) persons;
- During 3 successive tax periods, including the first one, the company’s activities are not suspended, the company is not liquidated, reorganized and the company’s shares (parts) are not transferred.
One way to distribute profits is to pay dividends. If dividends are received by natural persons, they are taxed with personal income tax, if legal entities – with profit tax.
Dividends paid by a Lithuanian company to a Lithuanian resident are taxed at an income tax rate of 15%. Dividends paid by a Lithuanian company to another Lithuanian or foreign company are not taxable if the company receiving the dividends holds (or intends to hold) at least 10% of the voting shares in the company paying the dividends for 12 months.