You will face certain bureaucratic requirements as soon as you start your business. More information in the FAQ question “How do you set up or register a business?”.
Some business areas are subject to licences and certain restrictions. Read more under the FAQ “What are the legal requirements?”.
Employees must be hired under a contract. Employee dismissal is strictly regulated by laws of the Republic of Lithuania.
TAX PAYMENT PROCEDURE
Main business taxes and amounts thereof are listed under the FAQ question “What are general business taxes to pay?”.
State social insurance (VSD) and compulsory health insurance contributions (PSD) are paid to the “Sodra” account, and, depending on the type of business you are engaged in (individual activity, individual enterprise, small partnership, private limited liability), these contributions shall be made:
- Until the last day of the current month or
- Until the 15th day of the subsequent month or
- Once a year, no later than within 10 days after a deadline for submitting an annual income declaration to the STI (deadline for provision of annual income declarations usually is May 1st).
IMPORTANT. Foreigners, having temporary residence permits, should pay compulsory social insurance contributions in advance (for example, pay entry for September until 31st of August), as these persons are considered covered by compulsory health insurance only after making contributions for the current month.
Find more information on the website of “Sodra”: https://www.sodra.lt/en/benefits/information-for-insurers/i-want-to-pay-my-contributions
Personal income tax (GPM) is paid to the state budget.
If you are self-employed and a permanent resident of Lithuania, you must pay your personal income tax contributions until May 1st for the previous year (after submitting an annual income declaration for the previous taxable period). If you are not a permanent resident, you must report your income not later than within 25 days from the day of its receipt (by filing Form FR0459) and must pay income tax to the budget from the derived income.
If you’re a business owner and have hired employees, you must pay personal income taxes for your employees. Income tax, withheld from the income paid out before the 15th day, shall be paid to the budget before the 15th day of the same month; while the income tax withheld from the income paid out after the 15th day of the relevant month of the tax period must be paid to the budget before the last day of the same month.
More information about personal income tax contributions and declaration procedure:
IMPORTANT. Self-employed individuals or individuals engaged other businesses must declare their income and assets annually.
All business transactions must be confirmed by relevant contracts.
Employees must be hired under a contract. Types of employment contracts and terms thereof are defined by the Article 66, para. 6 of the Labour Code of the Republic of Lithuania.
You shall notify the territorial office of the State Social Insurance Fund Board about the employee being hired at least one working day before the commencement of work.
Work and rest time
Work and rest time shall be planned in accordance with chapter VII of the Labour Code of the Republic of Lithuania.
Working time prescribed by the Labour Code is 40 hours per week. Maximum working time including overtime cannot exceed 48 hours per week (7 days).
Working time must be recorded every day in the working time accounting documents approved by the Government.
Procedure for granting of annual leave (incl. unused leave) is defined in the articles 125-138 of the Labour Code of the Republic of Lithuania.
Remuneration for work
The remuneration of employees who work in companies under employment contracts is regulated in accordance with Chapter IX of the Labour Code of the Republic of Lithuania.
It is important to remember that for overtime work an amount of at least 1.5 (up to 2.5) times the employee’s remuneration must be paid. For more information, see Article 144 of the Labour Code of the Republic of Lithuania.
Wage shall be paid at least twice a month or, at an employee’s request in writing — once a month. All the employees must be given pay slips by the employer. Pay slips shall indicate gross pay, take-home pay and deductions.
Employee dismissal is strictly regulated by laws of the Republic of Lithuania. In most of the cases, employees must be notified about their dismissal in writing. It is also important to respect the restrictions that, in certain cases, prohibit the dismissal of an employee.
In most of the cases, the dismissed employee shall be paid a severance pay and a compensation for unused leave.
Chapter V of the Labour Code of the Republic of Lithuania regulates the procedure for notification of employment contract termination and dismissal.
“Sodra” must be notified about the dismissal by completing an online form on “Sodra’s” platform for the insurers: https://draudejai.sodra.lt/sodra-login/index.
Rules of Procedure
Rules of procedure defines work procedures in the workplace. This is not mandatory, but helpful for resolving conflicts arising from work discipline or working time. Employee must only follow the Rules for Procedure if he/she signs that he/she is familiar with these rules.
Duties of employees may also be determined by the staff regulations. Having staff regulations for individual positions of employees is recommended.
See and download examples of staff regulations here.