Accounting services in the Republic of Lithuania
Each company registered in Lithuania must have its dedicated accountant hired inside the company or if company does not want to maintain and look after an accountant – accounting services in Lithuania can be outsourced to another company which provides all necessary services to keep business accounting in good order. After company formation the second thing what you have to do is sign service agreement with accounting company.
Each accountant or accounting company has to follow Lithuanian officially approved accounting standards.
The best thing about hiring accounting company is that you will not need to setup a work place for accountant and you will be able to use all accounting services on demand. Let say one month you have a lot of transactions, issued many invoices, did many bank transactions and second month you did nothing because you were working with sales which you did previous month. It means that you will pay much less for accounting services for the second month than you paid for the first month. Its because accounting companies in Lithuania charges their clients for job done basis each month separately.
More business you will do – more expensive accounting services will be. Less business you will do, less expensive accounting services will be.
It helps to optimize company expenses. Instead of hiring a dedicated accountant in your company and paying fixed salary each month, no matter how much work was in a month, it is less expensive to outsource company accountings to specialized accounting company in Lithuania.
You don’t need to have an office, you don’t need to purchase accounting software and other stationery supplies for an accountant and all these savings just because of outsourcing accounting work to another company.
Bookkeeping company in Vilnius city
Our company is located in Lithuanias capital city Vilnius. Here we are providing accounting services in our dedicated office. Once per month you will need to provide us all documents about your previous month business transactions: purchase, sale invoices, bank statement, cash receipts an other related documents with your business that bookkeeper could register everything in bookkeeping software and prepare necessary reports for social security department and tax inspection. It is not mandatory to choose accountant in the city where the company is registered. Your company registration address and accountant can be in different cities it does not make any trouble. In Lithuania some reports have to be submitted on monthly basis, some on quarterly or yearly basis. Income tax and social security tax reports calculated from salaries and Value Added Tax (VAT) reports have to be submitted on monthly basis. Profit tax report and balance sheets have to be paid submitted and paid only once a year.
Our accountants will take care of following things:
- Bookkeeping according to the requirements of the state legislation;
- Representation and communication with State tax, social security department and other government institutions;
- Official annual balance preparation, balance sheet preparation on demand for company directors;
- VAT return document preparation;
- Corporate tax, Social security contribution, personal income tax calculation and report submission to authorities;
- Import, export documentation;
- And many more.
Advantages of outsourscing accounting services to us:
- All reports and statements submitted to authorities always on time;
- Financial reports of the company available on request;
- Latest understanding of current business and taxation law in Lithuania;
- Professional services at a reasonable prices, variable on amount of your company documentation;
- All year uninterrupted accounting;
- No sick leaves or holidays for your company bookkeeping.
Taxes in Lithuania 2018
The Republic of Lithuania has modern taxation system and implements a friendly taxes for local business and foreign investors. A lot has changed in Lithuanias taxation system since 1990. Currently there are seven major taxes which affects each business:
Corporate income tax: 5% – 15%
Each company operating in Lithuania has to pay corporate income tax. Tax is calculated for calendar years and applies for the incomes which are left after deducting all allowable expenses. If expenses exceeds incomes, no corporate tax will be applied.
There are two different rates which applies for different companies: 5% and 15%. The smallest corporate tax rate is applied for small companies where the number of employees does not exceed 10 and incomes per calendar year does not exceed 300’000 Eur. For all other cases 15% tax rate applies.
Values added tax (VAT): 0% – 5% – 9% – 21%
The standard rate of VAT in Lithuania is 21%, there are some exceptions where goods or services can be charged with a reduced VAT rate. Reduced rate of 9% applies for books and thermal energy required for heating premises. 5% rate applies for medicine drugs and in some international trading cases 0% VAT rate can be applied. VAT tax is paid on monthly basis.
Dividend tax: 15%
Dividends in Lithuania are taxes with a flat rate of 15%.
Personal income tax: 15% – 20% – 27%
Salaries paid by companies to natural persons are being taxed with personal income tax. In 2018 personal income tax in Lithuania was a flat rate of 15%. From 2019 income tax will become variable and will be increased. The base rate will become 20% for lower income citizens and 27% rate for higher income citizens. The rate will be calculated accordingly how much citizen earns in Lithuania. Personal income from salaries has to be paid on monthly basis.
Social Security contributions: 40,18%
Salaries paid in Lithuania is taxes with social security tax. It is a flat rate for everyone with some rare exceptions. This tax covers health insurance for workers in Lithuania and they are treated free of charge if taxes are being paid.
VAT license registration for Lithuanian company
By default it is not mandatory to have a VAT license for operating company. VAT license allows company to add value added tax to their invoices and return value added taxes for purchases made from other companies which have included VAT in their invoices.
VAT license registration is mandatory if one or more limitations are exceeded:
- Income for the last previous 12 months exceeded 45’000 Eur;
- If shareholders owns more than one company in Lithuania and total incomes for all companies for the previous 12 months exceeds 45’000 Eur;
- There are some other delicate limitations for registering VAT license, but implies very rarely.
Of course you can apply for VAT license whenever you need, our accountants in Lithuania can apply your company for license registration with Lithuanian tax inspection. To get a license company has to provide employment contract of director, accounting service contract, premises lease agreement, short business description, any available collaboration or service contracts with partners.