Starting a Consulting Company in Lithuania: Taxes, Setup and MB vs UAB

Lithuania can be an attractive location for consultants who want an EU-based company with limited liability, competitive corporate tax rates and largely digital administration. It is suitable for management consultants, IT consultants, marketing specialists, recruitment advisers, engineers, business strategists and other professionals selling expertise to clients in Lithuania or abroad.

The two legal forms most commonly considered by small and medium-sized consulting businesses are the small partnership (MB) and the private limited liability company (UAB). Both protect the owners' personal assets in normal circumstances, but they differ in ownership, management, capital and options for future growth.

This guide explains how to start a consulting company in Lithuania, how the main taxes work in 2026 and whether an MB or UAB is the better choice.

Why start a consulting company in Lithuania?

Lithuania offers several practical advantages for a consulting business:

• Access to the EU market. A Lithuanian company is an EU legal entity and can contract with customers throughout the European Union.

• Competitive corporate taxation. Eligible new small companies may pay 0% corporate income tax during their first two tax periods. A 7% rate can apply to qualifying small companies, while the standard rate is 17%.

• Tax is charged on profit, not total turnover. Properly documented expenses incurred to earn income may reduce taxable profit.

• Digital administration. Company registration, tax declarations and many filings can be completed electronically.

• Foreign founders are welcome. Both EU and non-EU citizens can establish companies in Lithuania. The exact registration route depends on the founder's electronic identification and available documents.

• No general licence for ordinary consultancy. Management, marketing, IT and general business consulting normally do not require a special sector licence. Regulated services—including certain investment, financial, audit or legal activities—may require authorisation or professional qualifications.

For a knowledge-based business with limited equipment and inventory, Lithuania can therefore offer a relatively lean operating structure. However, the company must still keep proper accounts, file reports and follow Lithuanian tax rules.

MB vs UAB: which structure is better for consultants?

An MB and a UAB are both limited-liability legal entities. The correct choice depends less on the word “consulting” and more on who will own the company, how the owner will be paid and how far the business is expected to grow.

When an MB is usually the better choice

An MB is often suitable when one person or a small group of individuals will provide the consulting services themselves. It's minimum share-capital starts at 1 EUR and an MB offers more flexibility in internal management.

It can be a practical choice when:

• the business will have one or only a few individual owners;

• no legal entity needs to become an owner;

• external investment is not expected soon;

• the founders want to start without contributing €1,000 in share capital;

• the business will remain relatively small and owner-managed.

An MB is not automatically simpler in every tax situation. Payments to members can be treated differently depending on whether they are profit distributions, payments for management or services, or withdrawals for personal needs. Each route can create different personal income tax and social insurance consequences.

When a UAB is usually the better choice

A UAB is Lithuania's standard private limited company. It is normally the stronger option for a consultancy that wants a conventional corporate structure, expects to employ a larger team, may introduce investors or will be owned by another company.

A UAB is often preferable when:

• a corporate shareholder will own all or part of the business;

• the company wants a structure familiar to international customers and investors;

• ownership may later be transferred through the sale of shares;

• the consultancy plans to hire many employees and scale;

• the founders want clearer separation between ownership and daily management.

The minimum share capital is €1,000. This money belongs to the company after registration and may normally be used for legitimate business expenses; it is not simply a government fee.

Taxes for a consulting company in Lithuania in 2026

The corporate income tax rules generally apply to both MBs and UABs. Choosing an MB instead of a UAB does not by itself create a lower corporate tax rate.

0% corporate income tax for eligible new companies

From 2026, a newly registered company may qualify for a 0% corporate income tax rate during its first and second tax periods.

The relief is not automatic. Among other statutory conditions:

• the company's revenue must not exceed €300,000 in the relevant tax period;

• the company's participants must be natural persons;

• the related-company rules must not disqualify the business; and

• during three consecutive tax periods, including the first two, the company must not be suspended, liquidated or reorganised, and its shares or membership rights must not be transferred to new participants.

Because the ownership condition is important, founders expecting to sell shares or introduce a new investor shortly after incorporation should check the consequences before relying on the 0% rate.

7% corporate income tax for qualifying small companies

A 7% corporate income tax rate may apply when the company's annual revenue does not exceed €300,000 and the related-entity restrictions are not triggered.

From 2026, the previous employee-number condition no longer applies to this small-company rate. Nevertheless, revenue of certain related companies may need to be combined when assessing eligibility. A founder who controls several businesses should therefore obtain an individual tax assessment.

Standard 17% corporate income tax

If the company does not qualify for the 0% or 7% rate, the standard Lithuanian corporate income tax rate is 17% for the 2026 and later tax periods.

Corporate tax is calculated on taxable profit

Corporate income tax is generally charged on taxable profit rather than gross sales. In simple terms:

Taxable profit = taxable income − allowable business expenses

For a consulting company, deductible expenses may include accounting services, business software, professional insurance, advertising, subcontractors, office or coworking costs, computers, telecommunications and qualifying business travel. Every expense must be connected to the company's activity, correctly documented and permitted under Lithuanian tax rules.

For example, assume a consulting company earns €100,000 and has €40,000 of allowable expenses. Its taxable profit would be €60,000. If the 7% rate applies, corporate income tax would be €4,200, leaving €55,800 after corporate tax.

If the full €55,800 were then distributed as dividends to a Lithuanian-resident individual, a 15% personal income tax on dividends would generally equal €8,370. The exact result may differ for a non-resident owner or where a tax treaty applies.

VAT for consulting services

The standard Lithuanian VAT rate is 21%. Mandatory VAT registration can arise when consideration from taxable economic activity carried out in Lithuania exceeds €45,000 during the current or previous calendar year.

International consulting requires extra attention. When services are supplied to a VAT-registered business in another EU country, the reverse-charge mechanism will often apply, meaning Lithuanian VAT is not added to the invoice and the customer accounts for VAT in its own country. The supplier must verify the customer's VAT number and meet the relevant invoicing and reporting requirements.

VAT registration or reporting obligations may also arise below the €45,000 domestic threshold—for example, because of certain cross-border services or purchases from foreign suppliers. A consultant working internationally should review VAT before issuing the first invoices, rather than waiting until the turnover threshold is reached.

Is taxation in Lithuania easy to manage?

Lithuania's system is highly digital. Tax returns are generally submitted through the State Tax Inspectorate's electronic systems, while annual financial statements are filed with the Centre of Registers. This reduces paperwork and allows many obligations to be handled remotely.

However, “digital” does not mean that bookkeeping is optional. Both an MB and a UAB must maintain accounts, retain supporting documents and submit the required tax and financial reports. A local accountant is especially valuable when the consultancy has foreign clients, employees, related companies or several methods of paying the owner.

Information updated in August 2026. Tax treatment depends on the company's ownership, related entities, transactions and the owner's tax residence. This article is general information and should not replace individual legal or tax advice.

Official sources

• State Tax Inspectorate: corporate income tax rates and conditions

• Ministry of Finance: corporate income tax in Lithuania

• State Tax Inspectorate: calculation of the €45,000 VAT threshold

• State Tax Inspectorate: taxation of dividends

• Innovation Agency Lithuania: small partnership (MB)

• Innovation Agency Lithuania: private limited company (UAB)

• Centre of Registers: electronic and foreign-user services

• Bank of Lithuania: authorisation of financial adviser companies