Publication date 2026-05-20
Private limited liability company (UAB)
A private limited liability company (UAB) is a private legal entity with limited liability. This means that shareholders are not liable with their assets for the unfulfilled obligations of the UAB. The authorized capital of a UAB must be at least 1,000 EUR. A UAB can be established by one or more natural persons and/or legal entities, and the number of shareholders is not limited.
The establishment, management, operation, reorganisation, conversion, division, and liquidation of a Private Limited Liability Company (UAB), the rights and obligations of its shareholders, as well as the establishment and termination of the activities of branches of foreign companies, are governed by the Law on Companies of the Republic of Lithuania.
Advantages:
- In the event of a business failure, the shareholder risks only the assets he has contributed to the UAB, thus protecting his personal assets;
- In order to attract additional funds, UAB may issue new shares, upon the acquisition of which the shareholders pay a certain amount of money;
- Opportunity to leave the business by transferring the shares of UAB to other persons or selling the business;
- UAB tax benefits: if the average number of employees does not exceed 10 people and the income for the tax period does not exceed EUR 300,000 can be applied 5% income tax rate instead of the usual 15%. tariff.
Disadvantages:
- When establishing a UAB, it is obligatory to contribute at least 1 000 EUR to the authorized capital;
- Shareholders can pay out the profit earned by UAB only through dividends (if UAB works profitably) or by receiving a salary, in which case high taxes will have to be paid.