A freelancer in Lithuania has four legal shapes, and for most the choice is settled by income rather than preference. Individuali veikla — self-employment registered with VMI — taxes a developer, designer or consultant lightly while annual taxable income stays within €20,000, because an income-tax credit brings the 20% rate down to 5%, on top of Sodra at 19.5% on 90% of that income. A verslo liudijimas replaces income tax with a fixed municipal fee, but its activity list does not reach most freelance work and it stops once companies pay you more than €4,500 a year. A mažoji bendrija or a UAB pays corporate tax at 7% or 17% and 15% on dividends, carries an accountant from €70 a month, and starts to make sense where the individual-activity credit has run out — €42,500 of taxable income, roughly €60,714 of invoicing — or earlier where liability or a client's procurement rules demand a company.
Table of Contents
The four structures a freelancer can use
Two of the four are you, trading as a person; two are a company you own. Individuali veikla pagal pažymą is the registration of an activity with VMI, free, done online, taxed on the person's own return. Individuali veikla su verslo liudijimu — the business certificate — is the same person paying a fixed sum set by the municipality instead of income tax, on a closed list of activities. A mažoji bendrija (MB) is a small partnership with no minimum capital whose members must be natural persons. A UAB is a private limited company with €1,000 of share capital and a director under an employment contract. Both companies give limited liability, both file annual accounts, and both need books kept.
What separates them is not the rate on any one line but the whole stack: how much of the income is taxed at all, whether Sodra is charged on it, what the structure costs to run, and what it stops you doing. The sections below take each in turn, and the comparison puts them side by side at €20,000, €40,000 and €80,000 of gross income. Every rate is the 2026 rate; the corporate rates changed on 1 January 2026 and the business-certificate limit with them.
Individuali veikla: the default, and why
Registering individuali veikla costs nothing and takes a form in Mano VMI. The tax then runs in three steps, and the self-employment page walks through each with worked examples; the shape is this. First, expenses come off: either the actual documented ones or a flat 30% of income with no receipts, which is what most freelancers with a laptop and a desk choose. Second, Sodra: 12.52% state social insurance (15.52% with the second-pillar pension) and 6.98% health insurance, charged on 90% of taxable income, so 17.55% of taxable income in effect. Third, income tax at 20%, reduced by the credit.
The credit is the reason individuali veikla is the default. While annual taxable income — after the deduction — stays within €20,000, the credit is 15% of it, so the 20% rate nets to 5%. Between €20,000 and €42,500 the credit shrinks steadily with income until it is gone; the formula that does the shrinking is GPMĮ Article 18² and is set out on the self-employment page. Above €42,500 there is no credit and individual-activity income goes onto the same progressive scale as a salary: 20% to €83,237, 25% to €138,729, 32% above. On the flat deduction those two taxable thresholds sit at about €28,571 and €60,714 of gross invoicing.
Three Sodra rules that change the total
The VSD part is capped at 43 average wages a year — €99,422.45 in 2026, a maximum of €12,447.69 of VSD — which matters only well above the credit ceiling. The PSD part has a floor: €80.48 a month, 6.98% of the minimum wage, paid monthly by the last day of the month unless you are insured through a job, a benefit or the state, and settled against the real figure by 4 May 2026. And a first-time self-employed person — first activity since 2018, or ten years since the last — pays no VSD at all in the first year. Sodra states all three on its individuali veikla page.
What individuali veikla does not give you is limited liability: a client who sues, sues you. It also does not give a large client a supplier that looks like a company, and some procurement systems will not take a natural person's invoice. Those two things, not tax, are what usually push a freelancer with income still inside the credit into forming an MB.
For a foreigner, the registration itself is open to an EU citizen freely and to a non-EU citizen only if the residence permit allows self-employment — an employment-based permit generally does not. The self-employment page sets out which permits do.
Verslo liudijimas: the fixed-fee certificate
A business certificate replaces income tax on the activity with a fixed amount set by each municipality, bought for a period from VMI, plus Sodra charged not on income but on the minimum wage: 8.72% VSD and 6.98% PSD of €1,153, which is €181.02 a month, €2,172.25 a year, whatever you earn. VMI publishes the municipal amounts for every activity and municipality on its own site, and they vary enough between Vilnius and a rural district that the table, not any single figure, is the thing to read.
Three rules from VMI's notice on the 2026 certificates decide whether it is available to you at all. The activity has to be on the classifier — the 2026 list carries translation (code 056), photography except photojournalism (029), computer and electronic equipment repair (055) and professional training (103), and does not carry software development, IT consulting, graphic or web design, marketing or accounting, which is most of what a foreign freelancer sells. Services may be sold to companies only where the company's own activity does not overlap the certificate, and income from companies may not exceed €4,500 a year — so a translator invoicing agencies is outside it almost immediately. And from 1 January 2026 the part of certificate income above €50,000 a year is taxed as individual-activity income under a certificate of registration, which is to say as individuali veikla.
| Verslo liudijimas | Individuali veikla pagal pažymą | |
|---|---|---|
| Income tax | Fixed amount set by the municipality, per period | 20% less the credit; 5% effective up to €20,000 taxable |
| Sodra | 8.72% + 6.98% of the minimum wage — €181.02 a month | 12.52% + 6.98% of 90% of taxable income |
| Expenses | Irrelevant — the fee is fixed | Flat 30% or actual |
| Selling to companies | Only non-overlapping activities, and €4,500 a year at most | Unlimited |
| Activities | The closed classifier list | Any lawful activity with an EVRK code |
| Ceiling | €50,000 a year, then taxed as individuali veikla | None — the credit runs out, the activity does not |
The certificate suits a person selling a listed service to households in a cheap municipality: a tutor, a photographer at weddings, a repairer. It does not suit a freelancer whose clients are companies, and it is not a route into the tax comparison below for that reason.
MB and UAB: what a company changes
A company separates the money from you. Income arrives in the company, the company pays its costs — including the accountant it now needs, from €70 a month for an MB or €130 for a UAB on the published lists — and what is left is profit, taxed at 7% for a small company whose income stays within €300,000, 17% otherwise, and 0% for a qualifying new company's first 2 tax periods, provided all its shareholders are natural persons and there is no restructuring for 3 periods. VMI's 2026 summary records that the employee-count condition on the small-company rate was dropped, so a one-person company qualifies on income alone. Profit that reaches you as a dividend is then taxed at 15%, with no Sodra on it.
That last clause is the point and the catch. Dividends carry no social insurance, so a founder living on dividends alone has no PSD unless it comes from somewhere else — a job, a spouse's insurance, or the self-paid €80.48 a month — and is building no pension record. The two structures solve that differently:
| Getting money out | MB | UAB |
|---|---|---|
| Dividends | 15% GPM after corporate tax, no Sodra | 15% GPM after corporate tax, no Sodra |
| Withdrawals for personal needs | Income tax on the employment-income scale, 20% and up; Sodra at 13.83% VSD plus 6.98% PSD on 50% of the sum to 30 June 2026 and on 90% from 1 July 2026 | Not available — a UAB pays its director a salary |
| Pay for managing the company | A member's management pay under a civil contract: 15% GPM up to 12 average wages (€27,745.80 in 2026), then the progressive scale | Salary under the employment contract the Law on Companies requires — the salary calculator gives the net |
| Sodra ceiling | 43 average wages, €99,422.45; a maximum €13,750.12 of VSD | The employee ceiling applies to salary |
| Registration fee | €17.13 | €14.02 electronically, plus €1,000 of capital |
| Annual accounts approved within | 3 months | 4 months |
The MB's middle row is what makes it the freelancer's company. A member may take money out "for personal needs" during the year without a salary and without a dividend; the sum is taxed on the employment-income scale at 20% and carries the member's own Sodra at 20.81% — but only on half of it until 30 June 2026 and on 90% of it from 1 July 2026, which is a change worth knowing the date of. From 2026 a member's pay for running the MB under a civil contract is taxed at 15% while it and other non-employment income stay within 12 average wages. A UAB has neither option: its director works under an employment contract, and the salary carries an employee's 19.5% Sodra and the employer's 1.77% on top.
What the company costs to set up is on the company formation cost page: €17.13 to the Register for an MB, €14.02 for a UAB filed electronically, or €159 to €189 through an agent with the state fee inside.
The numbers at three income levels
Three gross incomes, four ways of taking them, every figure arithmetic on the rates named above. Individuali veikla uses the flat 30% deduction and Sodra on 90% of taxable income. The company column takes the whole gross as profit, pays corporate tax at the small-company rate and pays the rest out as a dividend — no salary, no Sodra, and therefore no health insurance or pension record, which the row underneath prices. The employee column is the tax an employer would deduct from the same gross, from the salary calculator, for scale.
| Gross income | Individuali veikla, flat 30% | Company: 7% tax, then 15% on dividends | New company: 0% tax, then 15% | Employee on the same gross |
|---|---|---|---|---|
| €20,000 | €3,157.00 — Sodra €2,457.00 + GPM €700.00, full credit | €4,190.00 | €3,000.00 | €6,711.27 |
| €40,000 | Sodra €4,914.00; GPM inside the credit taper — the self-employment page carries the formula | €8,380.00 | €6,000.00 | €15,800.00 |
| €80,000 | €21,028.00 — Sodra €9,828.00 + GPM €11,200.00, no credit | €16,760.00 | €12,000.00 | €31,600.00 |
Read the first row and the last. At €20,000, individuali veikla costs €3,157.00 and buys health insurance and a pension record; the company costs €4,190.00, buys neither, and has an accountant to pay first. At €80,000 the credit is gone, individuali veikla is €21,028.00, and the company at €16,760.00 is cheaper by more than a year of accounting — before the founder has paid a euro of PSD. The middle row is where the answer changes: taxable income of €28,000.00 sits inside the taper, which is worked through on the self-employment page.
The company column is a ceiling on the saving, not a budget
Nobody lives on dividends alone at €20,000. Add the self-paid PSD of €80.48 a month — €965.76 a year — and the cheapest published accounting of €70 a month, and the company at €20,000 costs €5,995.76 against individuali veikla’s €3,157.00, with no pension record. The 0% column needs a company that is genuinely new, owned only by natural persons and left alone for 3 periods.
The verslo liudijimas is not in the table because its tax is a figure each municipality sets and VMI tabulates; its Sodra is €2,172.25 a year at any income, and its €4,500 limit on income from companies takes most freelancers out of it before the arithmetic starts. An MB member drawing the money out for personal needs rather than as a dividend pays 20% GPM and, from 1 July 2026, Sodra of 20.81% on 90% of the sum — a combination that sits above individuali veikla inside the credit and below it outside, and that buys the insurance the dividend route does not.
The VAT threshold, whichever you choose
VAT does not care which of the four you picked. Once taxable supplies in Lithuania exceed €45,000 in a calendar year — counted over the calendar year since 1 May 2025, not over a rolling twelve months — registration is compulsory, the standard rate is 21%, and a return is due for every period after. VMI's own page on how the €45,000 is counted excludes income from activity outside the scope of VAT, sales of fixed assets and advances received, and includes the current and the previous calendar year.
For a freelancer selling services to businesses in other EU countries the reverse charge usually applies, so the Lithuanian invoice carries no VAT and the client accounts for it; the sales still count towards the threshold test in the way the VAT page describes, and that page also covers the small business scheme in force since 1 May 2025, which lets a small trader stay exempt up to €45,000 at home and €100,000 across the EU. A company crossing the threshold adds VAT returns to the accountant's monthly work and the fee rises with them; a self-employed person crossing it usually acquires an accountant for the first time. Either way, €45,000 is the income at which "who does the books" stops being optional.
When to switch, and who does the books
The switch is made for one of four reasons, and only the first is about tax. Taxable income is approaching €42,500 — about €60,714 of invoicing — and will stay there. A client will only contract with a legal person, or wants limited liability. The work needs a second person on a payroll. Or the freelancer wants to keep profit in the business at 7% rather than draw it all and pay Sodra on it. None of the four requires closing the individual activity the day the company is registered; the two coexist, and what moves is which entity invoices.
Who does the books decides the running cost. Individuali veikla on the flat deduction needs an income record and one annual return; a company needs monthly bookkeeping and annual accounts filed with the Register. The three providers below are the three that publish an accounting price alongside a formation price on their own site.
Nothing on this page is paid placement and no provider has paid to appear or for its position. The three providers are the three that publish a formation price, a registered-address price and a monthly accounting price on their own site, ordered by their published accounting price, lowest first. Some outgoing links may earn a commission; none of the three does today. Every link goes to the provider's own price page, which is where the figures on this page were read.
Mažojibendrija.lt
An MB specialist, cheapest books
Key highlights
Key features
- Prices with VAT, state fee inside
- Formation, address and liquidation listed
- Consultation priced hourly
Account details
- Accounting
- from €70/month
- MB online
- €159
- Address/year
- €59
- VAT registration
- €79
Summary
- Prices with VAT, state fee inside
- Formation, address and liquidation listed
- Consultation priced hourly
- MB only, no UAB
- Accounting 'from', tiers on request
- No individuali veikla price
Eureka.lt
UAB and MB books on one price
Key highlights
Key features
- The only UAB and accounting pair
- Plans by document volume
- Files the same day
Account details
- Accounting
- from €130/month
- New company
- €80/month
- UAB formation
- €179
- MB formation
- €159
Summary
- The only UAB and accounting pair
- Plans by document volume
- Files the same day
- The highest entry price here
- Accounting VAT status unclear
- No foreign-founder price
Apskaita.lt
An accounting firm, prices with VAT
Key highlights
Key features
- Formation prices carry VAT
- Two to three working days online
- Address €59 a year with VAT
Account details
- MB formation
- €159 with VAT
- UAB formation
- €189 with VAT
- VAT registration
- €79
- Foreign founder
- €369
Summary
- Formation prices carry VAT
- Two to three working days online
- Address €59 a year with VAT
- No monthly accounting price published
- State fee inclusion unclear
- Apostilled power of attorney needed
A few things the cards cannot hold. Mažojibendrija.lt quotes two to three working days for the online MB, and it is built around the MB because that is the structure most freelancers here end up in. Eureka.lt's €179 UAB price has the state fee and the JADIS and JANGIS filings inside it, its €80 rate covers a new company's first three months before the €130 standard rate begins, and its €19.99 registered address is the cheapest published on this site. Apskaita.lt's €369 foreign-founder package includes a year's registered address, and its separate €79 VAT registration is the line that matters once turnover approaches €45,000. All three are accounting practices first, so the formation client is a bookkeeping client from day one.
Common mistakes
The first is buying a verslo liudijimas for work that is not on the list, or for clients that are companies. The classifier does not carry software, design, consulting or marketing, and income from companies is capped at €4,500 a year; VMI's notice taxes what falls outside as individuali veikla income.
The second is missing the monthly PSD. The €80.48 is due by the last day of each month from a self-employed person not insured elsewhere, whatever the year's income turns out to be, and an unpaid month is still owed at the annual settlement.
The third is crossing €45,000 without noticing. The threshold is a calendar-year count, the obligation arises on the day it is crossed, and a freelancer with EU business clients under the reverse charge can be over it while never having charged a cent of VAT.
Why You Can Trust This Guide
Frequently Asked Questions
Should a freelancer in Lithuania register individuali veikla or form a company?
Individuali veikla, until one of four things happens: taxable income after the 30% deduction approaches €42,500, where the income-tax credit has run out; a client insists on a legal person; the work needs an employee; or limited liability matters. Below the credit ceiling individuali veikla is taxed at 5% income tax plus Sodra on 90% of income, and needs no accountant.
How much tax does individuali veikla pay at €20,000 a year?
On the flat 30% deduction, taxable income is €14,000.00. Sodra is 12.52% plus 6.98% on 90% of that, €2,457.00; income tax at 20% less the 15% credit is €700.00. Total €3,157.00, and it includes health insurance. The self-paid monthly PSD of €80.48 is part of that Sodra figure, not on top of it.
And at €80,000?
Taxable income is €56,000.00, above the €42,500 ceiling, so there is no credit. Sodra is €9,828.00, income tax at 20% is €11,200.00, total €21,028.00. A company paying 7% corporate tax and 15% on the dividend would pay €16,760.00 on the same gross, before its accountant and before the founder buys any health insurance.
What happens between €20,000 and €42,500 of taxable income?
The credit shrinks with income until it reaches zero at €42,500, so the effective income-tax rate climbs from 5% towards 20%. The formula is GPMĮ Article 18² and is set out with worked figures on the self-employment page.
Can a freelancer use a verslo liudijimas?
Only for an activity on VMI's classifier, which for 2026 includes translation, photography, computer repair and training but not software development, IT consulting, design, marketing or accounting; only where income from companies stays within €4,500 a year; and only up to €50,000 a year, above which the excess is taxed as individuali veikla. Sodra on a certificate is €181.02 a month on the minimum wage regardless of income.
How is money taken out of an MB taxed?
Three ways. Dividends: 15% after corporate tax, no Sodra. Withdrawals for personal needs: income tax at 20% and up as employment-type income, plus the member's Sodra of 13.83% VSD and 6.98% PSD on 50% of the sum until 30 June 2026 and on 90% from 1 July 2026. Management pay under a civil contract: 15% while it and other non-employment income stay within 12 average wages, €27,745.80 in 2026.
Does a UAB director have to take a salary?
The Law on Companies has the director work under an employment contract, and a salary under it carries the employee's 19.5% Sodra, the employer's 1.77%, and income tax on the progressive scale — the salary calculator gives the net. That is the structural reason a one-person UAB is heavier than an MB, whose member can draw for personal needs instead.
What corporate tax does a small company pay in 2026?
7% where income stays within €300,000 and the related-party tests are passed, with the employee-count condition removed from 1 January 2026; 17% otherwise; and 0% for a qualifying new company's first 2 tax periods if all shareholders are natural persons and there is no cessation, reorganisation or share transfer across 3 consecutive periods. Dividends then carry 15%.
When must a freelancer register for VAT?
When taxable supplies in Lithuania exceed €45,000 in a calendar year, counted on the calendar-year basis in force since 1 May 2025. The rule is the same for individuali veikla, a certificate, an MB and a UAB. Services to EU business clients under the reverse charge carry no Lithuanian VAT but are part of the count the VAT page describes.
Can I keep individuali veikla and have a company at the same time?
Yes. Registering an MB or a UAB does not close the individual activity, and many freelancers move clients across as contracts renew. What has to be clean is which entity invoices which client and where the money lands: the company's income goes to the company's account and the person's to the person's, and Sodra for each is worked out on its own base.
Price the company before you form it
A company changes the tax only once the individual-activity credit has run out, at €42,500 of taxable income. What it costs to register and to run — €17.13 to the Register for an MB, €14.02 for a UAB, an address from €19.99 and an accountant from €70 a month — is on the formation cost page.