Creating and managing payroll in Lithuania
Since leaving joining the European Union in the early 20th Century, Lithuania’s economy has grown dramatically and is now one of the strongest in the region. As such, Lithuania has become a popular country for foreign businesses to expand, and there are many opportunities for any organization willing to make the transition.
An important step in setting up a business in Lithuania is likely to be hiring staff and setting up a payroll. However, with the country’s unique set of employment laws and administrative procedures, hiring and establishing a payroll in Lithuania can be a difficult process. It can take longer than expected to get up and running, leading to a potential loss of income.
Horizons offers a flexible range of payroll outsourcing services for organizations expanding into Lithuania. Our experts can handle all the legal compliance work, taxes, and payroll-related administration, even acting as your employer of record in the country, making the whole expansion process more efficient and helping you get up and running faster.
If you have an entity
If your organization already has a registered entity in the country, then we can provide everything you need to build and run a Lithuania payroll. We will help you navigate the complex laws, establish your payroll, and handle any ongoing administration.
This service is an excellent choice for large-scale organizations and those looking to build a long-term presence in Lithuania.
If you don’t have an entity
If you haven’t established an entity in Lithuania, our dedicated Lithuanian subsidiary can work as your employees’ official employer of record. Our team will handle all of your payroll, contracts, associated legal work, and associated administration, helping you focus solely on a successful expansion.
This service is ideal for any organization aiming for full flexibility and low risk while expanding into Lithuania. You will remain autonomous and have full control over your Lithuanian workforce while not having to deal with any of the complex administration and compliance work.
How Horizons can help you expand into Lithuania
Lithuania payroll guide
What are the rules for payroll tax in Lithuania?
Employees in Lithuania generally need to pay a health insurance contribution of 6% of salary, and a social insurance contribution of 3%.
Employers are required to pay 27.98% of salaries to social insurance, as well as a health insurance contribution of 3% and a State Guarantee contribution of 0.2%.
Income tax in Lithuania is generally set at 15% or 20%, depending on income level.
Corporate tax in Lithuania is 15% for most companies.
Rules for contracts and terminations
Workers in Lithuania can terminate an employment contract with 14 days of written notice. Employers must provide two months of written notice. Employees terminated when not at fault cause are generally entitled to a severance payment of between one and six months of pay, depending on their length of service.
Probation periods in Lithuania can last for a maximum of three months, and the notice period is three days during this time.
How to establish a Lithuania payroll
There are a number of quite complex procedures to follow when setting up your own payroll in Lithuania. You may need to establish a Lithuanian entity, open a Lithuanian bank account, register with various authorities, and follow Lithuania’s unique set of employment laws.
Alternatively, you can outsource the setup and management of your payroll to Horizons. We will ensure that your expansion into Lithuania is as simple as possible, helping you get started in the county faster and more efficiently. Additionally, we can offer our employer of record service, so even organizations without an in-country can benefit from our outsourcing services.