Self-employed in Lithuania: individual activity, patent, MB and UAB compared

Working for yourself in Lithuania is easy to start and surprisingly easy to get wrong. Easy because you can register online before your first invoice. Wrong because the rules changed with the 2026 tax reform and a large share of guides still describe the earlier ones.

This article compares the options for being self-employed in Lithuania, from a one-person activity to a company. Treat the rates below as a map of the 2026 rules, not as a calculation for your own case.

How do you become self-employed in Lithuania?

For a European, there is freedom of establishment: once your stay is regularised, you can work on your own account. You register an individual activity (individuali veikla) with the tax office (Valstybinė mokesčių inspekcija, VMI), at the latest one working day before you start. The application is online, on the VMI's Mano VMI system, and no fee is stated by the VMI. Sodra issues the individual activity attestation within five working days.

You choose between two forms:

• Activity certificate (individualios veiklos pažyma): you declare your income after the year, minus actual expenses or a 30% flat deduction.
• Patent (verslo liudijimas): a fixed tax set by the municipality and paid in advance, whatever your income, and only for a list of activities. Compare before choosing: if your activity starts slowly, the certificate may cost less.

Some activities also need a sector authorisation. Start with your residence and personal code (Lithuanian personal code).

How is a self-employed person taxed in Lithuania?

Income tax (2026, VMI): up to €42,500 of taxable income, the rate is 20% reduced by a tax credit, which gives 5% effective up to €20,000, then a rate rising from 5% to 20% between €20,000 and €42,500. Beyond €42,500 the main scale applies (20, 25 and 32%). Taxable income is your receipts minus your actual costs, or minus a flat 30% without receipts. Some English pages, including the Migration Information Centre's, still say "5 to 15%": that is the rule before 2026.

Social insurance (VSD) 2026: 12.52% (pension, sickness, maternity), or 15.52% if you add 3% to supplementary pension saving, on 90% of your taxable income, with a base capped at €99,422.45 a year. Health insurance (PSD): 6.98% on the same base, minimum €80.48 a month, paid by the last day of each month, with a yearly adjustment before your annual income tax return (Sodra gives the exact date each year).

Patent: a fixed tax set by each municipality, for income up to €50,000; above that, the excess is taxed like an individual activity. Contributions are 8.72% for pension only, plus PSD at 6.98% (check the base with Sodra).

Exemptions from VSD exist in your first year if this is your first self-employed activity since 2018 (you build no pension rights during that time), if you receive an old-age or invalidity pension, even from another EU country, or if you have reached retirement age. They do not cover PSD.

Torn between a certificate and a patent, or wondering what an MB would change for your situation? Moovy can put your expected income against the rules and prepare the questions for the tax office or an accountant.

When does VAT apply?

The 2026 rates are 21% standard, with reduced rates of 12% and 5%. The 9% rate was abolished in 2026. The registration threshold is €45,000 of annual turnover, assessed on the previous year and the current year. Lithuania grants no tolerance period: once you exceed it, you register. A small company from another EU country can stay unregistered under the threshold if its total EU turnover does not exceed €100,000.

When should you form an MB or a UAB?

• MB (mažoji bendrija, small partnership): only natural persons, up to ten members, members not liable for debts on their personal assets (VMI). Contributions in money or goods, not in work. Ask the Centre of Registers about capital, since no page we read sets a minimum.
• UAB (uždaroji akcinė bendrovė, private limited company): limited liability, minimum capital €1,000.
• IĮ (individual enterprise): possible, but the owner answers with their own assets.

Registration at the Centre of Registers: UAB €14.02 online, €30.83 on paper; MB €17.13; IĮ €13.08 online, €21.12 on paper (2026). Online takes one working day, paper three. The notary on paper costs €85 to €338. You need a registered office, with the owner's qualified electronic signature if it is not yours, and for a UAB an accumulation account to pay in the capital. If any signatory lacks a qualified electronic signature, go through a notary.

Corporate income tax is 17% in 2026, 7% for small businesses up to €300,000 of turnover under conditions, and 0% for newly registered small companies in their first two tax periods, also under conditions (the VMI lists them). Annual financial statements must be filed at the Centre of Registers: a missing, late or wrong filing exposes the manager to a fine of €600 to €1,450.

What mistakes should you avoid?

• Starting before registering with the VMI.
• Relying on a guide from before 2026.
• Forgetting PSD even with no profit.
• Counting on unemployment benefit. There is none for these forms.
• Missing the VAT threshold by tracking only last year's turnover.
• Choosing a patent without comparing.

British citizens need a residence permit before running a business (moving to Lithuania from the UK). If you are a retiree who works on the side, the VSD exemption for pensioners described above may apply to you; for your health cover, see healthcare in Lithuania.

What are the steps to register an individual activity?

1. Get your residence document, personal code and declared address (Lithuanian personal code).
2. Choose certificate or patent.
3. Register with the VMI, online or at an office, at the latest one working day before you start (form REG812).
4. Check whether your activity needs a sector authorisation or a recognised diploma.
5. Let the VMI notify Sodra; then pay VSD and PSD to Sodra with the single payment code 444.
6. Track turnover for VAT, and declare your activity income in the VMI's annual return each year.

What happens to your social rights as self-employed in Lithuania?

Your pension, sickness and maternity rights come from the 12.52% social insurance. Unemployment insurance is not included for an individual activity or a patent, whereas owners of an individual enterprise and members of an MB who pay themselves an income contribute 13.83% including unemployment. That is a reason to keep a cash buffer if you work alone (working in Lithuania).

A foreigner with a temporary residence permit pays PSD in advance and is insured only once the month's contribution is paid.

What differs for Swiss and British citizens?

Swiss citizens have the same freedom of establishment as EU citizens under the free movement agreement, with proof of activity in Lithuania, but the Centre of Registers reserves eIDAS login for EU citizens: use an activated e-resident card or a notary to create a company. British citizens are third-country nationals: they need a temporary residence permit that allows business or self-employment, and they have no eIDAS access either (moving to Lithuania from the UK).

Should you hire an accountant?

No official page we read makes a certified accountant mandatory. For a company, you must file annual statements with the Centre of Registers, and mistakes are fined. For a sole trader with a simple activity, the tax office's online system may be enough. If your activity involves VAT, cross-border clients or a mix of employment and self-employment, an accountant's fee is usually worth it. We do not give a price, because no official source does.

Whatever form you lean towards, have a Lithuanian accountant or tax adviser look at your own figures before you register: the 2026 reform changed many of the numbers, and a short meeting costs less than a wrong choice.