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Mercans offers complete payroll, PEO and HR services in Lithuania

Lithuania offers an incredible business and investment climate that is supported by skilled talent, a streamlined business environment and strong infrastructure. Ranked 5th globally for digital skills availability and 1st in the EU for real GDP per capita growth 2000 - 2020, Lithuania’s e-infrastructure is world-class. It is a regional leader for bandwidth and fiber-optic infrastructure.


Doing Business in Lithuania

There are numerous business opportunities across tech (Fintech, cybersecurity, software engineering and game development), manufacturing (automotive, industrial machinery), business services and life sciences. Its capital is ranked #1 globally in Tech Startups FDI Attraction Index.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Lithuania is straightforward. Choose how your company operates from a range of entity types that suit your individual circumstance.


Banking Hours: 9:00 am to 3:00 pm from Monday to Thursday and 9:00 am to 2:00 pm on Friday.

Working Week

The standard working week is from Monday to Friday from 8:00 am - 5:00 pm.

Labor Law

The employment relationship is regulated by the Labor Code.

Main Industries

Petroleum refining, food processing, energy supplies, chemicals, furniture, wood products

GDP Growth


Dates & Numbers


Official State Name

The Republic of Lithuania


2.79 million



Major Languages




Internet Domain


International Dialing Code


Vilnius, LT
1:54 pm, April 25, 2024
temperature icon 8°C
broken clouds
Humidity 81 %
Wind Gust: 0 mph


Employers are required to approve a remuneration system unless this is already established in the collective agreement. The system must be prepared in a way that avoids gender discrimination among other issues.

It is acceptable to provide employees with online payslips


Payroll reports must be kept for 6 years


Employees are entitled to receive paid annual leave of 20 days

Annual Leave

Employees are entitled to receive paid sick leave of 3 days

Sick Leave

Employees are entitled to 18 weeks of unpaid maternity leave and 4 weeks of unpaid paternity leave

Maternity & Paternity Leave

An employee is to be given 14 days notice of termination of employment.

Employee Termination

There are no provisions mandated by law regarding the 13th month salary

13th month salary

730 Euro per month

Minimum Wage

Overtime payment is calculated at the rate of 1.5x the employee's ordinary rate of pay and 2x for night shift work


Employees paid monthly are entitled to 6 months’ pay for each year of employment for 20 years of service.

Severance Pay


Tax and Social Security

The tax system is simple with a range of incentives for large-scale investors including tax incentives for R&D. Worldwide income received by Lithuanian tax residents is subject to personal income tax. The social insurance system guarantees income of the insured in the case of incapacity for work due to disease, maternity, old age, disability etc.


Lithuania’s seven Free Economic Zones provide attractive conditions for developing business by offering infrastructure, support services and tax incentives.


Corporate Income Tax


Personal Income Tax


Sales Tax



Social Security

Lithuania has a number of traditional types of social insurance for pensions, sickness, maternity, health, unemployment, accidents at work and occupational diseases.


Social Security Rate


Social Security Rate for Employers


Social Security Rate for Employees


Employment Law

Mandatory employer requirements include a remuneration system where the number of employees is 20 or more and a policy on measures implementing employee equal rights, such a policy approved where the number of employees exceeds 50.

Employment Agreement

An employment agreement must be agreed upon prior to an employee starting work. Additionally, the territorial office of the Lithuanian State Social Insurance FUnd Board must be notified at least 1 business day before the scheduled commencement date.

Working condition

The new Labor code introduces five working regimes: fixed duration of workdays, summary working time, flexible working schedule, split shifts and individualized working time regimes.


Annual leave is calculated in terms of working days. There is additional leave for continuous employment, that is, 3 working days for continuous employment of 10 years and another working day for every 5 years of continuous employment thereafter.

Employment termination

In addition to termination by mutual agreement, the most common way to terminate employment are ordinary dismissal and dismissal on the employer’s will.


14 days

Minimum notice period for terminating an employee


16 days

Total number of public holidays



Working hours per week



Total number of days for Compassionate & Bereavement Leave



EU citizens who intend to stay for under 90 days only require an ID card or passport in order to live and work in Lithuania. Stays for over 90 days up to a maximum of 5 years require an employment contract and a declaration of place of residence among other things.

Non-EU citizens will need to complete three steps prior to beginning work:

  • obtain a Schengen visa (C )
  • obtain an EU Blue Card (residence and work permit for highly skilled non-EU citizens valid for up to 3 years)
  • formalize the EU Blue Card (application takes between 5 – 10 days)

Residency permits

Business owners / shareholders may obtain a residence permit issued for 2 years (and which ca be extended for up to 2 years indefinitely). Key requirements include the company being active for at least 6 months prior to the residence permit application, equity of at least €28,000. Foreign investors will need to have invested a minimum of €14,000.

Work Permit Validity

1 year

Required Documents

An application form for a national visa, completed using the electronic application form

A passport that has been issued within the last 10 years, which contains two or more blank pages, and is valid for at least three months after the duration of the visa

A color passport photo

A letter of mediation from the employer, which should be submitted electronically

A work permit

Proof of sufficient funds and means of income

Proof of health insurance.

Compliant, reliable, error-free and touchless payroll in Lithuania

Build the best team and hire top talent compliantly in Lithuania. Get in touch with Lithuania payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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