Individual activity vs MB vs UAB in Lithuania: which suits a foreigner (2026)

The three forms

• Individual activity (individuali veikla, often IV). You work for yourself as a private person. You register with VMI, the State Tax Inspectorate, and get a certificate called FR0468. There is no company.
• MB (mažoji bendrija), a small partnership. A separate legal person whose members are natural persons. It is registered in the Register of Legal Entities, run by Registrų centras, the Centre of Registers.
• UAB (uždaroji akcinė bendrovė), a private limited company. A separate legal person owned through shares. It is also registered with Registrų centras.

Question	Individual activity	MB	UAB
Who carries on the business	You, as a natural person	A separate legal person	A separate legal person
Usually suits	One person testing demand	One or a few natural persons who want a legal person	One or more shareholders, when shares matter
Paperwork	Usually the least	More than individual activity	Usually a more formal company structure
Accounting	VMI offers i.APS, a free accounting tool for individual activity	Company accounting and financial statements	Company accounting and financial statements
The money	Part of your own activity, but you keep records for tax	Belongs to the MB, not to you; paying it out needs a legal and tax basis	Belongs to the UAB, not to you; paying it out needs a legal and tax basis
Owners	No shares	Members	Shareholders, who can include legal persons

This is a summary for the decision, not a full list of legal and tax differences. Check the current set-up conditions with Registrų centras.

Tax on the same profit: individual activity or MB

In short: on a small profit individual activity costs less, on a larger one an MB does, and where the line falls depends on the MB’s profit tax rate. The table adds up all the year’s taxes on the same profit.

Profit	IV, actual expenses	IV, flat 30%	MB 17%, dividends and PSD	MB 7%, dividends and PSD	MB 0%, dividends and PSD
€10,000.00	€2,487.92	€2,592.55	€3,910.75	€3,060.75	€2,465.75
€30,000.00	€7,282.55	€8,765.00	€9,800.75	€7,250.75	€5,465.75
€60,000.00	€20,424.00	€22,530.00	€18,635.75	€13,535.75	€9,965.75

What the numbers assume

• Both sides start from the same profit.
• Individual activity: 12 months, no extra 3% pension contribution, no other income and no other health insurance. The figures come from the same calculation as the individual activity tax calculator.
• MB: profit tax first, then the whole remaining profit is paid out as dividends, taxed at 15% income tax (GPM). If you leave profit in the MB, there is no dividend tax that year.
• Each MB column adds the yearly PSD minimum of €965.75 for one member who is not insured elsewhere. It does not include VSD on money taken out for personal needs.
• The break-evens were found by checking every €100 of yearly profit from €100 to €200,000. From each one, the MB stays cheaper at every later step in that range.

Read the 0% and 7% columns only if your MB meets VMI’s conditions for that rate, including the €300,000.00 income limit. Both rates also exclude MBs caught by the related-company rule in article 5(3) of the Law on Corporate Profit Tax. 17% is not the only other rate. The conditions are on VMI’s pages on the 0% rate and the 7% rate.

The table compares individual activity and MB only. We have not run the same comparison for a UAB.

Sodra in each form

• Individual activity: you pay VSD, social insurance, at 12.52% and PSD, health insurance, at 6.98% on 90% of your profit. PSD has a monthly minimum if nothing else covers you. The details are in Sodra and PSD for the self-employed.
• MB member: Sodra charges the yearly PSD minimum of €965.75 even if you take no money out, unless you are insured elsewhere. VSD is charged only on money you take out for personal needs. If you take out a lot, PSD can be more than the minimum.

Dividends do not build a pension. Of the 12.52% VSD on individual activity, 8.72% is pension insurance. It adds to your future Sodra pension and also covers sickness and maternity. You pay no Sodra contributions on dividends, so they add nothing to your pension.

When each form tends to fit

Individual activity

Look at it first if you will work alone, are still testing whether there are clients, carry little contractual or financial risk, need no separate legal person and no partners or investors, and want a simple way to stop if it does not work out.

Think again when contractual risk grows, a partner or investor appears, a client insists on contracting with a legal person, or the way you take money out gets more complicated.

MB

An MB can make sense if you want a separate legal person, all members will be natural persons, the ownership and management are small and clear, you accept that the partnership’s money is not yours to spend freely, and you are ready for company accounting, documents and financial statements.

Before you choose, write down how much you need each month for yourself, whether you will provide services to the MB, whether some profit stays in the business, and whether you plan to hire.

UAB

A UAB tends to fit when you need shares and clear ownership stakes, some owners may be legal persons, you plan to bring in an investor or sell part of the business, or partners expect a standard company structure. Expected growth alone does not mean you need a UAB from day one.

What is different for a foreigner

Registering individual activity

• If you are an EU or EFTA citizen, or a family member of one, VMI does not ask for a residence permit.
• Everyone else must show a valid temporary or permanent residence permit, or the registration document issued under the Law on the Legal Status of Aliens.
• If you are not a Lithuanian tax resident, you can register individual activity only if you carry it out through a fixed base (nuolatinė bazė) in Lithuania.
• Check yourself whether other laws require a company, a licence or a permit for what you do.

The steps and timing are in the individual activity tax guide.

MB or UAB and your right to stay

We have not checked how owning or running an MB or UAB affects a residence permit, or whether it can be the basis for one. Ask the Migration Department before you set one up for that reason.

Tax residency

Whether you are a Lithuanian tax resident decides how your personal income is taxed. It is not the same as a residence permit. In short, you are generally resident if you spend 183 days in Lithuania in a calendar year, or 280 days over two consecutive years with at least 90 days in one of them. You are non-resident only if your only permanent home is abroad, more of your interests are abroad, and you stay under both day counts. A foreign citizen whose only activity in Lithuania is individual activity through a fixed base stays non-resident even past those day counts, if no other residence test applies. The full rules are in the residency section of the individual activity tax guide.

What this guide does not cover

• Residence permits based on a business, and whether your permit lets you own or work in an MB or UAB. Ask the Migration Department.
• How dividends, profit tax and Sodra apply to MB members or UAB shareholders who are not Lithuanian tax residents.
• UAB tax and Sodra figures, share capital and set-up costs for any of the three forms.
• Personal liability for the business’s debts in each form. Ask a lawyer.
• Other ways to take money out of an MB, such as a service contract or withdrawals for personal needs, and the business certificate (verslo liudijimas).
• When you must register for VAT (PVM).