US Company Formation from Lithuania (2026): The 2026 Tax Reform, Individual Activity and MB vs a US LLC, 15% on Dividends, Fintech Licensing and the US–Lithuania Treaty

Lithuania changed its tax system on 1 January 2026. Personal income tax moved to three bands (20%, 25% and 32%), more kinds of income were pooled into the progressive base, and individual activity (individuali veikla) got a new credit that gives an effective rate from 5% to 20% up to €42,500 of taxable profit. Corporate income tax rose as well. At the same time, Vilnius has become one of Europe's fintech capitals, and companies such as its well-known marketplace and cybersecurity firms have shown that Lithuanian start-ups can build global businesses with large US customer bases.

For Lithuanians, the US company question splits three ways: freelancers comparing individual activity or a small partnership (MB) with a US LLC; UABs opening US subsidiaries; and fintechs that assume their Lithuanian licence will carry over to the USA. This guide covers each one, with the US–Lithuania treaty, and goes further than our Baltic overview.

In short: Lithuanian residents can own 100% of a US LLC or C-Corporation, formed remotely. From 2026, Lithuanian individual activity income is taxed at an effective 5% to 20% up to €42,500, and the progressive bands of 20%, 25% and 32% apply above that. Dividends are taxed at 15%. A UAB pays corporate income tax at the standard rate (raised for 2026), with reduced rates for small companies. Lithuania generally treats a US LLC as a foreign company. A Bank of Lithuania licence does not authorise financial services in the USA. The US–Lithuania treaty limits US withholding on dividends to 15% (5% for companies owning 10% or more), on interest to 10% and on royalties to 5% or 10%. With UCB, a Delaware corporation with EIN is $358 and a Wyoming LLC with EIN is $249, all-in.

Lithuania's rules after the 2026 reform

Social insurance (Sodra) and health insurance are added for individual activity, on a base linked to income with caps.

How Lithuania treats a US company

The IRS disregards a single-member LLC. Lithuania generally treats a US LLC with limited liability as a foreign legal entity:

• distributions to a Lithuanian individual are foreign dividends taxed at 15%, with credit for any foreign tax (none, for a disregarded LLC);
• a foreign entity managed from Lithuania can be taxed in Lithuania through a permanent establishment or residence;
• Lithuania's CFC rules can tax Lithuanian shareholders, including individuals in some cases, on the income of controlled foreign entities in low-tax situations.

Example: a designer in Kaunas

These are illustrative figures, not a client case, at €0.92 to the dollar.

Gabija is a UX designer in Kaunas with US$45,000 (about €41,400) a year from US clients, and modest expenses.

• Under individual activity, her taxable profit is close to €42,500, so the new credit gives an effective income tax well under 20%, plus Sodra and health insurance.
• Through a US LLC run from Kaunas, the LLC is likely taxable in Lithuania because it is managed there, or its distributions are taxed at 15% with no credit. She loses the simple individual activity regime and pays for US compliance.

She stays on individual activity. If a client requires a US vendor, she can form a small Wyoming LLC that contracts with the client and pays her for her work.

US LLC formation from Lithuania

US tax position

A single-member LLC with a non-resident owner pays no US income tax if the owner works from Lithuania and the LLC has no US office, employees or dependent agents (see effectively connected income explained). It files Form 5472 with a pro forma Form 1120 every year, and the penalty for missing it is $25,000 (see Form 5472 explained).

When an LLC fits

• A small US contracting entity owned by a UAB or MB, for clients who insist on a US vendor.
• US real estate, where an LLC is standard (see real estate investment LLC for foreigners).
• An online shop selling to US consumers through US payment processors and a US third-party warehouse, owned by a Lithuanian company (see LLC for e-commerce sellers).

US C-Corp formation from Lithuania

US tax position

A US corporation pays 21% federal tax on its profits plus state tax, and files Form 1120 and Form 5472 every year (see the 21% corporate tax explained and the C-Corp guide for non-residents). Its dividends to a UAB owning 10% or more carry 5% US withholding and are generally exempt in Lithuania under the participation exemption.

Fintechs: the licence does not travel

Many Lithuanian fintechs hold an electronic money institution (EMI) or payment institution licence from the Bank of Lithuania, which they passport across the EU. None of that applies in the USA. Moving money for others in the USA generally requires:

• registration with FinCEN as a money services business;
• money transmitter licences in most states, issued state by state;
• or a partnership with a US bank that holds the regulatory relationship.

A US subsidiary of a Lithuanian fintech is usually a Delaware C-Corporation, so that banks, regulators and investors deal with a familiar entity. Form it early, but do not offer payment services until US regulatory counsel confirms the route.

Example: a Vilnius SaaS company

Take an illustrative case: a Vilnius company that sells HR software to mid-sized firms hires two account executives in Austin. It forms a Delaware corporation registered in Texas:

• The US subsidiary employs the team, signs US contracts and pays US tax on its sales margin.
• The UAB owns and develops the software. Royalties from the subsidiary carry 10% US withholding under the treaty, creditable in Lithuania. Some groups instead charge for development services, which carry no US withholding. Transfer pricing must support either approach.
• Dividends from the subsidiary carry 5%.

See US subsidiary for a foreign company and US LLC for SaaS founders.

Start-ups

Lithuanian start-ups raising from US investors usually need a Delaware C-Corporation at the top, with the UAB as a subsidiary. See raising US investment as a foreign founder.

The US–Lithuania treaty

The treaty in force since 2000 limits US withholding:

It also limits US tax on business profits to a US permanent establishment and contains a limitation on benefits article. Claim it on Form W-8BEN or W-8BEN-E (see W-8BEN-E vs W-8BEN explained).

Which state

• Delaware for a subsidiary, fintech or start-up.
• Wyoming or New Mexico for a small LLC.
• The state where US staff work.

See best state for non-residents and the state selector.

What it costs

UCB's prices include state fees and the first year of registered agent service:

• Delaware corporation with EIN: $358.
• Wyoming LLC with EIN: $249, or $348 with a US bank account application.

A Delaware corporation costs $578 a year to keep active. A Wyoming LLC costs $121 a year, or $421 with the annual federal return. A US business address with your own suite number is $60 a year. See what a US LLC costs every year.

Documents and banking

For an individual, a Lithuanian passport or ID card and proof of address. For a UAB or MB, a Registrų centras extract in English and a decision of the manager or members. US fintech banks accept Lithuanian owners readily. See US business bank accounts for non-residents and Stripe for non-residents.

Mistakes to avoid

• Replacing individual activity with a US LLC that costs more in tax after the 2026 credit.
• Offering payment services in the USA on the strength of a Lithuanian licence.
• Not declaring LLC distributions at 15% because no US tax was withheld.
• Running a US LLC from Lithuania and forgetting it may be taxable there.
• Missing Form 5472 in a year when no US tax was due.

Frequently asked questions

Is a US LLC better than individual activity in Lithuania? Rarely. After the 2026 reform, individual activity up to €42,500 of profit is taxed at an effective 5% to 20%.

How does Lithuania treat a US LLC? Generally as a foreign company. Distributions are dividends taxed at 15%.

Does my Bank of Lithuania licence let me operate in the USA? No. US money transmission needs federal registration and state licences, or a US bank partner.

Is there a US–Lithuania tax treaty? Yes. Dividends 15% (5% for companies owning 10% or more), interest 10%, royalties 5% or 10%.

Does my US LLC pay US tax? Not if it has no US office, staff or agents. It files Form 5472 and a pro forma 1120 every year.

How UCB can help

We form US companies for Lithuanian residents, UABs and MBs remotely: the state filing, EIN, registered agent, US business address and bank application. We prepare W-8BEN-E treaty forms, and each year we file the US returns through our US tax filing service. See our formation, EIN and bank account package, and the Estonia, Latvia and Poland guides.

Setting up a US company from Lithuania? WhatsApp us at +1 315 961 2956 or email enquiries@ucbsolutions.com.