There is no one-suits-all answer as it is highly dependent on the industry and business model. However, a Small Partnership (MB) allows to distribute the profits in a different way than a Limited Liability Company (UAB), therefore, when properly structured, it might lead to a better tax effectiveness (find more information on differences between the two types of companies here).
For example, the manager of a Small Partnership might receive management fees which are considered to be allowable deductions for corporate income from the tax perspective, and which are also not subject to withholding tax in Lithuania (certain limitations and exceptions apply).
Interest and royalties might be subject to the withholding tax, however, they are considered to be allowable deductions in Lithuania if certain conditions are met. Differently from dividends, interest and royalties are not paid out from profits, so they are seen as ordinary expenses of the company.
European Union’s treaties for avoidance of double taxation can reduce the withholding tax rates. For example, interest paid to entities within the European Economic Area, or entities from countries which have treaties for avoidance of double taxation with Lithuania, are not subject to withholding tax on interest.
Nomad Law employs a team of highly competent experts who will evaluate your business model together with long term goals and find the type of company which will be the most tax effective in your case. Do not hesitate to contact us and we will provide you with full guidance, tailored for your specific circumstances.
We are here to help
+370 686 24426
United Arab Emirates
Nomad Advisory FZCO
Dubai Silicon Oasis, DDP
Dubai, United Arab Emirates
+971 56 591 0692
UAB Nomad Law
J. Basanaviciaus str. 26
+370 686 24426
All rights reserved © 2023 Nomad Law