Employer of Record Services for Lithuania

Employing in Lithuania

One of the three Baltic States (alongside Latvia and Estonia), Lithuania is known for its beautiful baroque architecture, local beers, shores lined with amber and basketball — it’s like a second (if not the first!) religion in the country.

Located in central Europe, Lithuania offers easy travel between other EU states.

Since declaring itself an independent state in 1990, the nation has been making the transition from an industrial economy to a knowledge-based one that focuses on high-value products and services. Today, Lithuania offers a diverse economy and a vibrant financial sector, with many international banks doing business in the country.

In recent years, the country has also excelled in IT and communications technologies — and Lithuania is now one of the leading European nations for biotechnology, communications and IT. Perhaps surprising for such a small country, Lithuania is also one of the most efficient internet providers in Europe. Locals are very proud of the cheap, fast and reliable internet that is accessible all over the country.

Our Expertise

Managing a global workforce in Lithuania

Managing a global workforce in Lithuania requires an understanding of the country's diverse and multilingual talent pool. Lithuania's advanced digital infrastructure and emphasis on education make it an ideal location for businesses seeking a technically skilled workforce. Employers should be aware of the labour laws, which promote flexibility and innovation while protecting employee rights. Leveraging Lithuania's workforce effectively can be a significant asset for any international business strategy.

Extensive expertise

Our team of experienced, knowledgeable staff collectively provide up-to-date employment information across 180 countries, so you can always get accurate advice.

Entity-free employment

Feel free to hire employees from all over the world without being weighed down by setting up entities, running complex payroll or recruiting a hiring team.

Payroll without hassle

Have the confidence that your staff will always be paid accurately and on time, so that you can focus on your core business activities and work towards your success.

Always-on support

Access helpful, relevant, personalised advice whenever you need it, along with expert-led recruitment policies and tried-and-tested HR best practices.

"With TopSource we were able to have employees hired or maintained in Nutreco without having to establish an entity in these countries for only 1-2 employees. I think most countries are covered by TopSource, so they can help us with almost all cases. Good advice on conditions and direct contact with employees. Invoicing done directly to the company. An easy process compared to hiring employees by ourselves."

Annette van Duijnhoven

Nutreco

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”We searched the market for a local payroll vendor in 2014 and we chose TopSource as our partner. We were looking for error-free and timely payroll processing and TopSource Worldwide delivers this, saving us time and money. We have worked together for 8 years now and would recommend them to anyone."

Praveen Lihinar

Sungard

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”TopSource Worldwide has a detailed and methodical onboarding process that made it easy for us to get set up and running with our UK employees. They were able to take the worry out of trying to comply with all local laws and regulations. Because they have this knowledge we do not have to research on our own and hope we are in compliance. This has saved us hours of time and gives both the company and employees a sense of security."

Supervisor

Client based in Ft Worth, Texas, USA

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GLOBAL EXPANSION STRATEGY

Personalised Employer of Record services in Lithuania

TopSource Worldwide offers personalised Employer of Record (EOR) services tailored to meet the specific needs of your business in Lithuania. This includes handling employee onboarding, payroll processing, tax compliance, employee benefits management, and HR support. Our EOR services ensure that your business meets all legal and regulatory requirements, providing a hassle-free solution to manage your Lithuania-based employees.

End-to-end Lithuania payroll services

Looking to expand into Lithuania? Our unparalleled expertise in global payroll services ensures that your business can seamlessly navigate the complexities of payroll on a global scale, supporting your Lithuania expansion initiatives.

Global entity management

Venturing into the Lithuanian market can be both exciting and challenging. With distinct business regulations, cultural nuances, and economic landscapes, it's essential to have a clear roadmap for your business establishment journey.

Accounting

Whether your goal is to process your purchase-to-pay transactions with minimum errors or manage your expense claim procedure, our team of experts can handle your accounting responsibilities, allowing you to focus on your core business and save time and money.

Global EOR services

Managing a diverse global workforce can be complex. This is where TopSource steps in as an invaluable employer of record services partner for companies seeking to expand their global reach while ensuring compliance with local employment laws and regulations.

Global Expansion Simplified

How to do business in Lithuania

Entering the Lithuanian market presents a mix of excitement and challenges. Given unique business regulations, cultural intricacies, and economic dynamics, a well-defined roadmap is crucial for a successful business establishment.

TopSource Worldwide is with you at every stage. Whether it's navigating local regulations or facilitating seamless operational transitions, our expertise ensures a swift and efficient process for establishing your business in Lithuania.

Start your Lithuania expansion

Lithuania Insights

Key insights into Lithuania's landscape

VAT rates: Lithuania has a standard VAT rate of 21%, with reduced rates of 9% and 5% for specific goods and services.

Ease of Doing Business rank: Lithuania ranks 11th globally in the World Bank's Ease of Doing Business Index, highlighting a favourable business environment.

Consumer Confidence Index: As of 2022, Lithuania's Consumer Confidence Index was 0.1, reflecting cautious economic sentiment.

Employee maternity/paternity leave: Maternity leave is 18 weeks, and paternity leave is 4 weeks, ensuring support for new parents in the workforce.

Employee termination period: Standard termination notice is 3 months, but specifics may vary based on employment contracts and circumstances.

Employee salary pay date: Wages are typically paid monthly, with payment dates established in employment agreements and subject to labour regulations.

Bank holidays: Lithuania observes national holidays, such as New Year's Day, Day of Restoration of Independence, and Christmas, with a total of 13 public holidays throughout the year.

Salary information

Salary

€642 per month is the minimum wage for a full-time job in Lithuania.

Bonus

A 13th-month salary payment is not required by law, but it’s normal that some businesses pay this as a bonus.

Employer costs

Employers’ costs are determined by the type of employment contract in Lithuania:

Permanent employment contract (indefinite time)
Fixed-term employment contract

Employer cost	Permanent contract (%)	Fixed-term contract (%)
Unemployment	1.31	2.03
Accidents	0.14	0.14
Warranty	0.16	0.16
Long-term work	0.16	0.16
Total	1.77%	2.49%

Employee costs

The social security system (SODRA) in Lithuania covers healthcare, pension and other statutory insurances such as sick pay and maternity leave. Monthly contributions should be withheld from an employee’s salary:

Contribution

Percentage

Pension

8.72

Sickness

2.09

Maternity

1.71

Health

6.98

Total

19.5%

The annual threshold is capped at EUR 81,162.00. Any income earned over the threshold is subject to a social security contribution ceiling whereby only the health insurance contribution of 6.98% will be deducted.

Healthcare

Lithuanian citizens are entitled to public healthcare, which is covered by compulsory healthcare contributions. Any EU citizen travelling to or living in Lithuania is also entitled to free healthcare.

Additional medicare tax

Employers whose wages exceed the maximum threshold of $200,000 are required to pay an additional Medicare tax. Employers are responsible for withholding the 0.9% additional Medicare tax from the employee’s wages; however, there’s no employer match.

Pension

The statutory pension contribution is 8.72% and will be withheld from an employee’s salary each month as part of the social security contributions. In addition to the statutory amount, employees can participate in an optional pension accumulation plan. This will additionally be withheld from an employee’s monthly salary based on the rate they select:

2.4% pension accumulation plan (equating to a total monthly social security contribution of 21.9% of gross monthly earnings)
3.0% pension accumulation plan (equating to a total monthly social security contribution of 22.5% of gross monthly earnings)

To access the old-age pension in Lithuania, employees must have contributed consistently for at least 15 years and be 64 years old (male) and 63 years old (female). Lithuania plans to push the retirement age up to 65 years for men and women by 2026.

Contractual provisions

Contract of employment

Employment contracts may be executed bilingually, provided that Lithuanian is one of the languages.

Rules of registration

The Social Security Authority must be informed of any new employees at least one working day prior to the employee’s start date.

Probationary period

The standard probationary period in Lithuania is three months but can be less. If deemed necessary, the period may also be extended by the employer.

An employer may terminate a contract during the probationary period should they deem the employee’s work to be unsatisfactory. The employer must provide the employee with three days’ written notice and is not duty bound to pay severance pay.

The duration and conditions of the probationary period should be outlined in the contract of employment.

Overtime

Overtime is usually paid at 150% of the normal hourly rate. In the instance of overtime having to be worked between the hours of 10 PM to 6 AM, the overtime hours should be paid at 200% of the employee’s usual hourly rate.

The maximum weekly overtime is eight hours and up to 12 hours if the employee agrees. The maximum annual overtime is 180 hours and must not exceed this.

Holiday & leave

All employees are entitled to 20 working days of holiday per year (and up to 24 working days’ holiday per year if they work six days per week).

Annual leave is granted following six months of employment.

There are 11 paid public holidays per year. Holidays are observed on their calendar day and are not moved if they should fall on a weekend.

Employees are additionally entitled to work one hour less the day before a public holiday and this hour must still be paid.

Annual leave must be granted at least once during a working year. The duration of at least one of the parts of annual leave may not be less than 10 working days (or less than 12 working days for 6 working days per week).

Sick leave

The employer has to pay 62.06% to 100% of the employee’s normal wages for the first two days of any illness. From the third day onwards, the social insurance fund (SODRA) pays the employee’s wages at 62.06% at no cost to the employer.

Parental (childcare) leave

As chosen by the family, the mother (adoptive mother), father (adoptive father), grandmother, grandfather or other relatives actually raising the child, or an employee designated as a child’s guardian, are granted parental (childcare) leave until the child reaches the age of three years. The leave may be taken all at once or in instalments. Employees entitled to this leave may take it alternately.

Creative leave

Employees are entitled to up to 12 months of creative leave to pursue creative or scientific endeavours.

Employ and pay anywhere

Specialising in multi-country payroll solutions

TopSource Worldwide offers comprehensive payroll outsourcing services, ensuring seamless and accurate management of your organisation's payroll functions. With cutting-edge technology and a team of experienced professionals, we handle payroll processing, tax compliance, and regulatory requirements with precision.

Discover our payroll benefits

Calculate Your Employer of Record Taxes in Seconds

Employment Cost Calculator in Lithuania

Our Employment Cost Calculator simplifies complex tax calculations for global businesses. Accurately assess tax obligations, ensuring compliance with local regulations. Streamline payroll management effortlessly with our user-friendly tool, providing transparency and efficiency in international workforce taxation.

In addition to calculating your EOR taxes, our calculator can also help you:

Understand the different types of EOR taxes
Stay up-to-date on the latest changes to EOR tax regulations
Avoid penalties for non-compliance

Speak to our team

Our author

Mark Robbins

Global Sales Director

Mark is the Sales Director at Topsource Worldwide. He has been a pioneering figure in the global expansion space since 2013. He is the first salesperson to sell EOR services in Europe, a feat he accomplished in 2013.

Published 2023-11-14 00:00:00

Updated 2023-11-15 00:00:00

Reviewed by:

Adrian Cooney

Fact checked by:

Adrian Cooney

Employer of Record FAQ

Frequently Asked Questions about Lithuanian employment solutions

What is an Employer of Record in Lithuania?

An Employer of Record (EOR) is a professional services provider that assumes the responsibility of being the legal employer for a company's workforce in Lithuania. This entails managing tasks such as payroll processing, tax withholding, benefits administration, and ensuring compliance with local labour laws and regulations.

How do global employment services work?

Global employment services operate as a comprehensive solution for businesses seeking to expand their workforce across borders. These services, often provided by Employer of Record (EOR) companies like TopSource Worldwide, streamline the complexities of international employment.

What are the benefits of working with an Employer of Record in Lithuania?

Employer of Record companies assume the legal responsibilities associated with employment, alleviating the burden of compliance, payroll, and HR management in Lithuania. This allows companies to expand globally without the complexities of establishing legal entities in each location.

What is the difference between EOR & PEO?

An EOR acts as the legal employer, handling tasks like payroll, tax compliance, and benefits administration. This allows companies to expand internationally without establishing legal entities. On the other hand, a PEO shares employer responsibilities with the client company, often co-employing workers.

How are employer payroll taxes calculated in Lithuania?

Calculating employer payroll taxes involves understanding the various taxes associated with employing workers and complying with tax regulations in Lithuania. Key components include federal and state income taxes, Social Security, Medicare, and unemployment taxes.

What global employment solutions does TopSource offer?

TopSource Worldwide facilitates hassle-free global expansion by acting as the legal employer, handling payroll, tax obligations, and HR responsibilities. With expertise in global entity management, TopSource assists businesses in navigating the intricacies of legal structures across borders.