Companies have a lot to think about during an expansion to Lithuania, including HR, taxes, compliance management, payroll setup, and more. As a global Employer of Record, G-P’s goal is to help make your expansion faster and easier by streamlining payroll.
When you work with us, you won’t have to set up your Lithuania payroll and learn the country’s employment compliance laws — we’ll take care of the complexities for you.
Taxation rules in Lithuania
Employees pay income tax of 20% on income below EUR 82,162, and 32% on any income that exceeds that amount and social security of 19.5%.
Employers also have their own taxes to worry about. Companies must pay a social insurance tax of 1.45% to 2.71%. Employers also need to contribute 0.16% to the long-term employment Fund and 0.16% to the Guaranteed Fund. Keep in mind that Lithuania is working on changing its tax laws, particularly for low-wage workers, so you should watch for any tax law updates.
Lithuania payroll options for companies
Companies have 3 main Lithuania payroll options:
- Internal: Companies that already have an in-country subsidiary and are committed to Lithuania long-term may choose to set up an internal payroll. This option will require a larger budget to support a full HR team.
- Lithuania payroll processing company: If you’d rather outsource, you can work with a local Lithuania payroll processing company that will take care of your payroll. However, you’ll still be held liable for any compliance mistakes.
- Employer of Record (EOR): With an EOR like G-P, you can leave the complex and time-consuming tasks around payroll setup and management to global HR and legal experts. We’ll mitigate costly compliance risks every step of the way, so you can focus on building your global teams.
How to set up a payroll in Lithuania
Companies looking to expand to Lithuania typically have to establish a subsidiary in the country first. This process is necessary before you can set up your Lithuania payroll, hire employees, and pay them. However, you can skip this step by partnering with G-P. As the Employer of Record, we use our existing subsidiary to help you start hiring in minutes, not months, without setting up new entities.
Entitlement/termination terms
Termination can prove difficult in any country, especially if you are unfamiliar with the local employment laws. You should include certain entitlement and termination terms in your employment contracts before choosing a Lithuania payroll option and adding employees.
Lithuania allows fixed and indefinite contracts as well as probation periods up to 3 months. Employers can terminate an employee by giving 2 months’ notice, and that employee is generally entitled to severance pay based on their length of service if they’re terminated without fault.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading global employment platform. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.