What do you need to know to hire in Lithuania?

Employer social insurance on an open-ended contract runs at 1.77% of gross. That covers unemployment, accident insurance, the guarantee fund, and the long-term employment fund. A fixed-term contract carries a higher unemployment rate, lifting the employer total to 2.49%. The default accident insurance group adds 0.14%, inside those totals. Teamed's Lithuania fee sits inside the total cost envelope, not outside it.

Teamed's Lithuania price is a starting rate, with zero FX in any currency pairing. No setup fees. No exit fees. Salaries, taxes, and benefits passed through at cost on every invoice.

The full breakdown, with worked examples at current statutory rates, is in the cost guide.

Registering a Lithuanian company means incorporation at the Centre of Registers, registration with Sodra for social insurance, and a tax number with the State Tax Inspectorate (VMI) for payroll. Setup takes several weeks and brings ongoing monthly filings and local accounting. An Employer of Record is faster and cheaper at low headcount. Teamed runs Lithuanian payroll, contracts, and compliance from day one.

The crossover point depends on Lithuanian salary levels and your local accounting costs. For most professional-services roles it lands around 5 to 8 employees. The EOR vs entity guide runs those numbers.

Most EOR providers will not tell you when you have crossed it. We do, and we help you move. You progress from contractor to EOR to your own Lithuanian entity on one platform under Teamed's Graduation Model, with tenure preserved.

The 2026 reform replaced Lithuania's near-flat scale with three bands under the Law on Personal Income Tax. The 20% rate applies to annual pay up to 36 average wages (EUR 83,237.40 in 2026). The new 25% band runs from there to 60 average wages. The 32% rate applies above 60 average wages, over EUR 138,729 a year. Distributed-profit and dividend income is taxed apart at 15% and is not added into the bands.

The same 60 average wages mark caps social insurance contributions, at €138,729/year. A 2025 change also raised overtime pay on public holidays including night work. The tax and payroll guide covers each current obligation in detail.

Statutory annual leave is 20 days on a 5-day week basis under the Labour Code, with extra days for parents of young children, minors, and disabled workers. There are 14 public holidays a year. The standard working week is 40 hours.

Maternity leave totals 126 days, split as 70 calendar days before birth and 56 after. Sick pay starts with the employer covering the first two days at between 62.06% and full pay. From day three Sodra pays 62.06% of compensable earnings. Lithuanian law sets no 13th or 14th month salary. The benefits guide covers each entitlement in full.

The employee deduction of 19.5% covers pension, sickness, maternity, and health insurance. The health insurance part alone is 6.98%. Contributions are capped once annual pay reaches €138,729/year. The employer adds 1.77% on an open-ended contract, or 2.49% on a fixed-term one.

Income tax is progressive from 2026. The 20% band applies up to 36 average wages, then 25% to 60 average wages, then 32% above that. Dividends are taxed apart at 15%. Teamed runs all employee deductions and Sodra and VMI remittances. The tax and payroll guide sets out every band and threshold.

An employer dismissing without employee fault gives 1 month notice, or 2 weeks when the job lasted under a year, under Article 57 of the Labour Code. Notice doubles for staff within five years of pension age and triples for protected groups, such as pregnant workers, parents of young children, and disabled employees. Severance is 2 months of average pay after a year of service, and 0.5 months below a year. A separate long-service benefit is paid by Sodra, not the employer.

During probation, which runs up to 3 months and cannot be extended, either side ends the contract on 3 days with no severance. Where a court finds a dismissal unlawful and does not order reinstatement, the cap on the per-service-year compensation is 6 months of average pay, on top of back pay for forced absence. The termination guide runs the full process.

The cost split is the opposite of what US buyers expect. The employer adds only 1.77% on an open-ended contract. The employee carries 19.5% of social and health insurance, plus income tax on the new 2026 bands. Budget the gross-to-net gap carefully when you set an offer.

Probation is short and fixed. The trial period runs up to 3 months and the law bans extending it by agreement. End it for poor results on 3 days written notice, with no severance. Miss that window and the full no-fault notice and severance rules apply. The hiring guide and the termination guide both cover safe process in detail.