Annual Financial Reporting Obligations in Lithuania

Why should you take annual financial reporting in Lithuania seriously?

Establishing a company in Lithuania is an extremely attractive step to access the EU market. However, almost every legal entity operating in Lithuania is required to prepare annual financial statements and submit them to the Register of Legal Entities (Register of Legal Entities / Centre of Registers) within strict deadlines each year.

Financial statements that do not comply with the reporting schedule or are prepared with incorrect standards can lead to penalties, loss of trust from banks and investors, and even sanctions against the company in the registry. It is particularly critical for Turkish companies operating in Lithuania, such as SPVs, holding structures, fintech companies, or those working with remote teams, to properly structure this process.

The legal basis of the annual financial reporting regime in Lithuania

The annual financial reporting obligations in Lithuania are shaped by four main interconnected laws:

• Law on Accounting – daily accounting records, document organization, bookkeeping principles.
• Law on Financial Statements of Entities – which businesses are required to prepare financial statements, the scope of the statements, presentation format, approval and submission deadlines, management report, and other elements.
• Law on Consolidated Financial Statements of Enterprises – principles of consolidation in group companies.
• Law on Audit of Financial Statements – under which circumstances independent audits are mandatory, the scope of the audit.

In addition, for publicly traded and financial sector companies, EU-level IAS Regulation (implementation of IFRS in the EU) and specific regulations regarding securities and financial institutions also come into play.

Which businesses are required to prepare annual financial statements in Lithuania?

According to Lithuanian legislation, almost all legal entities are obliged to prepare annual financial statements for each financial year and submit them to the Register of Legal Entities. Typically, the following structures fall under this scope:

• UAB (Private Limited Liability Company)
• AB (Public Limited Liability Company)
• General partnerships and limited partnerships
• Cooperatives
• Branches and representative offices of foreign companies (local reporting obligations for foreign companies operating through a registered branch in Lithuania)
• Associations and some non-profit organizations (depending on activity volume, turnover, and type)

Even if a company is not actively operating, in most cases, it is required to prepare and declare simplified or “zero” annual financial statements. The approach of “There were no transactions, so there is no need to report” can lead to serious penalties in Lithuania.

Financial year, first year, and time constraints

In Lithuania, the financial year is 12 months. This period can be:

• Aligned with the calendar year (January 1 – December 31), or
• Another consecutive 12-month period determined by the company

The financial year, as a rule, cannot be changed more frequently than every 5 years. This limit can only be relaxed in exceptional cases, such as aligning the financial year with the calendar year.

For a newly established company, the first financial year begins from the date of establishment and continues until the end date of the chosen financial year; however, it cannot exceed 18 months. For example, the first financial year of a UAB established in September 2024 with a financial year-end of December 31 will be subject to the maximum 18-month rule from September 2024 to December 31, 2025.

Deadlines and approval process for annual financial statements

In Lithuanian practice, the annual financial reporting calendar is generally summarized as follows:
“End of financial year + 4 months + 30 days”.

First 4 months: Preparation and general meeting approval

• Within 4 months following the end of the financial year, the company:
  • Prepares the annual financial statements,
  • If necessary, prepares the annual management report,
  • Presents this set for approval by the shareholders at the general meeting.
• This period should be planned to include the completion of the audit process if independent audit is mandatory.

Next 30 days: Notification to the Register of Legal Entities

• The annual financial statements approved at the general meeting, the annual report if applicable, and the auditor’s report must be submitted to the Register of Legal Entities (Centre of Registers) within 30 days of the approval date.
• Thus, you must complete the entire reporting and notification process within a legal window of approximately 5 months from the end of the financial year.

Which accounting standards are applied? IFRS or Lithuanian BAS?

In Lithuania, companies prepare their annual financial statements using one of two main accounting frameworks:

• Lithuanian Business Accounting Standards (BAS / LBAS) – Local GAAP. Based on IFRS but with a simplified structure; it is the basic framework for SMEs.
• EU-endorsed IFRS – Mandatory for entities of public interest (PIE).

Companies required to use IFRS (Public Interest Entities)

According to the Accounting Law and Lithuania’s IFAC country profile, public interest entities (PIE) are required to apply EU-approved IFRS in both individual and consolidated financial statements. This category typically includes:

• Publicly traded companies,
• Banks and other credit institutions,
• Insurance companies,
• Pension funds, investment companies, brokerage firms,
• Some public enterprises and other institutions specifically designated by the Ministry of Finance.

SMEs and other companies

All companies outside of PIE, meaning most SMEs and closed partnerships:

• May apply IFRS if they wish,
• Or may use Lithuanian Business Accounting Standards (BAS/LBAS).

Lithuania has not adopted IFRS for SMEs as a separate framework. Therefore, the main options for SMEs are full IFRS or local BAS. Companies reporting to international investors generally prefer IFRS, while SMEs focused solely on the local market use BAS due to simplified obligations.

Scope of annual financial statements: Which reports are mandatory?

The set of reports to be prepared varies according to the size of the company (very small, small, medium, large). However, in general, annual financial statements in Lithuania consist of the following elements:

• Statement of Financial Position – Assets, liabilities, and equity.
• Profit and Loss Statement / Income Statement – Revenue, expenses, and profit/loss for the period.
• Cash Flow Statement – Cash flows from operating, investing, and financing activities (mandatory for most small businesses).
• Statement of Changes in Equity – Capital, reserves, and movements in retained earnings/losses.
• Explanatory Notes – Accounting policies, detailed explanations by item, commitments, related party transactions, etc.
• Management/Annual Report – Mandatory for medium and large enterprises, and companies exceeding certain thresholds.

Simplifications by size

Lithuanian legislation generally classifies companies as very small, small, medium, and large and scales reporting obligations accordingly:

• Very small entities
  • In some cases, may prepare a shortened set of financial statements (mostly balance sheet and income statement).
  • If they meet the conditions set by law, they may be exempt from preparing notes; in this case, a very basic set is applicable.
• Small entities
  • May use simplified formats, but are generally required to present a minimum set of reports and some notes.
• Medium & large entities
  • Are required to prepare a full set of financial statements: balance sheet, income statement, cash flow statement, statement of changes in equity, and notes.
  • They are often also required to prepare a management report.

The thresholds used for classification based on turnover, balance sheet, and number of employees are updated from time to time. It would be prudent for investors and CFOs planning to establish a structure in Lithuania to conduct a scale analysis based on current threshold values before making an investment decision.

Group companies and the obligation for consolidated financial statements

In Lithuania, if a company has control over other companies and is in the position of a parent company, it is generally required to prepare consolidated annual financial statements.

• Consolidated financial statements; include the parent company and all subsidiaries. It does not matter whether the subsidiaries are registered in Lithuania or another country.
• The principles of consolidation are regulated by the Law on Consolidated Financial Statements of Enterprises.
• Consolidated financial statements are usually accompanied by a consolidated management report.
• In line with EU legislation, publicly traded group companies and other PIE groups are required to prepare consolidated financial statements in accordance with IFRS.

Mandatory independent audit: Which companies are subject to audit?

In Lithuania, the independent audit of annual financial statements depends on both the type of company and specific balance sheet, turnover, and employee number thresholds.

According to practical summaries, a company is considered to be subject to mandatory independent audit if it exceeds at least two of the following thresholds in two consecutive years:

• Net turnover > 3.5 million EUR
• Total assets > 1.8 million EUR
• Average number of employees > 50

In addition:

• Public interest entities (PIE) – are always subject to mandatory audit regardless of their size.
• Some sector companies subject to special legislation may also fall under the audit obligation, regardless of their size.
• In small companies, the audit is optional; however, it may become mandatory if required by investors, banks, or grant institutions.

The audit report must be completed by the date the general meeting approves the financial statements and must be included in the file submitted to the Register of Legal Entities.

Notification, publication, and electronic reporting

Where to notify?

• All annual financial statements (individual and consolidated if required), along with the relevant management report and independent auditor’s report, must be submitted to the Register of Legal Entities (Centre of Registers).
• This registration creates a central platform for making the financial information of companies publicly accessible and ensuring transparency.

Electronic format and XBRL/ESEF obligations

As an EU member, Lithuania has transitioned to electronic submission of annual financial statements and structured data format for certain issuers. Particularly for publicly traded companies, XBRL tagging obligations are applied under the EU Regulation 2018/815 ESEF (European Single Electronic Format).

This requires publicly traded Lithuanian companies to prepare their financial statements in a machine-readable format, making them more comparable for investors.

Sanctions and risks in case of non-compliance

Lithuanian authorities have tightened the audit of timely and accurate submission of annual financial statements in recent years. In case of violation of obligations:

• Administrative fines – Financial penalties may arise for companies that do not submit annual financial statements on time or do not submit them at all.
• Sanctions in the registry – In cases of excessive delays or repeated violations, the company’s registry status may be negatively affected, and some transactions may be blocked.
• Loss of reputation with investors and banks – Especially loss of trust with international investors or banks can increase funding costs or narrow credit channels.
• Tax audits – Inconsistent or non-submitted financial statements may increase your risk score with the tax authority.

Managing these risks, especially for international group structures, fintech licensed institutions, and Turkish companies working with remote teams in Lithuania, requires a proper compliance strategy.

Financial reporting in Lithuania – Practical challenges for Turkish companies

Establishing a UAB or AB company in Lithuania and managing it from Turkey brings some unique challenges:

• Standard selection – You may have to use IFRS for group reporting and BAS for local tax and public authorities. This dual structure complicates consolidation and tax planning.
• Calendar alignment – Aligning group reporting, which runs on a January 1 – December 31 calendar in Turkey, with a different chosen financial year in Lithuania may create extra workload.
• Language and regulatory barriers – A large portion of official resources is in Lithuanian; although there are English summaries, the fine nuances often require local expertise.
• Audit thresholds and surprise mandatory audits – Start-ups or rapidly growing companies may exceed the audit threshold faster than expected due to turnover and balance sheet size.
• Remote teams and payroll – In structures managed from Turkey with employees in Lithuania, payroll, social security, and tax obligations intertwine with financial reporting processes.

The role of Corpenza: End-to-end support from company formation to annual report

At Corpenza, our focus is to manage company formation, residence permits, golden visas, international accounting, payroll (EOR), tax optimization with posted worker models, and investment citizenship processes under one roof in Europe and globally.

Specifically in Lithuania, the areas where Turkish and regional companies most frequently need support are as follows:

• Company establishment and structuring – Establishing UAB/AB, structuring partnership and capital considering IFRS/BAS and tax implications.
• Establishing the annual financial reporting calendar – Selecting the financial year, planning the first year, organizing the closing process according to the 4 months + 30 days rule.
• Selection of accounting standard and group reporting – Answering the question of whether to use IFRS or BAS considering your group structure, investment goals, and tax plan; establishing a dual reporting structure if necessary.
• Mandatory audit and coordination with the auditor – Monitoring when you will approach the audit threshold, selecting the auditor, integrating the audit process with the financial closing calendar.
• Notifications to the Register of Legal Entities – Timely and correctly submitting the annual financial statement, management report, and audit reports.
• Payroll, EOR, and posted worker models – Managing payroll, social security, tax, and financial reporting processes in a single framework for your teams working in Lithuania.

This way, the annual financial reporting for your company in Lithuania transforms from a last-minute crisis that management “extinguishes” into a predictable and planned management tool.

Conclusion: Annual reporting in Lithuania is not a formality but a strategic tool

Annual financial reporting in Lithuania is not just a legal obligation; it also:

• Provides transparency and trust to EU and global investors,
• Creates a solid data foundation for intra-group tax and cash flow planning,
• Strengthens the compliance infrastructure for remote teams, fintech licenses, and expansions within the EU.

However, to manage this process correctly, a team that can read Lithuanian legislation, IFRS/BAS distinctions, annual calendars, and audit thresholds together, while also thinking integratively with your structure in Turkey and other countries, is required. At this point, working with a professional consultancy focused on international company formation and mobility, like Corpenza, not only reduces risks but also saves time for management.

Disclaimer

This text has been prepared for general informational purposes. It does not constitute legal, tax, or financial advice. Annual financial reporting, accounting standards, audit, and notification obligations in Lithuania may vary depending on the type of company, size, area of activity, and current legislative changes.

Before making any decisions, be sure to check the latest official regulations and resources published by relevant authorities (e.g., Lithuanian tax authority, Register of Legal Entities, central bank, or relevant ministries) and seek support from a professional advisor with expertise in the field. The authors or Corpenza cannot be held responsible for any consequences arising from decisions made based on the information here.