Payroll for remote employees from Lithuania in 5 steps

Payroll for remote employees from Lithuania

Nowadays it is common to search for professional employees beyond the borders of the country your company is situated in. Especially if there is little to no difference whether a person works for you from an office or remotely. Lithuania, for instance, is a good source of a skilled IT workforce. The European country has one of the most developed internet infrastructures in the EU, a comparatively low cost of living (therefore lower competitive salaries), and a large pool of talented IT professionals. Lately, it has become one of the major IT hubs in Eastern Europe with its own prosperous infotech startup environment and many Belarusian companies moving their offices to the country. Thanks to all of this, there has been a growing interest in specialists from Lithuania.

But how to organize payroll for a remote employee from Lithuania?

Steps for organizing payroll for remote employees from Lithuania

  1. Obtain a Lithuanian Tax ID. A foreign company must obtain a Lithuanian tax identification number (TIN) to operate in Lithuania. The TIN is used to register the company for tax purposes and file tax returns.
  2. Register with the State Social Insurance Fund Board. All companies in Lithuania must register with the State Social Insurance Fund Board (Sodra). Sodra will manage your employee’s social insurance, which includes pension and health insurance.
  3. Determine the Employee’s Salary. The employee’s salary must be determined based on the country’s minimum wage regulations and the employee’s skills, experience, and qualifications. You can find out more about the minimum wage in Lithuania in 2023 here. You can also count the salary and calculate all the necessary taxes with our salary calculator
  4. File Tax Returns and Make Tax Payments. As an employer, you must file tax returns and make tax payments on behalf of the company and the employee. Failure to comply with tax laws can result in severe penalties.
  5. Administer Employee Benefits. As an employer, you must also administer employee benefits. It includes health insurance, retirement plans, and vacation time. Your employee from Lithuania is entitled to 20 vacation days a year if they work 5 days a week and to 24 days off if they work 6 days a week. Remember — you must ensure that all the benefits mentioned comply with Lithuanian laws and regulations.

At the end of the day, to properly employ a specialist from Lithuania, you need to obtain a comprehensive understanding of the country’s payroll regulations and tax laws. Because if you fail to comply with them, your company can face severe penalties.

But there is an alternative — finding a payroll provider in Lithuania. And you have already found us, so why go any further? This specific assistance — organization of the whole payroll process for foreign companies seeking employees in Lithuania — is one of the services our dedicated payroll team provides. 

You are welcome to contact us, so we could help you with the whole process!