Company accounting and document retention in Lithuania: who and how long

Accounting is organised by the company’s manager. This holds even where an accounting services firm keeps the books under a contract: the manager chooses that firm (unless the law gives that right to another management body) and makes sure the bookkeeper receives correct information on business transactions on time (Article 13(1) of the Law on Financial Accounting of the Republic of Lithuania (FAĮ)). From day one every business transaction must be supported by an accounting document and recorded. The same law applies to a Lithuanian branch of a foreign legal person. Documents are kept under the Law on Documents and Archives, and their minimum retention periods are set by a schedule approved by the Chief Archivist of Lithuania (Lietuvos vyriausiasis archyvaras): accounting documents and registers are kept for 10 years, employment contracts for 50 years from their termination.

What to do with documents when a company is liquidated is covered on our company liquidation page and in the article on the liquidation process. Which HR orders are actually required is covered in a separate article. This article is about what must exist in a company that is trading.

Who is responsible for accounting

Article 13(1) FAĮ lists what the manager does. The manager chooses the person who keeps the accounts, except where the law gives that right to another management body (Article 13(1)(1) FAĮ). The manager sets the procedure for recording and valuing business transactions (Article 13(1)(3) FAĮ) and the internal control measures (Article 13(1)(4) FAĮ). The manager ensures that, when the bookkeeper or the manager changes, the documents and registers are handed over on time (Article 13(1)(5) FAĮ).

Where an accounting services firm keeps the accounts, it may carry out some of these steps itself if the contract says so (Article 13(3) FAĮ). So the contract should state clearly who sets the accounting procedure and who is responsible for internal control. In our view, the manager’s duty to organise accounting does not pass to anyone else just because the bookkeeping has been given to an outside firm.

What must exist from day one

The FAĮ does not provide for a separate “start of accounting” document. It requires the system to work from the first transaction:

• business transactions are supported by accounting documents and all of them are recorded in accounting registers (Article 3(1) and (2) FAĮ);
• business transactions are recorded on the day they occur or as soon as possible, and no later than the day the statements are prepared, while cash transactions must be recorded no later than the last day of the current month (Article 3(3) FAĮ);
• accounting documents are prepared at the time of the transaction or after it and delivered to the recipient without delay, no later than the 10th day of the following month (Article 6(1) FAĮ);
• accounts are kept by double entry, except where the entities listed in Article 4 FAĮ choose simplified accounting (Article 3(4) FAĮ). A for-profit UAB is not among them (Article 4 FAĮ);
• a general ledger is kept, except by entities that have chosen simplified accounting (Article 8(1) FAĮ).

For-profit limited liability legal persons keep their accounts so that financial statements can be prepared under the Lithuanian or the international financial reporting standards (Article 11(1)(2) FAĮ). The exception is the entities listed in Article 11(1)(1) FAĮ, for example financial brokerage firms and insurance undertakings: they apply the international standards only (Article 11(1)(1) FAĮ). The financial year lasts 12 months, and a new company’s first financial year runs from the day it was established to the end of the financial year (Article 14(1) and (3) of the Law on Reporting by Undertakings and Groups of Undertakings of the Republic of Lithuania (IIGAĮ)). It is worth recording the chosen year-end in the accounting policy straight away, because the financial year may be changed no more than once every 5 years, except where it is changed to the calendar year (Article 14(2) IIGAĮ).

An accounting services firm starting work with a new company may ask for:

• an extract from the Register of Legal Entities or the electronic registration certificate;
• the articles of association and the list of shareholders;
• the bank account opening documents;
• powers of attorney signed by the manager, so that the bookkeeper can represent the company before public bodies;
• details of employees, if any will be hired.

If the manager lives abroad, it is worth signing and sending the powers of attorney in advance. If the bookkeepers need paper originals, sending them from abroad takes time.

A foreign company’s subsidiary and branch

A subsidiary UAB is a Lithuanian legal person, so all of the rules above apply to it. The IIGAĮ provisions on financial statements apply to for-profit limited liability legal persons registered in Lithuania (Article 2(1)(1) IIGAĮ).

A branch is not a legal person (Article 2.53(2) of the Civil Code of the Republic of Lithuania (CK)), but the FAĮ applies to it directly: the law applies to branches and representative offices in Lithuania of foreign legal persons or other foreign organisations (Article 1(3)(8) FAĮ). So a branch in Lithuania keeps its own accounts under Lithuanian rules. Which financial statements of the foreign company must be filed when the branch is registered is covered in our article on branch registration.

Two rules make life easier for groups. The mandatory details listed in Article 7 FAĮ are not required in accounting documents prepared by foreign entities (Article 7(7) FAĮ). And where transaction data are collected in several systems or in other entities, for example in the parent company’s system, entries in the Lithuanian entity’s registers may be made as summary amounts at least once a quarter, provided those amounts can be supported (Article 8(5) FAĮ). A foreign group may want the Lithuanian accounts to be kept the same way as in its existing company. That is possible as long as these requirements of the law are met.

How long to keep documents

Accounting documents and registers are kept in the manner set by the manager under the Law on Documents and Archives (Article 10(1) FAĮ). The same applies to financial statements (Article 38 IIGAĮ). Article 12(1)(2) of the Law on Documents and Archives of the Republic of Lithuania (DAĮ) requires private legal persons to keep their operational documents for as long as necessary, and the manager is responsible for this (Article 12(2) DAĮ).

A company sets retention periods in line with the requirements of laws and other legal acts (Article 13(1) DAĮ). Retention schedules for the internal administration documents of private legal persons whose preparation is required by legal acts are approved by the Chief Archivist of Lithuania (Article 13(2) DAĮ). This is the Retention Schedule of Internal Administration Documents (Vidaus administravimo dokumentų saugojimo terminų rodyklė), approved by Order No V-100 of the Chief Archivist of Lithuania of 9 March 2011 and restated in a new version from 1 October 2024. It applies to internal administration documents of private legal persons whose preparation is required by legal acts, and it sets minimum periods (point 2.1 of Order No V-100). The holder may extend a period (point 2.4 of Order No V-100). The main periods are:

• documents on the company’s registration in the Register of Legal Entities – until deregistration from the register (point 1.1 of the Schedule);
• decisions of the management body on organising the business – 10 years (point 1.5 of the Schedule);
• minutes of meetings of collegial bodies – 10 years (point 1.6 of the Schedule);
• lists of shareholders – 10 years from the change (point 1.8 of the Schedule);
• correspondence – 3 years (point 1.9 of the Schedule);
• cooperation agreements – 5 years from the end of the agreement’s term (point 1.10 of the Schedule);
• powers of attorney to represent the company – 1 year from the end of the power’s term (point 1.14 of the Schedule);
• decisions on hiring, transfer, substitution, dismissal, pay, childcare leave, paternity leave and idle time – 50 years (point 2.1.1 of the Schedule);
• decisions on leave schedules, annual and other leave, business trips and remote work – 3 years (point 2.1.2 of the Schedule);
• employment contracts and their annexes – 50 years from termination of the contract; employment contracts that never took effect – 3 years (point 2.3 of the Schedule);
• notices of termination of an employment contract – 3 years (point 2.6 of the Schedule);
• working time records – 10 years (point 2.20 of the Schedule);
• annual financial statements – 10 years (point 3.4 of the Schedule);
• accounting documents supporting a business transaction (invoices, payment orders, advance reports and others) – 10 years (point 3.15 of the Schedule);
• accounting registers – 10 years (point 3.19 of the Schedule);
• payroll calculation documents – 50 years, but only for one of the payroll calculation documents the company prepares; the others are kept for 10 years (point 3.20 of the Schedule);
• lists of persons entitled to sign accounting documents, with specimen signatures – 10 years from the change of the list (point 3.22 of the Schedule);
• purchase or service contracts and acceptance certificates – 10 years from performance of the contract (point 3.24 of the Schedule).

For a branch’s accounting documents, the DAĮ applies through Article 10(1) FAĮ, because the FAĮ also applies to branches. The Schedule itself speaks of legal persons, so our recommendation is to set the retention periods for a branch’s internal documents by reference to it, to leave no gaps.

Paper or electronic, and when documents may be destroyed

Paper operational documents, except those kept permanently, may be kept in electronic form without keeping the paper original, provided the authenticity of the digital image is ensured (Article 12(3) DAĮ). The procedure for selecting paper documents and keeping them in electronic form is set by the Chief Archivist of Lithuania (Article 12(3) DAĮ). Electronic documents must remain authentic, reliable and accessible for the whole retention period, and contextual information must be kept with them (Article 12(1)(4) DAĮ).

Documents may be destroyed only after an appraisal of their value, once the retention periods have expired; the manager takes the decision (Article 14(1) DAĮ). In addition, once the minimum period has expired, only documents that are no longer relevant to the company’s business processes may be selected for destruction (point 2.5 of Order No V-100). When a company is liquidated, documents whose retention period has not expired are transferred, before deregistration, to the municipality in whose territory the registered office was located (Article 17 DAĮ).

How to start

Send us the company’s extract from the Register of Legal Entities and tell us who keeps the accounts and where the documents are kept. We will draft the manager’s decisions on organising accounting and on document retention, or review the ones you have.

Phone +370 5 212 1506, email info@linden.lt

More about this service: drafting legal entity documents.