The company no longer trades — do you have to liquidate it?
No, it is not necessary. The law imposes no duty to close a company merely because it has stopped operating. Article 2.95(1) of the Civil Code (CK) provides that legal entities cease to exist by way of liquidation or reorganisation — in other words, a company continues to exist until one of those two things happens, whether or not it is doing anything. You can suspend activities and leave the company “dormant”. But one obligation remains even then, and it is precisely that obligation which causes most of the problems.
What “suspending activities” means
In practice, it means notifying the State Tax Inspectorate (VMI) that activities are temporarily not being carried out. Article 77(1) of the Law on Tax Administration (MAĮ) deals with cases where taxpayers temporarily do not carry out activities — in such a case, you may be temporarily exempted from filing current tax returns.
There is a second side to this that is worth knowing in advance. Article 77(2) MAĮ provides that the taxpayer must pay the tax within the time limit set by the relevant tax law, even though it has been temporarily exempted from filing the tax return. An exemption from filing a return is not an exemption from the tax. If a tax liability remains from the period of activity, it remains.
From our correspondence in 2024: the request concerning current tax returns is submitted to the VMI through its electronic system, with the members’ decision attached. It is not complicated and does not require an intermediary. Most clients do it themselves once they know what to ask for.
What suspension does not remove
This is where people get it wrong almost every time.
In one case, a client suspended activities, received confirmation from the VMI, filed nothing for two years and was convinced that everything was in order. Then came a notice of intended liquidation on the initiative of the Centre of Registers (Registrų centras). The client’s reaction was the same as everyone’s: “but I suspended activities”.
Suspension applies to tax returns. It does not apply to the set of financial statements. Article 2.66(4) CK imposes a duty to file the set of annual financial statements with the Register of Legal Entities every year within thirty days of their approval, unless the law provides for another time limit. Article 58(3) of the Law on Companies (ABĮ) makes that time limit specific for companies: since 1 July 2026, the set must be filed with the registrar within 5 months of the end of the financial year.
This means that even a completely inactive company must, every year, convene a meeting, approve the set of financial statements and file it. The statements will be empty, but they must exist.
It is precisely unfiled sets of statements that, after twelve months, bring the register’s notice. What happens next, and how much time you then have, is described separately — see the article on liquidation on the initiative of the Centre of Registers.
The same applies to non-profit organisations
For public establishments (VšĮ), associations and foundations the logic is no different. Activities can be suspended. The duty to file financial statements remains. In practice the problem arises here more often than in companies, because non-profit organisations have no accountant paid every month who would remind them of the deadline.
If you change your mind halfway through liquidation
The decision does not become irreversible until the last minute. Article 73(16) ABĮ provides that a decision to liquidate a company may not be revoked if at least one shareholder has received a share of the assets of the company being liquidated. Until the distribution of assets has begun, the process can be stopped. This is useful to know if liquidation has started and a buyer or a new order then turns up.
What each option costs — a comparison without a recommendation
Both routes have a cost, and the costs are of different kinds.
Leaving the company dormant costs something every year: the accountant’s work on the set of financial statements, formalising the meeting, and sometimes a registered-office address service. The amount is small, but it recurs every year, indefinitely. Alongside it, the duties of the head of the company remain — someone has to be appointed, reachable and responsible for making sure the statements are filed. In practice, this is the part that breaks down first, because nobody takes any interest in a dormant company.
Liquidation costs once, and then it is over. Afterwards there are no annual obligations, no head of the company, and no risk that the register will start the process because documents were not filed.
Which option is better depends on one thing: whether the company will ever be needed again. If the answer is “maybe in a year or two”, it is worth keeping. If the answer is “probably not, but it seems a shame to close it”, in practice that means paying every year for something you do not use, and waiting for a notice from the register.
We make no recommendation here, because it depends on your plans, not on the law.
How to start
Write to us saying whether the company might ever be needed again and how many years of financial statements remain unfiled. We will work out the cost of both routes in your case and tell you whether there are already grounds for a notice from the register. The first assessment is free of charge.
Tel. +370 5 212 1506, email info@linden.lt
More about this service: liquidation of companies.
