How to convert an MB into a UAB (and when it is worth it)

Converting an MB into a UAB is worth it once you outgrow the limits of a small partnership — when you want to bring another company on board as a co-owner, attract an investor, sell part of the business as shares, or you simply have more owners than an MB allows. Purely for tax reasons the conversion almost never pays off: both a small partnership (MB) and a private limited company (UAB) are legal entities that pay corporate income tax (CIT), and dividends are taxed the same way in both cases. The real difference is not fiscal but one of ownership and financing — a UAB is simply a better fit for growth and outside capital.

This article explains how an MB and a UAB differ legally, when conversion is genuinely worth it (and when it just wastes money), how the process works, and how much share capital you will need. All rates, amounts and deadlines here are illustrative and current for 2026; always verify the exact conversion procedure and fees with the Centre of Registers, and taxes with the State Tax Inspectorate (VMI).

Converting from an MB to a UAB is not a tax trick but an ownership move: you do it when the business needs shareholders or capital that a small partnership simply cannot take on.

MB vs UAB: the core differences

Before considering conversion, it helps to understand why a UAB sometimes becomes a necessity. The main differences:

• MB members can only be natural persons, and there can be no more than 10 of them. Another company, a fund or any legal entity cannot become an MB member.
• UAB shareholders can be both natural and legal persons — up to 249. That means a UAB can be owned by another company, a holding structure or an investment fund.
• A UAB's ownership is divided into shares. Shares are comparatively easy to transfer, sell in part, or grant to an investor; MB ownership is built on member contributions and rights that are harder to transfer.
• Limited liability applies to both forms, so that is not a reason to convert.

If you are still choosing between forms, or wondering whether to start as an MB at all, read our comparison MB or UAB — which to choose in 2026 and the broader comparison of individual activity, a business certificate and an MB.

When it is worth converting an MB into a UAB

Concrete signals that it is time to move from an MB to a UAB:

• A corporate shareholder is joining. If another company or fund wants to become a co-owner, an MB does not allow it — you need a UAB.
• You are raising an investor or venture capital. Professional investors almost always invest in shares and want a clear shareholder structure — that is UAB territory, not MB.
• You want to sell part of the business or exit. Selling shares is far cleaner and more standard than transferring MB membership rights.
• You have more owners than an MB allows. When the number of co-owners approaches or exceeds 10, the MB form no longer fits.
• Rapid expansion and partnerships. For larger deals, tenders or international partners, a UAB often looks and reads as more established.

If you are only just starting out and are unsure about the form, first look through our general guide on how to start a business in Lithuania in 2026 — you may not need to convert at all yet.

When it is better to skip the conversion

Conversion costs time and money, so do not do it "for the prestige". Most often you do not need it if:

• you work alone or with a few partners who are natural persons and do not plan to bring in companies;
• you are not seeking an outside investor and have no intention of selling shares;
• you expect the conversion to cut your taxes — it will not. Both an MB and a UAB pay the same corporate income tax, and distributed dividends are taxed at 15% personal income tax (GPM) in both cases.

In other words, there is no tax benefit to look for in conversion — the reason must be structural, not fiscal.

How the conversion works: the process in general

Conversion is a change of legal form in which the company continues to operate: the same legal entity remains, and its rights and obligations pass to the UAB. The general logic:

1. Members' decision. The MB members decide to convert the partnership into a UAB and approve the terms.
2. New documents. The UAB articles of association and conversion documents are drawn up, and the share structure is set.
3. Capital. The UAB share-capital requirement is met (see the next section).
4. Notary (if needed). Depending on the situation, documents may need to be certified by a notary.
5. Registration at the Centre of Registers. The changed legal form is registered, and the company continues to operate as a UAB.

You will find the detailed UAB incorporation and document steps — which largely overlap with the conversion — in our guide how to set up a UAB in 2026: the steps. Verify the exact conversion procedure and timelines with the Centre of Registers — the registration itself takes about 3 working days, though in practice often 5–10 days.

UAB share capital: 1,000 EUR (at least 250 EUR upfront)

The biggest practical difference, and where MB members often stumble, is capital. An MB has no share-capital requirement (it is nominal). A UAB must have at least 1,000 EUR of share capital. Of that, at least 25% (250 EUR) must be paid in before registration, and the remainder can be contributed within 12 months.

In practice this means that converting an MB into a UAB will require forming at least 1,000 EUR of capital — not for tax reasons, but as a legal requirement. For more on how this capital is calculated and formed, read our article on how much share capital a UAB needs.

Example: an MB with a new corporate shareholder becomes a UAB

Suppose an MB owned by two natural persons wants to bring in a co-owner — another company that will invest in expansion. The MB cannot accept such a member, so a UAB is needed. An illustrative (2026) sequence and costs:

• Name reservation (JAR-5) — about 16 EUR (valid for up to 6 months), if you want to lock in the UAB name in advance.
• Capital — 1,000 EUR of share capital is formed; at least 250 EUR is paid in before registration, with the remainder within 12 months.
• Registration at the Centre of Registers — electronic registration is about 30 EUR; if a notary is required (depending on the situation), the notary fee is about 85–338 EUR based on the capital.
• Result — the company becomes a UAB, the shares are split between the natural owners and the new corporate shareholder, and a stake can be sold or transferred.

After conversion, profit is still subject to corporate income tax, and distributed dividends to 15% GPM. The specific amounts depend on your capital and situation, so verify exact fees with the Centre of Registers.

Taxes after conversion: what changes and what doesn't

It is important to understand that simply changing the legal form from an MB to a UAB barely changes the tax burden — both forms are corporate income tax payers:

• Standard corporate income tax — 17% (up from 16% in 2026).
• For small companies — 7% (up from 6%), if they meet the conditions.
• New small companies may pay 0% corporate income tax for the first 1–2 years (if fewer than 10 employees, revenue below 300,000 EUR, and the company is not part of a group) — but whether a converted company counts as "new" is worth checking separately with VMI.
• Dividends — 15% GPM.
• If the UAB director draws a salary, it is taxed like wages (GPM and "Sodra" social contributions); "Sodra" contributions are calculated on a set base.

Do not forget the obligations that stay the same: the annual financial report to the Centre of Registers — by 06-30, and the corporate income tax return to VMI — by 06-15 (for a calendar year).

Check the numbers with a calculator and official sources

Before starting a conversion, work out whether it pays off structurally:

1. Define the goal — do you really need a corporate shareholder, an investor or shares? If not, an MB may be perfectly enough.
2. Calculate director-salary costs — if you plan to pay yourself or partners a salary from the UAB, use our salary and tax calculator to see how much stays "in hand" and how much goes to "Sodra".
3. Check the current rates and procedure on the VMI, "Sodra" and Centre of Registers websites — they are updated every year.
4. Consult an accountant or lawyer about the specific conversion procedure and your case.

Disclaimer: all rates, amounts and deadlines in this article are illustrative and current for 2026 and intended for general understanding only — this is not tax or legal advice. Always verify the current rules and conversion procedure at the official VMI, "Sodra" and Centre of Registers sources, or with an accountant.

web1o helps growing businesses move cleanly into their next stage — from a website and customer flow to automated invoices and reminders, so structural changes don't turn into chaos. Before you take the step, work out the costs with our salary calculator and, if you need a concrete plan, book a consultation.