Freelance contracts and prices: how to set a rate, get an advance payment and invoice a foreign client
On this page · 11
- How to calculate an hourly rate
- Hour, unit or project
- What to put in a contract
- Advance payment and payment stages
- Forged bank details: a real case
- Form of activity: what VMI states
- VAT when working with foreign clients
- An invoice to a foreign client
- Additional income that does not depend on hours
- Frequently asked questions
- Sources
Most freelancers start with the question “how much should I ask?” and think about the contract and invoices only when a client is late paying. It is worth doing the opposite: the rate, the contract, the advance payment and the form of activity are one system, and its weakest link determines how much money is actually left.
This part of the guide covers how to calculate an hourly rate, when to choose a project price, what to put in a contract, how to issue an invoice to a foreign client and which forms of activity and VAT rules are set out by the State Tax Inspectorate (VMI).
In short
- Minimum hourly rate = (the income you need + business expenses + taxes) ÷ the hours you can realistically sell. Sellable hours are always fewer than working hours.
- A written contract and an advance payment are the only payment protection when you work with a client directly.
- Self-employment under a certificate (individuali veikla pagal pažymą) suits almost all services. A business certificate (verslo liudijimas) is almost unsuitable for work with companies: income received from companies is attributed to it only up to 4 500 € per year.
- When you provide services to companies in other EU countries or buy services from foreign companies, you have to register as a VAT payer regardless of the 45 000 € threshold.
How to calculate an hourly rate
The most common beginner's mistake is to equate the hourly rate with an hour of your former salary. For an employee, the employer pays the taxes, holidays and sick days, provides equipment and pays for time spent in meetings. A freelancer covers all of this from the rate.
- How much you want to receive “in hand” per year. This is the amount you need for living and savings.
- Add business expenses: computer and software, internet, training, accounting services, platform commissions and payout fees.
- Add taxes and contributions. Their amount depends on the form of activity and income – you can work it out with the ACS.lt personal income tax (GPM) calculator.
- Count the sellable hours. From the working days in a year, subtract holidays, public holidays and sick days. From the remaining hours, subtract those nobody pays for: finding clients, proposals, correspondence, invoices, learning.
- Divide. The required annual amount divided by the sellable hours is your minimum rate – the line below which you work at a loss.
Calculation example
Suppose you work 40 hours a week, but you can bill clients for 25 of them – the rest go on proposals, correspondence and administration. Working 44 weeks a year, you sell 1 100 hours. If income, expenses and taxes together require 33 000 € per year, the minimum rate is 30 € per hour. The figures are illustrative: put in your own hours and your own amounts.
Hour, unit or project
| Pricing | When it suits | Advantage | Drawback |
|---|---|---|---|
| Hourly | Unclear scope, consultations, ongoing maintenance | You do not lose out if the work expands | The client does not know the final amount; the faster you work, the less you earn |
| Per unit | Translations, texts, photo processing | Easy to compare and count | Does not reflect complexity |
| Per project | A clear result: a website, a logo, a package of texts | The client knows the budget, and your speed becomes your profit | If the scope is misjudged, the loss is yours |
| Monthly fee | A regular client with recurring work | Predictable income | What is included must be precisely defined |
Calculate the project price from hours: estimate how many each stage will need, multiply by the rate and add a margin for unforeseen work. In the proposal to the client show not the hours but the result and the amount.
What to put in a contract
A contract does not have to be long. For a short job, a proposal that the client confirms by email is enough – what matters is that the terms are written down rather than agreed over the phone. If you create a work – a text, a design, a translation, software code – and transfer the rights to it, the Law on Copyright and Related Rights requires a written copyright contract.
| Term | What to write down |
|---|---|
| Scope of work | What exactly will be done and – no less important – what is not included in the order |
| Result | In what format and by what means it is delivered |
| Deadlines | Your deadlines and the deadlines within which the client provides material and comments |
| Revisions | How many rounds are included in the price, how much additional ones cost |
| Price and payment | Amount, size of the advance payment, payment stages, payment deadline, late payment interest |
| Acceptance | Within how many days the client approves the work; what counts as acceptance if the client stays silent |
| Rights | Which economic rights are transferred, for which territory and term, from which moment |
| Termination | What is paid for if the project is stopped halfway |
| Confidentiality | Whether you can mention the client and show the work in your portfolio |
| Bank details | Which account is paid into and how a change of account is confirmed |
As regards rights, the law provides default rules: if the modes of use are not specified, it is considered that only as many rights have been transferred as are necessary for the purpose of the contract; if the territory is not specified, the rights have been transferred only in the territory of Lithuania. This may come as a surprise to a foreign client, so the territory and modes of use are worth writing down clearly.
Advance payment and payment stages
On platforms payment is protected by escrow: the client deposits the money before you start. When you work directly, an advance payment plays the same role.
- For a new client – an advance payment before work begins. Its size is a matter of agreement; what matters is that the work does not start without it.
- For a longer project – payment in stages: each stage begins once the previous one has been paid for.
- Final files and rights – handed over after full payment. This is worth putting in the contract.
- For a regular client – an invoice once a month with a clear payment deadline.
A client who refuses any advance payment and any contract is usually the same one who later pays late.
Forged bank details: a real case
There is a risk freelancers think about least often – not a client who does not pay, but money that has gone to the wrong recipient. Scammers break into the email of one of the parties or create a very similar address, watch the correspondence and at the right moment send an email: “our bank account has changed, pay into this one”.
The police daily incident report from October 2026 describes exactly such a case: a company in Trakai district received by email forged account details of its foreign partners and transferred 54 374 € to the specified account at a foreign bank.
For a freelancer this scheme is dangerous from both sides. Your client can receive a fake email in your name and pay the scammers – then you are left without the money, and the client believes the payment has been made. Or you may be the one who receives a fake invoice – from a supposed subcontractor or service provider.
How to protect yourself
- Put your account number in the contract together with a term that a change to it is valid only when confirmed through another channel – for example, by a call to the number stated in the contract.
- When you receive an email about changed bank details, call your partner on the number you had before, not the one given in that email.
- Check the sender's address carefully: the difference is often a single letter or a different domain ending.
- Use two-factor authentication for your email and invoicing software.
If the money has already been transferred to the wrong recipient, call your bank immediately – sometimes the payment can still be stopped. Then report it to the police via epolicija.lt or by phone on 112 and keep all the correspondence.
Form of activity: what VMI states
| Self-employment under a certificate | Business certificate | |
|---|---|---|
| What activity can be carried out | Any activity not prohibited by law, except activity that requires an employment contract or a company | Only activities from a limited list |
| When you can start | From the day a correctly completed application is submitted | Issued within 4 working days at the latest |
| Duration | Unlimited | For a chosen period, no longer than a calendar year |
| Income tax | Calculated on profit – income minus expenses | Fixed, calculated per day |
| Income limit | None | 50 000 € per year from 2026; the part above it is taxed as income from self-employment under a certificate |
| Income from companies | Not limited | Attributed to business certificate income only up to 4 500 € per year and only from companies that do not carry out the same activity |
The last row explains why a business certificate rarely suits a freelancer: the clients are mostly companies. A business certificate is intended more for services to private individuals.
The third route is a company, most often a small partnership (MB) or a private limited company (UAB). It is a separate legal entity: its assets and obligations are separate from your personal ones, but you have to keep the company's accounts, and money is taken out of the company under separate rules. A company is worth considering when volumes are large, you work with a team or clients want a contract with a legal entity.
A comparison of the forms and calculations are in the ACS.lt article “Self-employment: registration certificate or business certificate”, and the conditions of the business certificate in “Business certificate 2026”.
VAT when working with foreign clients
The VMI page “Kada atsiranda prievolė registruotis PVM mokėtoju?” (When does the obligation to register as a VAT payer arise?) lists five situations. Three are relevant to a freelancer.
| Situation | When the obligation to register arises |
|---|---|
| Income threshold | When, in the current or the previous calendar year, the consideration for VAT-taxable activity carried out in Lithuania exceeds 45 000 € |
| Supply of services to other EU Member States | When services are supplied whose place of supply, under Article 13(2)(1) of the Law on VAT, is considered to be another Member State – regardless of the amount |
| Purchase of services from abroad | When services are purchased from foreign taxable persons for which VAT must be calculated under Article 95(2) of the Law on VAT – regardless of the amount |
The VMI guidance note for natural persons explains that the general place-of-supply rule applies, for example, to intellectual services – advertising, consulting, engineering and similar. These are exactly the services freelancers most often provide. The second situation means a company in another EU country as a client, and the third can also cover the commissions of foreign platforms or software subscriptions.
The good news: when you register because of the supply of services to other EU countries or the purchase of services from abroad, you can apply the small business scheme if the consideration for activity in Lithuania does not exceed 45 000 €. Then you do not need to charge VAT on services supplied in Lithuania, but reporting obligations arise. How to apply this to your situation – whether the client is in the EU or outside it, a company or a private individual – is worth clarifying with an accountant or a VMI consultant before issuing your first invoice.
An invoice to a foreign client
- Language and currency. Issue the invoice in a language the client understands, and state the currency you agreed on. If it is not euros, say in the contract who bears the exchange rate risk and the bank fees.
- Your details. First name and surname, the number of your self-employment certificate, address and, if you are registered, your VAT number.
- The client's details. Name, address, company code and VAT number. The VAT number of an EU company can be checked in the European Commission's VIES system.
- Service. The same description as in the contract, the period, the quantity and the price.
- Payment. IBAN and the bank's BIC code, the payment deadline, the invoice number the client has to state in the transfer.
- Accounting. Record the income received in your income and expense accounts – VMI publishes ready-made sets of accounting documents for beginners.
Payments from non-euro-area countries can arrive reduced by intermediary bank fees. If this matters to you, state in the contract that the bank fees are paid by the payer.
Additional income that does not depend on hours
Hourly work has a ceiling: you can sell only as many hours as there are. That is why some freelancers have, alongside orders, a source of income that does not depend on hours – for example, an affiliate link to a product they recommend to their clients or readers. Commissions are also income from activity and are recorded in the same accounts.
Frequently asked questions
How do you calculate a freelance hourly rate?
Add up the income you need per year, business expenses and taxes, and divide the total by the hours you can realistically bill to clients. That is the minimum rate.
Is a written contract required?
When you transfer the rights to a work – a text, a design, a translation – the copyright contract is by law concluded in writing. In other cases a written contract is not mandatory, but without it it is hard to prove what was agreed.
Is a business certificate suitable for freelance work?
Rarely. VMI states that income received from companies is attributed to business certificate income only up to 4 500 € per year, and most clients are companies.
Do I need to register as a VAT payer if I earn less than 45 000 €?
You may. The obligation arises when you provide services to companies in other EU countries or purchase services from foreign companies, regardless of the amount. In that case you can apply the small business scheme.
What should I do if a client says they transferred the money to my “new” account?
This is the forged bank details scheme. The client must immediately contact their bank and the police (epolicija.lt or 112), and you should change your email password and check whether your account has been broken into.
Sources
- Valstybinė mokesčių inspekcija. Individualios veiklos pagal pažymą ir verslo liudijimo palyginimas
https://www.vmi.lt/evmi/kuri-veiklos-forma-man-tinkamesne - Valstybinė mokesčių inspekcija. Kokie yra individualios veiklos pagal verslo liudijimą apribojimai?
https://www.vmi.lt/evmi/kokie-yra-individualios-veiklos-pagal-verslo-liudijima-apribojimai- - Valstybinė mokesčių inspekcija. Kada atsiranda prievolė registruotis PVM mokėtoju?
https://www.vmi.lt/evmi/kada-atsiranda-prievole-registruotis-pvm-moketoju- - Valstybinė mokesčių inspekcija. Apie smulkiojo verslo schemos (SVS) Lietuvoje taikymą nuo 2025-05-01
https://www.vmi.lt/evmi/5678 - Lietuvos Respublikos autorių teisių ir gretutinių teisių įstatymas (suvestinė redakcija)
https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/TAIS.81676/asr - Lietuvos policija. Paros įvykių suvestinės
https://policija.lrv.lt/lt/ivykiu-suvestines/