Freelance contracts and prices: how to set a rate, get an advance payment and invoice a foreign client

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).

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.

1. How much you want to receive “in hand” per year. This is the amount you need for living and savings.
2. Add business expenses: computer and software, internet, training, accounting services, platform commissions and payout fees.
3. 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.
4. 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.
5. Divide. The required annual amount divided by the sellable hours is your minimum rate – the line below which you work at a loss.

Hour, unit or project

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.

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.

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

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.

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