Guide
Sales representative for the Baltics: how commercial agency works.
If you sell industrial goods or services and you want Lithuania, Latvia, Estonia or Finland covered without opening a company there, a commercial agent is the standard European answer. Here is exactly what that means.
Commercial agent, definition. A self-employed intermediary with continuing authority to negotiate the sale of goods on behalf of another person, called the principal, or to negotiate and conclude such transactions in that principal's name. That wording comes from Article 1(2) of EU Directive 86/653/EEC, which every member state has implemented. In German the word is Handelsvertreter (HGB §84). In Lithuanian it is prekybos agentas.
The three routes into a market, compared
| Commercial agent | Distributor | Employee | |
|---|---|---|---|
| Who contracts with the end customer | You | The distributor | You |
| Who sets the price | You | The distributor | You |
| Who carries stock and credit risk | Neither, unless agreed | The distributor | You |
| What you pay | Commission, often with a small retainer | A margin, typically 20 to 40 % | Salary and costs, whatever happens |
| Who owns the customer afterwards | You | The distributor | You |
| Time to start | Two to four weeks | Weeks, if you find a good one | Three to six months, plus an entity |
| Protected by statute | Yes, heavily | Rarely | Yes, employment law |
What the law gives the agent, and why that is good for you too
Agency is one of the few commercial relationships in Europe with a statutory floor that cannot be contracted away. Article 19 of the directive forbids agreements that derogate to the agent's detriment. The floor matters to a principal because it removes the argument: everybody knows the rules before anyone signs.
Notice periods
The directive sets one month in the first year, two in the second, three in the third, and allows member states to extend. Several did.
| Country | Implementing law | Notice ladder | End-of-contract claim |
|---|---|---|---|
| Lithuania | Civil Code Arts. 2.152 to 2.168 | 1 / 2 / 3 / 4 months | Indemnity or compensation, capped at one year's average remuneration |
| Germany | HGB §§84 ff. | 1 / 2 / 3 / 3 / 3 then 6 months after five years | Ausgleichsanspruch under §89b, capped at one year's average commission over the last five years |
| Latvia | Commercial Law ss. 45 to 63 | 1 / 2 / 3 / 4 months | Compensation, capped |
| Estonia | Law of Obligations Act §§670 to 691 | 1 / 2 / 3 months | Compensation, capped |
| Finland | Act 417/1992 | 1 / 2 / 3 / 4 / 5 / 6 months | Indemnity only, average annual commission over the last five years |
Sources and article-level detail are in our research file. This is general information about the law, not legal advice on your contract.
The termination payment nobody budgets for
When a principal ends an agency relationship, the agent can claim an indemnity or compensation for the customer base they built and you keep. It is capped at one year's average remuneration over the preceding five years, and the claim expires if the agent does not raise it within one year of termination. Germany calls it the Ausgleichsanspruch and it is litigated constantly. Budget for it at the start and write the calculation method into the contract.
What commission is normal
For industrial goods across this region, 5 to 15 percent of net invoiced revenue is the working range. The three things that move it:
- Your gross margin. A 60 percent margin product can carry 12 to 15 percent. A 20 percent margin product cannot, and an agent who accepts it on that product has not read your price list.
- Average order size. Large orders carry lower percentages because the work per euro is lower.
- How much of the sale the agent carries. Introduction only sits at the bottom of the range. Full cycle, technical qualification, procurement and after-sale sits at the top.
Small retainers alongside commission are normal and sensible in this region, because the sales cycle for industrial goods runs three to nine months and no good salesperson can work nine months unpaid. Treat a retainer as the price of getting a senior person rather than an available one.
How to appoint one, in order
Define the territory and the product lines
By name. Include the accounts you already hold, listed individually, and say they generate no commission.
Decide exclusive or not
Exclusive gets you a serious agent. Non-exclusive gets you an agent who works whoever pays first. In practice, for four small markets, exclusive is the only version that attracts anyone good.
Agree the commission and when it is earned
On order, on delivery, or on payment. Payment is the fairest and the most common. Also agree what happens to repeat orders from accounts the agent opened after the contract ends.
Write down the termination arithmetic
The indemnity or compensation method, not just a cross-reference to the statute.
Get a tax opinion on permanent establishment
Before signing. See below.
Give them what a salesperson needs
Pricing authority within limits, a technical contact who answers, reference customers, and a response time on quotes. Most agency relationships fail on the principal's side, not the agent's.
The tax question you must ask first
An agent acting in your country can, in some circumstances, create a permanent establishment for you there, which means taxable profits in that country. The general distinction in the OECD model and in most treaties is between a dependent agent who habitually concludes contracts in your name or habitually plays the principal role leading to their conclusion, and an independent agent acting in the ordinary course of its own business. The 2017 changes tightened the test considerably, including a closely-related-enterprises rule. Separately, holding a VAT number in a country is not by itself a fixed establishment for VAT, which is stated expressly in Article 11(3) of Implementing Regulation 282/2011.
None of that is advice on your situation. Ask your tax adviser before you sign, and give them the draft agency contract rather than a summary of it.
Sources
Every figure on this page comes from one of these, read on the date shown. Where a source could not be reached directly, the page says so rather than implying a check that did not happen.
- EU Directive 86/653/EEC on self-employed commercial agents — the articles on notice, commission and indemnity
- Lithuanian Civil Code, Book Two, commercial agency — Articles 2.152 to 2.168
- German Commercial Code, HGB § 84 ff. — Handelsvertreter, and § 89b for the Ausgleichsanspruch
- Finnish Act on Commercial Representatives and Salesmen 417/1992 — the longest notice ladder of the four countries
- Latvian Commercial Law — sections 45 to 63
- Estonian Law of Obligations Act — §§ 670 to 691
- OECD Model Tax Convention, Article 5 on permanent establishment — the dependent and independent agent distinction
Read 20 September 2026. German, Finnish and Estonian statutory sites block automated readers, so those texts were checked through secondary legal databases and the primary links are given for you to verify.
The four countries side by side
This is the comparison a principal actually needs before signing anything. Every row is read from the statute named in the first column, not from a summary of it.
| Country | Notice ladder, indefinite contract | Payment at the end | Cap | Deadline to claim |
|---|---|---|---|---|
| EU floor Directive 86/653/EEC, Art. 15, 17 |
1 / 2 / 3 months | Indemnity or compensation, each state chooses | One year's average, over five years | One year |
| Lithuania Civil Code 2.165, 2.167 |
1 / 2 / 3 / 4 months | Both routes available | One year's average over the whole term if five years or less, otherwise the last five | One year |
| Germany HGB 89, 89b |
1 / 2 / 3 / 3 / 3 / 6 months | Ausgleichsanspruch, indemnity | One year's average over the last five years | One year |
| Latvia Commercial Law 57, 59 |
1 / 2 / 3 / 4 months | Indemnity | Average annual commission, last five years | One year |
| Estonia Law of Obligations Act 670 to 691 |
1 / 2 / 3 months | Indemnity and damages | One year's average over the preceding five years | One year |
| Finland Act 417/1992 |
1 / 2 / 3 / 4 / 5 / 6 months | Indemnity only | Average annual commission, last five years | One year |
Three things are true of every row. The notice period cannot be shortened by agreement. The payment at the end of the contract cannot be excluded in advance. And the agent has one year from termination to say he intends to claim, or the right is gone.
Finland has the longest ladder of the four. Estonia is the only one that lets an agent take indemnity and damages rather than choosing. Lithuania is the only one that offers the principal a genuine choice of route, which in practice means the contract should say which one applies.
Last reviewed 2026-09-22. Written by Arūnas Roličius, get2market, Vilnius. Figures are dated where they are quoted.