TENEBRIS LLC » Lithuania a Good Place to Invest in Baltic Countries

Basics

Lithuania (Republic of Lithuania, officially) is located in north-eastern Europe. It is bordered by Latvia, Russia (Kaliningrad Oblast), Poland and Belarus. It has access to Baltic Sea. Population is around 2,8mln.

GPD is 107 billion USD – GPD nominal is 55 billion USD (2020)

GPD per Capita is 38 605 USD – GPD per Capita nominal is 19 883 USD (2020)

Currency: EUR

Legal system is based on Civil Law

Lithuania is part of European Union.

Investing in Lithuania

It is worth to mention that Lithuania was a part of Soviet Union, it was not separate country but is was basically in USSR. Because of that the country's economy was controlled and influenced by Soviet Russia. Legal system and business environment was 100% Soviet and Communist. As such it was not a place for private entrepreneurs like cold be seen in other countries. After the collapse of Soviet Union the country gained its independence but it was in total chaos. Economy was almost none since everything was created by Soviet Russia and was targeting mostly soviet countries and allies.

The new Lithuanian country that emerged started changing law in order to create Western standards (you can find my publication about it on Amazon). I have to say that the process went quite well and today Lithuania is interesting country to invest by opening new companies or moving part of the production or services there.

The best option would be to create something in Free Economic Zones (FEZ) as there are always some benefits to gain from them. For instance there is 0% of profits from FEZ for 10 years after that there is only 7,5% tax on profits. I have to say that this option is very good for start-ups as they can invest the amount that would go on tax.

If we are talking about investments there is a Investment Project Incentive witch allows investor to reduce taxable profits up to 50%. Again start-ups can reduce their taxes by investing into their growth. The whole idea behind Lithuanian Government is to encourage companies into investing in their future not only to look for cheap place. Which in my opinion is more then good idea. This scheme makes Lithuania very good place for R&D places for foreign companies. You do not have to worry about work force, Lithuanian youth has got good education and because country is neighbouring with Poland, Lithuania and Belarus you can 'import' needed workers.

The tax outside the FEZ is also more then favourable as CIT is 15% and personal income tax is also 15%. This makes Lithuania a small tax heaven for companies. The VAT (Value-Added-Tax) is 21% (standard), 9% (reduced), 5% (certain pharmaceutical goods) and 0% (international transportation).

Renting a space is not that expensive as it ranges from 6 to 20 EUR per sqm. The price depends on the location, standard of the property and its purpose. Comparing this to other European rates the rent is more then fair.

Key Sectors

Lithuania welcomes any investors with their ideas and assist them with achieving their goals. Nonetheless there are some sectors that are close to their hart:

a) Global Businesses Services (BPO, Shared Services etc.)

Business Services for Finance and Insurance Companies
Businesses Services for IT Companies
Business Services for Manufacturing Companies

b) Manufacturing

Automotive Components
Aircraft MRO

c) Technology

Fin-Tech
Cyber Security
Games Development
Data Centres

Those sectors are quite lucrative in Lithuania plus there is available work force in the Country and surrounding neighbours. Personally I do not like key sectors that much as it is always government wish to develop this side of the economy. I think that it is better to think what you investor would like to do and make the risk. Of course companies in those sectors would be spoiled by central and local authorities.

Conclusion

Lithuania is very attractive place to invest do to its tax schemes and incentives. The easy access to qualified work force enables investors not to worry about the business progress.

The last important thing is the by investing in Lithuania your will have access to EU market without any restrictions. This means that if you move part of the production (product assembly for example) you will get 'EU Made'. This will allow you to sell your product within EU without any problems or tariffs. This is most important for non-EU investors (for example USA or China). British companies can also benefit from this since the BREXIT.

In my opinion Lithuania is good place to start your expansion into EU. Maybe it is not a big market for sales but is is a good place to locate your base of operations. The country gives impressive number of possibilities that can be utilized. Being part of the EU and having access to the sea is just a cherry on the cake.

Please leave your thoughts in comments section.