Investment

Investment in Lithuania

In the course of the last years Lithuania became one of the most popular and attractive targets in the region for foreign investments. However, foreign investments decreased significantly in 2009 and the main reason for this was global economic crisis that had and continue to have material impact on the economic situation of the country.
Irrespective of that, Lithuania still offers a high quality and much less expensive alternative to similar activities in the West. Moreover, fixed and stable currency, diversified business environment and the existence and application of the legislation ensuring the safety and non-discrimination of investors have taken away the doubts of domestic and foreign investors with regard to the benefits and the safety of investments in Lithuania.
The Law on Investment of the Republic of Lithuania provides that Lithuania is open for investments and all kinds of investors. Lithuanian and foreign investors are granted with the same treatment.

The State supporting investments in the ways, where:

1) the minimum amount of capital investments (LTL 5 or 20 million, see below) is invested in the means for refurbishing and modernising technologies of prospective industry enterprises, improving the country’s ecological situation, developing the small-medium businesses;
2) greenfield investment is made;
3) investment is made in buildings (structures) in the course of construction, which may not be completed due to lack of funds or which become being no longer suitable for use for the purpose for which they were intended;
4) investment is made in territories with specific social and economic problems;
5) investment is made in free economic zones, science and technology parks;
6) investment is made in innovations, knowledge economy clusters – clusters of geographical interrelated industries and institutions of a certain sphere.
The State may also allocate funds, grant loans and give loan guarantees for investments into the restructuring of sectors of the economy, reduction of economic and social differences between separate regions of the country, job creation and mitigation of natural disaster effects.
Investment shall be promoted by the State by the following methods:
1) the investors shall be granted tax incentives determined by appropriate tax laws;
2) personnel retraining costs shall be covered in part or fully;
3) Lithuanian and foreign creditors who have granted loans for the execution of investment projects shall be given State and municipal guarantees;
4) the repayment to the banks of loans intended to be used by economic entities for financing the execution of investment projects may be secured by the guarantees offered by the guarantee institutions set up by the Government or the guarantees offered by insurance undertakings or by insurance of the loans;
5) contracts for the investment of not less than LTL 20 million and, in the districts where the unemployment level is above the national average officially announced by the Department of Statistics, not less than LTL 5 million, shall be concluded with investors by the Government of the Republic of Lithuania or an institution authorised by it, where special terms and conditions of investment and business set;
6) contracts for investment in municipal infrastructure, production or service area, which meet the criteria set by the municipal council shall be concluded by the municipality. Special terms and conditions of investment, business or choice of a land plot shall be established in such contracts according to the competence of municipality;
7) in the cases specified by laws of the Republic of Lithuania, State-owned land shall be leased to the investor with no auction procedure;
8) the infrastructure shall be created (up to the boundaries of the land plot allotted to the investor) with the State/municipality resources.
The investment promotion methods shall be applied to the extent these are not in breach of the EU legislation on State aid.
An investor has the right to convert Litas into a foreign currency or transfer abroad without any limitation. The tax regime applied to the businesses with foreign capital investments may not be less favourable than the one applied to Lithuanian legal and natural persons.

Restrictions Applicable to Foreign Investments

Foreign entities which do not meet the criteria of European and Transatlantic integration provided for in the Constitutional Law are prohibited from acquiring land, internal waters and forests in the Republic of Lithuania. However, they may lease the State land plot for the maximum term of 99 years. The foreign entities meeting the criteria of European and Transatlantic integration have no right to own the land for agricultural and forestry purposes until the expiration of the provisional period of seven years determined by the Accession Treaty to the European Union, i.e., till 1 May 2011.
The foreign investments are restricted in the national security and defence activity (except the investments from business entities satisfying the criteria of the European and Transatlantic integration, if approved by the State Defence Council).

 Bilateral agreements

The bilateral agreements on the promotion and protection of investments are concluded and in effect between Lithuania and Albania, Argentina, Armenia, Austria, Australia, Azerbaijan, Belarus, the Belgo-Luxemburg Economic Union, Bosnia and Herzegovina, Bulgaria, China, Croatia, the Czech Republic, Denmark, Estonia, Finland, France, Greece, Germany, Georgia, Hungary, Iceland, Italy, Israel, the Hashemite Kingdom of Jordan, Montenegro, the Republic of Korea, Kuwait, Kazakhstan, Kirghizia, Latvia, Moldova, Mongolia, Serbia, the Netherlands, Norway, Poland, Portugal, Romania, Russia, Serbia, Slovenia, Spain, Sweden, Switzerland, Turkey, the United Kingdom of Great Britain and Northern Ireland, Ukraine, Uzbekistan, the United States of America, Venezuela and Vietnam.