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Business Guide Lithuania 2018

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Business guide Lithuania 2018 General, tax and legal information for foreign investors. Table of Contents Country managing partner’s foreword 3 General information 4 Facts and figures Politics Economic environment 8 Key economic indicators Attractive sectors Regional and urban economic overview and trends Setting up a business 12 Ease of doing business Types of entities Accounting and audit requirements Share option plans Investment incentives 14 Investment financing Legal framework Double tax treaties Free economic zones Investment in real estate and land Investment protection and guarantees Labour 18 Conclusion of an employment agreement Working conditions Termination of an employment agreement State social security issues Immigration & permits 20 EU citizens Non-EU citizens Tax system 22 Corporate income tax (CIT) Withholding tax (WHT) Value added tax (VAT) Personal income tax Social security Other taxes Useful links in Lithuania 33 PwC 34 Contacts 35 © 2018 PricewaterhouseCoopers UAB. All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. Country Managing Partner’s Foreword It is a great pleasure for me to pre- the most dynamically developing city sent the Business Guide of Lithuania in the CEE region. 2018. The Guide offers a useful Here, at PwC Lithuania, we’re de- insight into the Lithuanian busi- lighted to share our insights to make ness environment for the potential your first steps in the Lithuanian individual or corporate investors. It market as easy as possible. We’re provides answers to the most com- ready to help you with a full range mon questions that the investors may of business, tax and legal issues. Our have: from business set-up to the people have extensive expert knowl- most relevant upcoming changes in edge and professional experience, the regulatory system of the country. and they are willing to offer profes- Our team at PwC Lithuania has also sional services tailored to the needs prepared an overview of the local of your business. economic environment, legal require- Rimvydas Jogėla ments, educational advantages and Managing Partner governmental incentives for investing for PwC Lithuania in Lithuania. We’re happy and proud that, despite the changing geopolitical environ- ment, Lithuania is able to maintain stable economic growth. It is not therefore surprising that in 2017, for the third year in a row, Vilnius – the capital of Lithuania – was elected as Business Guide Lithuania 2018 3 General information Facts and figures den and Denmark lie. Extending to 65,300 sq. km, Lithuania is a coun- try larger than Belgium, Denmark, Geography the Netherlands or Switzerland. The Republic of Lithuania is situated Lithuania has around 99 km of sandy in Northern Europe on the south- coastline devoted to a combination of eastern shore of the Baltic Sea. It is leisure and conservation. Lithuania the largest of the three Baltic States, has an ice-free port in Klaipėda, the other two being Latvia and Esto- which is the most important and the nia. Lithuania shares its borders with biggest Lithuanian transport hub, Latvia in the north (558 km), Belarus connecting sea, land and railway in the south-east (653 km), Poland routes from East to West. and the Kaliningrad Region of the The climate is midway between Russian Federation in the south-west maritime and continental. In January (104 km and 249 km, respectively). the average daytime temperature is To the west of the Baltic Sea Swe- -3°C (27°F), rising in July to +20°C (68°F). Country facts Estonia Capital Vilnius Latvia Area 65,300 km² Lithua nia Population 2.9 million Language Lithuanian Dominant languages English, Russian, German, Polish Currency Euro (EUR) Source: Statistics Lithuania 4 Business Guide Lithuania 2018 Vilnius Old Town is a UNESCO World Heritage Site Population and language The population of Lithuania is 2.9 million. Some 86.9% of the popula- tion are ethnic Lithuanians, 5.6% are Poles, 4.6% are Russians, and 2.9% - others. Lithuania is the largest of the three Baltic States, but globally it is a small country. Its capital and the largest city is Vilnius with a population of The New York Times ranks Vilnius 545 thousand. The second and the third largest cities are Kaunas and as one of the best places to live. Klaipėda with a population of 293 thousand and 151 thousand, respec- Vilnius is among 5 most affordable tively. The official and most commonly EU cities to live in. spoken language is Lithuanian. It is one of only two living languages (the other one being Latvian) of the Baltic branch of the Indo-European language family. About 95% of the population speak one foreign language (English, Russian, German or Polish) and more than 50% speak two foreign languages. 95% Time, weights and measures Lithuania uses Eastern European of working-age Time, which is two hours ahead of Lithuanians Greenwich Mean Time (GMT+2 know at least hours). Every year, between March and September, Lithuania intro- one foreign duces Daylight Saving Time (GMT+3 language hours). Lithuania uses the metric Lithuania system of weights and measures and the Celsius temperature scale. ranks second globally for Codes entrepreneurship The international extension code for Lithuania is 00 370. of managers The country code used in the Inter- net domain names is .lt. Business Guide Lithuania 2018 5 Politics • According to the Constitution of the Republic of Lithuania (adopted in 1992), Lithuania is an inde- pendent democratic parliamentary republic. • The supreme executive power rests • The supreme legislative power is with the Prime Minister who is held by the Seimas (Parliament), appointed by the President and the consisting of 141 members elected Parliament. Currently, the position for a term of four years on the of the Prime Minister is held by Mr basis of universal, equal and direct Saulius Skvernelis, one of the lead- suffrage and by secret ballot. Cur- ers of the Lithuanian Farmers and rently, Lithuania’s ruling coalition Greens Union. consists of the Lithuanian Farmers • Lithuania has 60 municipalities and Greens Union and the Social governed by mayors which starting Democratic Party. from 2015 are directly elected for • The President of Lithuania is four-year term. elected for a five-year term on the • Lithuania joined NATO on 29 basis of universal, equal and direct March 2004. On 1 May 2004, suffrage and by secret ballot. The Lithuania became a full member President represents the state of of the European Union, and joined Lithuania and performs the func- the Schengen Area on 21 Decem- tions prescribed to him/her by the ber 2007. Constitution and other laws. Cur- • In June 2015, the Lithuanian rently, the President of Lithuania is delegation received an official Ms Dalia Grybauskaitė, who is the invitation to start accession process first female president in the Lithu- to the Organisation for Economic anian history. She was re-elected Cooperation and Development for the second term in 2014. (OECD). The first positive opinion was issued by the OECD Trade Committee on 22 April 2016. The Lithuanian authorities are in process of an intense technical accession, which is expected to be completed during 2018. Lithuania’s court system Supreme Supreme Administrative Constitutional Court Court Court Court of appeals 5 regional administrative courts 5 regional courts 49 district courts 6 Business Guide Lithuania 2018 Economic environment Key economic investment levels and growing cus- tomer consumption are also impor- indicators tant factors that have considerable influence on Lithuania’s economic Due to accelerated international recovery and growth. trade and significantly greater Booming shared service centres production, global economic activ- 2.0% ity has been recently expanding. Vilnius is attracting higher added value jobs such as business analytics, GDP growth The improved economic situation of Lithuania’s major export partners anti-money laundering, asset man- in 2018* (i.e. Estonia, Latvia, Poland, Russia agement support, and IT develop- and Germany) has also had a positive ment. More and more shared service effect on the country’s economy. Both centres choose Lithuania as their exports of products and exports of destination due to highly skilled well- services have been picking up the educated professionals that are able 3.3% pace. Yet international environment to speak several foreign languages, a is not the only factor contributing world-class infrastructure and a good GDP growth to the growth of the Lithuanian location. in 2017* economy. According to economists, Currently, there are more than fifty declining unemployment, increased shared service centres in Lithuania that provide worldwide high-qual- ity services. Overall, the sector has Lithuania’s economy is rapidly growing grown by 82% during the last three years. The main macroeconomic indicators for 2013–2018 Infrastructure Lithuania is situated at the heart 2013 2014 2015 2016 2017* 2018* of Europe, thus making it easy and Nominal GDP (EUR billion) 35.0 36.6 37.3 38.6 40.0 41.3 convenient to access other European GDP growth rate, % 3.5 3.0 1.7 2.3 3.3 2 cities. There are four international airports in Lithuania, which offer di- Average annual inflation, % 1.2 0.2 -0.7 0.8 3.2 2.2 rect flights of up to three hours to the Unemployment rate, % 11.8 10.7 9.1 8.0 7.3 7.1 main business destinations. The road * Forecast network of Lithuania is also well de- Source: Statistics Lithuania and Bank of Lithuania forecasts veloped. Lithuania has more than 71 thousand kilometres of roads whereof Inward foreign direct investment by country 91% are paved roads. (outstanding amounts at the end of 2016, EUR million) Attractive sectors Sweden, 2,599 18.7% Netherlands, 1,834 13.2% Information and communication technology sector is one of the highly Germany, 1,040 7.5% prioritised and most promising sec- Poland, 977 7.0% tors in Lithuania.
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