Lithuania: Country and Foreign Investment

Lithuania History, Population, Language and Culture

Lithuania was united as a country in 1236, and by the end of the 14th century was the largest state in Europe. A union with Poland in the 16th century survived until 1795, but the country was not again independent until after World War I, only to be occupied by Russia in 1944.

The country regained independence in 1991 after the dissolution of the USSR, and joined the EU in 2004 along with seven other Eastern European countries.

The population was 3.54m in July 2010, divided approximately as to: Lithuanian 84%, Polish 6%, Russian 7%, and other 3%.

Lithuanian is the official language, and 80% of the population are Roman Catholics.

BACK TO TOP

Lithuania Government

The Parliament (Seimas) has 141 seats and is elected by popular suffrage for a four-year term. The most recent elections in 2008 resulted in a multitude of small parties.

The President is elected for a five-year term and appoints the ministerial team. Dalia Grybauskaite has been the President since May 2009.

The legal system is based on civil law; there is a Constitutional Court, a Supreme Court and a Court of Appeal. Judges are appointed by the President.

BACK TO TOP

Lithuania Economy and Currency

Like most of the ex-USSR countries, Lithuania has had to cope with privatisation of most of its economy, but has also had to switch many of its eastern-pointing trade relationships towards the West. The country joined the WTO at the same time as joining the EU in 2004.

More than 69% of the economy is composed of services, with the remainder being industrial. Agriculture now accounts for only 4.2% of output. GDP per head was USD15,500 (2009). Growth was -15% in 2009, 3.1% in 2008, 9.5% in 2007.

Unemployment was 13.7% (2009 est.), however, the current account deficit of recent years is expected to have turned into a surplus by the end of 2010.

The currency is the Litas (LTL), which is pegged to the Euro at a rate of 3.4528 to 1. Monetary policy is directed towards a conversion to the Euro, which is expected to happen in or after 2013.

BACK TO TOP

Lithuania Entry and Residence

Lithuania is part of the EU's Schengen Area, meaning that there is visa-free movement within Schengen of nationals of all those EU Member States belonging to the area.

Lithuanian residence permits are issued to nationals of other Schengen countries subject to some conditions, including availability of sickness insurance, “adequate means of subsistence”, and a place to stay.

Temporary residence permits and entry visas for non-EU residents are still available but are more costly following the imposition of Schengen border controls.

For tax purposes, residency applies to anyone whose permanent place of residence or whose centre of personal and economic interests is in Lithuania, or who spends more than 183 days in Lithuania during a year, or more than 280 days over two years.

BACK TO TOP

Lithuania Business Environment

Telecommunication services are described as adequate. There are submarine cable connections to Denmark, Sweden and Norway, and landline connections to Latvia and Poland. Mobile phones have been edging out fixed lines. In 2008 there were more than 5m cellular phones, 1.4 per person; and more than 1.7 million Internet users.

There are three international airports, two of them in Vilnius. Most flights are to other European capitals and there are few direct intercontinental connections.

There are international train services connecting Lithuania with Russia, Germany and Poland, but buses are often preferred by local travellers, despite long delays at border crossings.

Klaipeda is a major port of call for international commercial ship traffic, but there are few passenger ferries.

The commercial property market has thrived since independence, but Lithuania has suffered along with other European capitals during the recent recession. Rental levels dropped sharply in 2009. The supply of modern offices in Vilnius increased by 65% in two years, prior to 2009. Current prices in Vilnius for modern space are between EUR12 and EUR15 per square metre per month.

Banking is moderately well developed. There are 10 locally-licensed commercial banks, and a number of foreign bank branches.

BACK TO TOP

Lithuania Investment Incentives

A reduced profits tax rate of 5% is available to micro-enterprises with fewer than 10 employees and turnover below LTL0.5m.

There are two free zones which offer tax benefits to enterprises which invest more than EUR1m.

EU Structural Funds support is available to certain types of project, particularly those with technological content. The allocation to Lithuania for the 2007-2013 period is EUR7bn. The government has opened eight industrial parks in which Structural Funds assistance is offered via free infrastructure, and subsidised, long-term rental of land.

Privileged tax treatment is available in the shipping sector.

BACK TO TOP