FOREIGN INVESTMENTS IN THE BALTIC STATES

UIA 58th conference in Florence, Italy

October 29 – November 2, 2014

Yvonne Goldammer

bnt attorneys-at-law

Investment environment in the Baltics

• EU member states• Estonia and Latvia in the Eurozone, Lithuania

to join in 2015• Stable, functional rule-of-law legal systems• Tax benefits offered for investors• Cheap and well-educated labour• Conveniently located with ready access to key

European markets

I. Lithuania1. Taxes

• Tax benefits for foreign investors

• Favorable tax environment for small businesses

• 5% (instead of 15%) of corporate income tax applicable to enterprises having less than 10 employees and with gross income below EUR 290k

• Possibility to establish micro companies with no statutory capital and to apply tax thresholds on payments to its founders

• 7 special economic zones with attached tax benefits

• No corporate income tax for 6 tax periods, reduction of corporate income tax by 50% for 10 years afterwards

• 0% corporate income tax on dividends

• 0% VAT on goods and services supplied in free economic zones

• Tax incentives

• Investment incentive relief (reduction of taxable profit up to 50% due to investment incentive project)

• Research and development (R&D) incentive (taxable income reduced 3x by R&D costs)

• Relief for financing production of a film (reduction of taxable income up to 75%)

• Accumulated tax loss carry forward (up to 70% of the current year’s taxable profit)

2. Opportunities for Investment

• Key PPP sectors: Energy Efficiency, Transport, Public order and security

• On the table now: 3 hot investment opportunities (PPP)

• New Detention Facility in Vilnius (40M EUR)

• Cargo Port Development in Kaunas (11M EUR)

• Road Reconstruction Vilnius-Utena (70M EUR)

3. Employment and education

• Well educated: • 2x EU average of young people studying Engineering, Manufacturing

and Construction 

• Loyal:• Average employee turnover rate in international Shared Service Centers

is 7-8% • 69% of population aged 18-35 would like to work for an international

company

• Not expensive:• Minimum monthly wage – EUR 300.00• Average monthly wage in the national economy – EUR 530.00 (second

quarter of 2014)

* Information based on statistics published in the official site of Invest Lithuania:

http://www.investlithuania.com/lets-talk-lithuania/talent/

4. Lithuania’s program for EU regional funding 2014 – 2020

• Detailed plan of investments for 2014-2020 worth € 7.89 billion (€ 6.7 billion of EU investments and a national contribution of around €1 billion) for Lithuania to create employment and growth

• Covers several key EU investment funds, i.e. (ERDF), (CF), (ESF), (YEI) 

• More than half of investments business support, research and innovation, information and telecommunication technologies and low carbon economy

• First calls for proposals planned for the end of 2014.

II. Latvia

• Tax benefits, such as tax rebate for large-scale investment projects

• Corporate income tax a flat rate of 15 %

• Personal income tax a flat rate of 23 %

• Highly beneficial destination for holding countries

• Four free ports and special economic zones with tax advantages

1. Public guarantees and loans for investments

• Export credit guarantee

• Other credit guarantees

• Mezannine loans

• Micro-loans (EUR 25 000) to SME

• Risk capital investments from risk capital funds financed by the Latvian Guarantees Agency

2. Co-funding under EU Cohesian Policy 2014-2020

• EUR 4.51 billion in total allocated to Latvian private industries and public entities

• Samples of private industries related major investment priorities:

• Creation and the extension of advanced capacities for product and service development

• Energy efficiency and use of RES in the enterprises, production and distribution of energy from RES

• High growth enterprises and SME’s in manufacturing, as well in the priority industries covered by R&I Strategy

• Private business investment in R&I

III. Estonia

• Favorable tax environment; for example no corporate income tax; only distributed profits are taxed

• Personal income tax a flat rate of 21 %

• General ease of doing business

• Excellent IT infrastructure

• Four free trade zones

Thank you for your attention

bnt | attorneys-at-law

Kalinausko 24, LT-03107 Vilnius

Phone +370 5 2121627Fax +370 5 2121630

yvonne.goldammer@bnt.eu

www.bnt.eu

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