Investment in the Baltic States - KPMG | US · PDF filePreface Investment in the Baltic States is one of a series of booklets published by KPMG to provide information to those considering

Investment in the Baltic States
A comparative guide to investment in Estonia, Latvia and Lithuania
KPMG in the Baltics

2
015
KP
MG
Bal
tics
SIA
, a L
atvi
an li
mite
d lia
bilit
y co
mpa
ny a
nd a
mem
ber fi
rm o
f the
KP
MG
net
wor
k of
inde
pend
ent m
embe
r firm
s af
filia
ted
with
K
PM
G In
tern
atio
nal C
oope
rativ
e (
KP
MG
Inte
rnat
iona
l),
a Sw
iss
entit
y. A
ll rig
hts
rese
rved
.

Preface
Investment in the Baltic States is one of a series of booklets published by KPMG to provide information to those considering investing or doing business in various countries.
This publication has been prepared by KPMG in Estonia, Latvia and Lithuania to assist those contemplating investment or commencing operations in the Baltic states. KPMG in the Baltics provides audit, tax and advisory services for local and multinational companies, government entities and inward investors.
The information in this booklet is of a general nature and should be used only as a guide for preliminary planning purposes. Because of the continually changing legislative environment in the Baltics, the complexity of corporate, tax and social laws and regulations in each country and the steadily evolving nature of the respective economies, comprehensive professional advice and assistance should always be obtained before implementing any plan to invest in or immigrate to the Baltic states.
KPMG with more than 300 staff in the Baltic states can provide such assistance and would be pleased to provide more detailed information on matters discussed in this publication.
Every care has been taken to ensure that the information presented in this edition is correct and accurate as of 1 April 2015.
Revised edition Riga, April 2015
2015 KPMG Baltics SIA, a Latvian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.

In Estonia KPMG Baltics ONarva mnt 5Tallinn 10117 EstoniaT: +372 6 26 87 00F: +372 6 26 87 77E: [email protected]
kpmg.com/ee
In Lithuania KPMG Baltics UAB Konstitucijos pr. 29Vilnius LT 08105Lithuania T: +370 5 210 26 00 F: +370 5 210 26 59 E: [email protected]
kpmg.com/lt
Contact us
Liep g. 4 Klaipda LT 92114Lithuania T: +370 46 48 00 12 F: +370 46 48 00 13 E: [email protected]
In Latvia KPMG Baltics SIAVesetas iela 7Riga LV 1013 Latvia T: +371 67 038 000F: +371 67 038 002E: [email protected]
kpmg.com/lv
www.kpmg.com/eewww.kpmg.com/ltwww.kpmg.com/lv

Contents
Country profile 10
Estonia General information 11Geography and climate 11Population and language 12Political system in Estonia 12Estonias mid-/long-term government strategy 13Overall investment environment 14Key economic indicators 16Infrastructure 17International membership 17
Latvia General information 18Geography and climate 18Population and language 18Political system in Latvia 19Overall investment environment 19Key economic indicators 24Infrastructure 24International membership 26
LithuaniaGeneral information 27Geography and climate 27Population and language 27Political system in Lithuania 28Governmental strategy for economic development 28Overall investment environment 29Key economic indicators 32Infrastructure 32

Business law 34
Estonia How to invest 35Corporate legal entities 35Incorporation and capital requirements 36Management 37Branch of foreign company 38Representative offices 38Mergers 39Cross-border mergers 39Going public 39Insolvency proceedings 40Bankruptcy proceedings 40Settlement with creditors 40Rehabilitation and compromise 41Reorganisation 41
LatviaHow to invest 41Corporate legal entities 42Incorporation and capital requirements 42Management 44Branch of foreign company 45Representative offices 45Mergers 45Cross-border mergers 46Going public 47Insolvency proceedings 47Legal protection proceedings 48Insolvency proceedings of a private individual 48
LithuaniaHow to invest 49Corporate legal entities 49Incorporation and capital requirements 50Management 51Branch of foreign company 51Representative offices 52Mergers 52Cross-border mergers 53Going public 54Insolvency proceedings 54

Business taxation 56
Estonia Tax residency 57Corporate income tax 57Value added tax 60Excise duties 62Real estate tax, land tax 63Other 63
LatviaTax residency 64Corporate income tax 64Value added tax 68Excise duties 69Real estate tax, land tax 70Other (natural resource tax) 70
LithuaniaTax residency 71Corporate income tax 71Value added tax 78Excise duties 80Real estate tax 80Land 80Other (local taxes) 81
Individual taxation 82
Estonia Tax residency 83Personal income tax 83Social security tax 86Unemployment insurance 86Pension insurance 86Capital taxes 86Inheritance and gift tax 86Tax calculation example 86
LatviaTax residency 87Personal income tax 87Social security tax 91Unemployment insurance 92Capital taxes 92Inheritance and gift tax 92Tax calculation example 92
LithuaniaPersonal income tax 92Social security and health insurance 97 contributions

Payments to Guarantee Fund 97Capital taxes 98Inheritance tax 98Tax calculation example 99
Accounting and auditing 100
Estonia Accounting 101Auditing 102
Latvia Accounting 104Auditing 109
Lithuania Accounting 110Auditing 112
Employment 114
Estonia Employment contracts 115Remuneration 116Working time 116Termination of employment 117Expatriates and immigration law 117Trade unions 118
LatviaEmployment contracts 119Remuneration 119Working time 119Termination of employment 120Expatriates and immigration law 120Trade unions and employee representatives 121
LithuaniaEmployment contracts 122Remuneration 123Working time 123Termination of employment 124Trade unions 125Work of expatriates in Lithuania 125Immigration 126
Real estate 128
Estonia Registration 129Acquisition 129Real estate contracts 130Mortgage 130

LatviaRegistration 131Movable and immovable property 131Acquisition 131Real estate contracts 132Mortgage 133
LithuaniaRegistration 133Movable and immovable property 133Acquisition 133Real estate contracts 134Mortgage 135
Other legal considerations 136
Estonia Competition law 137Intellectual property 139Consumer protection 139Anti-money laundering 139Litigation and arbitration 140
LatviaCompetition law 140Intellectual property 141Consumer protection 142Anti-money laundering 142Litigation and arbitration 142
LithuaniaCompetition law 143Intellectual property 144Consumer protection 145Anti-money laundering 145Litigation and arbitration 146
App Index A Tax treaties 148
App Index B Useful links 151
App Index C KPMG in the Baltics 153

10 | Investment in the Baltics
1 Country profile

Investment in the Baltics | 11
Estonia
General information
Estonia is a forward thinking, ambitious nation with a rich heritage, melding western influences with an eastern hunger for success. Currently, Estonia is very pro-business with one of the most liberal trade and investment policies in Europe. It was the first country in Europe to introduce a flat tax which ushered in an era of prosperity. Since then, many other countries have followed Estonias lead.
Estonia is an attractive investment location in the Baltic Sea region and has been successful in attracting foreign direct investment (FDI). This development of FDI stock vividly demonstrates the economic potential of Estonia. Countries that are more successful at attracting FDI will achieve more rapid convergence towards the EUs average economic development level. An influx of FDI involves a technological and management

Documents

Investment in the Baltic States - KPMG | US · PDF filePreface Investment in the Baltic States is one of a series of booklets published by KPMG to provide information to those considering