Why Lithuania

Competitive salary rates and high quality of staff map Lithuania among the most attractive countries to invest.

Lithuania takes one of the top positions in terms of European countries with lowest wages. The minimum monthly wage in Lithuania is currently 232 EUR. The average gross monthly earnings also have decreased due to the economic recession. After reaching a peak of 672 EUR in the third quarter of 2008, they decreased to 610 EUR in the second quarter of 2011.

Lithuania has one of EU’s most educated people: more than 90 % aged 25 to 64 have secondary or higher education (ranking 2nd in the EU, EU-27 average being around 70 %); 40 % of the 25 - 34 year olds have higher education, which is almost twice as high as the EU-15 average.

Source: Ministry of Economy, www.ukmin.lt;

Invest Lithuania, service provider for foreign investors in Lithuania, www.investlithuania.com;

Lithuania’s convenient geographic location since it is in the crossroad of economic markets of EU’s Western and Northern countries as well as non-EU’s Eastern countries builds a well-developed, economic bridge. The strategic Lithuania’s location also occurs as it is the country where railway tracks of two different standards – European and Russian – cross each other. In October 2011 the first regular container train linking Western Europe with China via Kazakhstan, Russia, Belarus and Lithuania was launched. The new rail link to Europe significantly reduces the time of shipment of goods. Sea shipment from Europe to China lasts 40 days, while the container train from China arrives in Lithuania in 10 days.

Although sometimes Lithuania is assigned to Nordic countries or to Eastern European countries, it combines the best features of both regions: Nordic progressiveness, innovative attitude as well as Eastern persistence, consistency and diligence.

Lithuania has shown one of the most successful rates of economic growth after joining EU in 2004. Lithuania’s Government took action to reform economic environment making it more business friendly and resistant to economic impacts. Therefore Lithuania’s economy managed to recover from global economic recession and it started to grow in the 3rd quarter of 2009. The GDP increased by 6.3 % in the second quarter of 2011 as compared with the corresponding period of the previous year. The Bank of Lithuania forecasts the economy will grow by 6.2 % in 2011 and by 4.8 % in 2012.

Source: Ministry of Economy, www.ukmin.lt

Lithuania offers a business friendly environment as its Government is very active in supporting companies establishing in Lithuania, i.e. Investment and Business Guarantees, INVEGA, a company established by the state, provides guarantees on bank and credit union loans as well as administering loan interest subsidies for small and medium-sized enterprises (SMEs) in need of business financing (for more information on INVEGA and investment guarantees and bank loan support please visit www.invega.lt)

Foreign investors interested in locating a business in Lithuania may apply for EU Structural Funds. Total allocation of EU structural assistance for Lithuania for the period 2007-2013, provided from the European Social Fund, European Regional Development Fund and Cohesion fund, amounts more than 6,7 billion Euro. This equals to an additional annual state budget. Multinationals such as Barclays, Western Union, Ideal Invent Technologies have already benefited from EU structural support when settling down in Lithuania.

Source: EU structural assistance to Lithuania, www.esparama.lt

The Lithuanian tax burden has been one of the lowest in the European Union according to the research “Taxation Trends in the European Union“ concluded by Eurostat in 2011. Lithuania exhibits the sixth lowest total tax burden (including social contributions) in the EU (29.3 % of the GDP against an EU-27 average of 38.4 %). The tax on corporate income is 15 %, being the fourth lowest in the EU-27 and far from the EU average of 23.2 %.

Lithuania has two free economic zones which are located in the country’s economically important centers and provide favorable conditions for developing business activities by offering prepared industrial sites with physical and/or legal infrastructure, support services, and tax incentives. Kaunas Free Economic Zone (for more information please visit www.ftz.lt) and Klaipeda Free Economic Zone (www.fez.lt) offer no corporate tax during the first 6 years and only 50% of corporate tax over the next 10 years (regular rate: 15%) , no tax on dividends for foreign investors (regular rate: 0* to 15).

Sources: Invest Lithuania, service provider for foreign investors in Lithuania, www.investlithuania.com;

Doing Business Project, www.doingbusiness.org;

European Commission, www.ec.europa.eu.

Lithuania, as a member of the European Union, uses all the benefits of free movement of goods in the single market of the European Union without internal frontiers. Lithuania is ranked in the 27th position for Trading Across Boarders in Doing Business 2012 data from World Bank and International Finance Corporation (IFC), measuring the ease of procedures and the level of costs in importing and exporting goods across 183 economies worldwide (whilst neighboring Poland takes the 126th position).

Lithuania provides the possibility to do business in the European Union at lower costs

Rental prices of office space vary depending on the location and the quality of the building.

Monthly rental of office space (EUR m2) A-Class B-Class

Vilnius 14-17 10-13

Kaunas 10-13 6-8

Klaipeda 10-13 6-8

Utility Costs

Utilities for companies Measurement Average rates, EUR

Electricity 1 kWh 0.09 - 0.11

Natural gas 1 m3 0.45 - 0.61

Cold drinking water 1 m3 1.17 - 2.06

Cold water for technical purposes 1 m3 1.17 - 2.06

Hot water 1 m3 4.34 - 5.80

Sources: public company AB Lithuanian Energy www.lpc.lt ,

private company UAB Vilniaus Energija www.vilniaus-energija.lt ,

public company AB Lithuanian Gas www.dujos.lt,

Lithuanian water supply companies,

Vilnius Municipality www.vilnius.lt,

private company UAB Vilniaus Vandenys www.vv.lt

NEWSEC/Re&solution, an independent financial and real estate consultancy company, www.newsecbaltics.com.

Lithuanian legal system is principally based on the legal traditions of continental Europe. The Lithuanian laws have been harmonized with the European Union law in order to become a member state as of 1 May 2004. The commercial law in Lithuania is of an increasingly excellent drafting quality and the market in Lithuanian legal services is now increasingly competitive.