1. Openness To, and Restrictions Upon, Foreign Investment
Policies Towards Foreign Direct Investment
Lithuania’s laws assure equal protection for both foreign and domestic investors. No special permit is required from government authorities to invest foreign capital in Lithuania. State institutions have no right to interfere with the legal possession of foreign investors’ property. In the event of justified expropriation, investors are entitled to compensation equivalent to the market value of the property expropriated. The law obligates state institutions and officials to keep commercial secrets confidential and requires compensation for any loss or damage caused by illegal disclosure. As a member of European Union, Lithuania is subject to WTO investment requirements. Invest Lithuania is the government’s principal institution dedicated to attracting foreign investment. It serves as a one-stop-shop to: provide information on business costs, labor, tax and legal considerations, and other business concerns; facilitate the set up and launch of a company; provide help in accessing government financial support; and, advocate on behalf of investors for more business friendly laws. In addition to its offices in Vilnius and major Lithuanian cities, Invest Lithuania has representative offices in Belgium, Kazakhstan, and the United States (Chicago). Every year the government holds a conference with foreign investors to discuss their concerns and ways to improve investment climate in Lithuania.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreign investors have the right to repatriate profits, income, or dividends, in cash or otherwise, or to reinvest the same without any limitation, after paying taxes. The law establishes no limits on foreign ownership or control. Foreign investors have free access to all sectors of the economy with some limited exceptions:
- The Law on Investment prohibits investment of foreign capital in sectors related to the security and defense of the State.
- The Law on Investment also requires government permission and licensing for commercial activities that may pose risks to human life, health, or the environment, including the manufacturing of, or trade in, weapons.
- As of May 2014, foreign citizens are allowed to buy agricultural or forest land.
The Law on Investment specifically permits the following forms of investment in Lithuania:
- establishment of an enterprise or acquisition of a part, or the whole, of the authorized capital of an operating enterprise registered in Lithuania;
- acquisition of securities of any type;
- creation, acquisition, and increase in the value of long-term assets;
- lending of funds or other assets to business entities in which the investor owns a stake, allowing control or considerable influence over the company; and
- performance of concession or leasing agreements.
- Foreign entities are allowed to establish branches or representative offices. There are no limits on foreign ownership or control. Foreign investors can contribute capital in the form of money, assets, or intellectual or industrial property. The State Property Bank screens the performance record and size of companies bidding on state or municipal property and has halted privatizations when it determined that the bidders were not suitable, i.e., for criminal or other reasons.
In 2018, the Lithuanian parliament passed a new edition of the law on the Protection of Objects Important to National Security. The law is aimed at enforcing additional safeguards to avoid threats related to investments into companies of strategic national importance, thus requiring a special government commission to screen investments in identified strategic sectors.
Other Investment Policy Reviews
- Check and reserve the name of the company (limited liability company). It takes about one day and costs approximately EUR 16.
- Register at the Company Register, including registration with State Tax Inspectorate (the Lithuanian Revenue Authority) for corporate tax, VAT, and State Social Insurance Fund Board (SODRA). It takes one day and costs approximately EUR 57.
- Complete VAT registration. It takes three days to complete at no charge.
The Lithuanian government neither incentivizes nor restricts outward investment.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy
* Source for Host Country Data: Lithuanian Statistics Department
Table 3: Sources and Destination of FDI
|Direct Investment From/in Counterpart Economy Data|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
|Total Inward||$17,769||100%||Total Outward||$3,531||100%|
|Sweden #1||$4,123||23.2%||Netherlands #1||$852||24.1%|
|Netherlands #2||$2,364||13.3%||Cyprus #2||$699||19.7%|
|Cyprus #3||$1,317||7.4%||Latvia #3||$526||14.89%|
|Germany #4||$1,297||7.2%||Poland #4||$372||10.5%|
|Poland #5||$1,069||6%||Estonia #5||$365||10.3%|
|“0” reflects amounts rounded to +/- USD 500,000.|
Table 4: Sources of Portfolio Investment
|Portfolio Investment Assets|
|Top Five Partners (Millions, US Dollars)|
|Total||Equity Securities||Total Debt Securities|
|All Countries||$9,976||100%||All Countries||$2,826||100%||All Countries||$7,150||100%|