Entering the Lithuanian Market

Lithuanian Market

Foreign companies planning to expand into Lithuania will be met with one of the strongest manufacturing sectors in the world, a highly skilled and educated workforce, straightforward business procedures, and a variety of growth incentives for investors. However, setting up shop in an unfamiliar place comes with its own challenges. 

Foreign businesses must comply with employment, tax, payroll, and corporate legislation whilst ensuring that their employees are working productively and efficiently. At Bradford Jacobs we know that these complexities can counteract your plans. By using our Professional Employer Organization (PEO) you do not have to worry about these aspects since our in-country experts will handle every aspect of compliance.

Starting a Business in Lithuania

Lithuania’s position at the center of Europe means that the country has access to diverse marketplaces in the EU, the Baltics, and Asia. With a robust infrastructure, and a dominant ICT industry that makes over EUR 675.2 million in exports, this creates an attractive environment for any business owner who seeks to expand their business.

Lithuania’s biggest asset is its rising reputation as an entrepreneurial hub, with over 1,000 businesses from around the world planting their roots in the country, in which government start-up incentives (such as a start-up visa for foreign nationals) have played a huge part.

To start a business in Lithuania you must go through the registration procedure, which is straightforward and designed to be executed easily. These steps can be done online or in person, but for online registration, you will require an e-signature.

Expanding into Lithuania

Foreign companies want to expand into a formidable market, with a large talent pool and attractive labor and administrative costs, which Lithuania provides. Lithuania is a world leader in technology, particularly in ICT services and product, and is fast-growing into an entrepreneur due to its location as well as its attractive company incentives.

Business opportunities in Lithuania include these top industries: global business services, ICT, manufacturing, technology, life sciences, furniture industry, transport and logistics, food and beverages, environmental protection and renewable energy, construction, paper and printing, apparel, textile and leather, chemicals, and wood product manufacturing.

Whilst these industries create opportune levels for international expansion, they can also be expanded locally to popular locations such as Kaunas, Vilnius, Klaipeda, Šiauliai and Panevežys.

Lithuania Business Facts

• Capital City: Vilnius
• Population: 3.5 million
• Cities: Vilnius, Kaunas, Klaipėda, Šiauliai, Panevėžys, Alytus, Marijampolė, Mažeikiaj, Jonava, Utena, Kėdainiai, Tauragė, Telšiai, Ukmergė
• Official language: Lithuanian
• Economy/GDP (2020): $55,688 million, 83rd
• World Ranking: 11th in Doing Business (World Bank, 2020)
• Leading sectors – ICT, manufacturing, technology, life sciences, furniture industry, transport and logistics, food and beverages, environmental protection and renewable energy, construction, paper and printing, apparel, textile and leather, chemicals, metal, and plastic processing
• Main exports: Refined fuel, machinery and equipment, chemicals, textiles, furniture, plastics, wood, cereals, vehicles, other chemical goods
• Main imports: Crude petroleum, cars, packaged medicine, refined petroleum, and electrical machinery/electricity
• Main trading partners: Poland, Russia, Germany, Latvia, and the Netherlands
• Government: Unitary Semi-Presidential Republic
• Currency: Euro

Advantages and Challenges of the Lithuanian Market

Advantages of expanding into Lithuanian market include:

• Low operating costs: Employment and operational costs are lower compared to other European countries but boasts one of the best cost-to-quality ratios in Europe.
• Competitive tax system: Lithuania has the third-lowest corporate profit tax in the CEE (KPMG, 2019).
• Educated workforce: Lithuania is the fourth highest in the EU concerning the share of youth in tertiary education (Eurostat, 2019).
• Language: English is the favoured language for doing business in Lithuania, and most workers are multilingual.
• Ease of Business: Lithuania is 8th in the EU for digital public services for businesses (European Commission, Digital Economy and Society Index 2020).
• Logistics: The infrastructure of Lithuania is highly developed, and has access to the rest of Europe, the Baltics and Asia in a matter of days.
• EU Benefits: Lithuania is a member of the European Union and enjoys the same trade benefits of other EU nations.

The biggest challenge facing the Lithuania market currently is the effects of COVID-19, like many other nations in the EU and around the world. Other challenges include income disparity, slow tax reforms, and low healthcare spending, but reforms are taking place to combat these challenges.

Limited Company / Subsidiary or Branch in Lithuania?

A subsidiary established in Lithuania is considered a legal entity that is separate from the parent company, with independent administration and management. This provides more freedom for market exploration and creating international credibility.

A branch however, does not have any independence from the parent company, is not treated as a resident entity of Lithuania, and is limited in its administration and management.