Country Report Lithuania 2020

Economic Overview

Lithuania registered a strong development in 2019, however this is conjecture to decrease in 2020 because of outer components. 

Gross domestic product development in 2019 is found in the 3.4-3.8% territory as indicated by estimates from the European Bank for Reconstruction and Development (EBRD), the European Commission, the International Monetary Fund (IMF) and Swedbank. 

This was helped by factors including better agrarian yields contrasted with 2018, which urged a few market analysts to raise their underlying figures for the year. During the year, development was upheld by “lively family unit utilization, venture and fares” as indicated by the EBRD, which highlighted work charge changes that decreased the duty wedge in 2019, giving an extra lift to family unit spending, while speculation development stayed solid as assimilation of EU reserves improves. 

The most recent information accessible from Statistics Lithuania shows that Lithuanian GDP development came in at a balanced 3.6% y/y in the second from last quarter, as per the insights office’s first perusing, which is only 0.4pp down on the past quarter’s perusing.

Main sectors of industry

The largest industries in Lithuania are oil refinement and compost fabricating. Processed and unprocessed nourishment sum for 16,9% of exports.Traditionally solid apparel industry has been hit by re-appropriating to Asia. 

The agricultural sectors  currently employs just somewhere in the range of 12 percent of the population yet they are acceptable at lobbying. In this manner the legislature by and large sponsors horticulture. The European Union adds to this in spite of the fact that the European Union endowments are essentially lower than for ranchers in nations like France. 

Lithuanian ranchers usually develop grain, pigs, chicken, and cows. 

The”traditional agriculture” where a family owns a single dairy animals, a pig and a few fields is declining yet at the same time all around settled in the Lithuanian open country. Town the travel industry offers another open door for Lithuanian ranchers and sightseers the same.

Taxation for businesses

The standard CIT rate is 15%. Small organizations and agricultural companies can apply a decreased CIT rate of 0% or 5% if certain conditions are met. In the period beginning from 1 January 2020 and finishing with 2022 an expanded CIT pace of 20% is applied on assessable benefits of banks, surpassing the limit of EUR 2 million. Uncommon principles for computation of assessable benefit apply.

For the most part, CIT is applied on assessable pay got by a Lithuanian expense occupant from its neighborhood and overall exercises. Taxable income is determined by diminishing general pay of a specific duty period with deductible costs and non-taxable incomey.

Income of a tax resident companyn isn’t dependent upon tax assessment in Lithuania on the off chance that it was gotten from exercises through a PE in a remote nation that is in the European Economic Area (EEA) or that has a DTT with Lithuania and if the pay was dependent upon tax assessment there.

Besides, CIT might be diminished or even not applied if outside sourced salary got not through a PE is burdened with a retention charge (WHT) in a remote nation and this nation has a DTT with Lithuania.

Non-resident companies are by and large burdened on Lithuania-sourced pay got through a neighborhood PE and diminished by deductible costs or on pay subject to WHT in Lithuania.

Investing in Lithuania

Strong points:

  • Participation of the eurozone and OECD
  • Sound public and external accounts
  • Banking framework ruled by three Scandinavian establishments
  • Travel zone between the European Union and Russia
  • Rising FinTech division

Weak points:

  • Light labour market
  • Large underground economy (26% of GDP)
  • Constrained worth of exports