Company Formation in Lithuania
Lithuania is a valuable business partner for German speaking investors and shippers.
With its geographic location, the three Baltic States are a very important partner from economic and political point of view, whereby their attractiveness for investors has even gone up with their entrance into the European Union. Upon acceptance of the economic relations on the basis of independence the volume of international business has increased about ten times. On 1 May 2005 all three states obtained the status of membership.
Detailed information to company formation in Lithuania
Tax Law in Lithuania
|Tax Law in Lithuania|
|The Lithuanian Tax Law has gone through many changes in the past few years. At the end of the year 2001 the Legal Entity Income Tax was worked-out and in the middle of 2002 a new VAT law has come into the effect which went through a significant amendment at the beginning of 2004 because of its entrance into the European Union.|
|Legal Entity Income Tax in Lithuania|
|The Legal Entity Income Tax Law came into the effect on 1 January 2002. Considering the law, the Lithuanian companies are subjects to the Legal Entity Income Tax with their total income, as well as foreign companies with a part of the income obtained from permanent business in Lithuania and income earned from sources obtained in Lithuania.|
|Natural Person Income Tax|
|Of his day, the Natural Person Income Tax rate was regulated to 33 per cent. From 1 July 2006 this tax rate was lowered to 27 per cent and since 1 January 2008 it has fallen to the final 24 per cent. |
|VAT in Lithuania|
|The Value Added Tax has come into the effect on 1 July 2002 and on 1 May 2004 it has been adopted to the norms of the European Union, including the 6th directive. All the adjustments to the VAT on internal supplies went into the use. |
|Drawback of VAT|
|In the chapter XIII of the Lithuanian Law about VAT of 2002 (amended on 15 January 2004, clause IX-1960) the possibility of VAT drawback for foreign companies was created.|
|Agreement on avoidance of the Double-Taxation Austria - Lithuania|
|Agreement on avoidance of the double-taxation between Austria and Lithuania (BGB1.III 209/2005) was under discussion from 2002, it was signed on 6 April 2005 and since 17 November it has come into operation. |
Structure of economy in Lithuania
After the becoming an independent country and changing to a market economy system Lithuania attended the above-average growth very quickly. In 1998 there was an economic crisis in Russia, but the Lithuanian economy increased on average about 7.3 per cent. In 1999 it came to recession which meant the decrease of economic activity of about 1.8 per cent. In the year 2000 the rise of about 4.0 per cent of the Gross Domestic Product was noticed. From 2001 the continual growth rate was achieved; circa 6 per cent (2001=6.5%, 2002=6.7%), which in 2003 culminated in the temporal economic growth of about 9 per cent, in 2004 about 7 per cent and in 2005 about 7.3 per cent. For the following years it is counted with an economic growth of about 6 - 7 per cent.
From the economic reforms, including the main tasks of price, bank and social reform, privatization of state-own enterprises, creating of the new rudiments of law, social reform as well as stabilization of the whole economic situation - a desired flop has been achieved.
After accomplishment of the entrance into the NATO and the European Union in 2004, the end of two-year testing phase in ERM II (the European Exchange Rate Mechanism) is successful. Lithuania could become the country with the highest economic goal in 2007 or 2008 with introduction of the Euro like the national currency as the first Baltic country. Although, but the problem can be the breach of Maastricht Criteria from 2005, because Lithuania attained the inflation of 2.7 per cent above the required value.
Agriculture in Lithuania
The agriculture of Lithuania has been developing fairy well after becoming the independent country in spite of immediate necessity of the economic restructuring towards to satisfaction of necessaries of the population. Until the year 2004, the share of the gross domestic product of agriculture was reduced from 27 % to 6.2 % comparing to the year 1989. Comparing to another Baltic republics Lithuania disposes the most high-power agriculture; 40 per cent of its production finds a market.
The volume of production and sale of the most important agricultural products has increased as well as the price of beef-cattle, pork, poultry and dairy products. In the same way, in general, the payments for transport in agriculture and turnovers and receipts have gone up.
New, more specialized and bigger agriculture companies come into being, a number of cattle breeder increases, and competitiveness in dairy products rises. The main products of Lithuanian agrarian companies are beef and pork, milk, poultry, pastes, potatoes, sugar-beet and vegetable.
Industry in Lithuania
The restructuring of economy caused the decrease of a part of the industry from 35 % of the gross domestic product in 1989 to 21 % in 2004. The proportion of building industry has been stable for a few years now and does the sum of above 6 per cent. In the industry there are quickly growing sectors of the branches of chemistry, furniture, oil products, medical supplies and tools, machines and facilities and textile. Average share of the gross domestic product consists of the most important sectors of petro-chemistry, food processing, textile industry, wood-processing industry, chemical industry and synthetic industry.
Trade, services and transport in Lithuania
From the beginning of the reformational processes the economic structure has changed a lot. A sector of trade and services is the strongest growing industry and in 2004 reached the output of circa 60 % of the gross domestic product.
The area of transport has an exceptional role because, apart from the others, it uses a large number of the road transport (more than 1.200 pieces). According to a central position of Lithuania in the area of the Baltic Sea, in the future the transit trade will fulfil a very important function. Here we could mention for example trade with transporting of oil as well as building of different traffic corridors between the east and the west which are supported by the balances of the EU.
Foreign Trade Services Austria (AWO)