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Foreign investments in the baltic states UIA 58th conference in Florence , Italy

Foreign investments in the baltic states UIA 58th conference in Florence , Italy October 29 – November 2, 2014 Yvonne Goldammer bnt attorneys-at-law. Investment environment in the Baltics EU member states Estonia and Latvia in the Eurozone, Lithuania to join in 2015

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Foreign investments in the baltic states UIA 58th conference in Florence , Italy

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  1. Foreign investments in the baltic states • UIA 58th conferenceinFlorence, Italy • October 29 – November 2, 2014 • Yvonne Goldammer • bnt attorneys-at-law

  2. Investment environment in the Baltics • EU member states • Estonia and Latvia in the Eurozone, Lithuania to join in 2015 • Stable, functional rule-of-law legal systems • Tax benefits offered for investors • Cheap and well-educated labour • Conveniently located with ready access to key European markets

  3. Lithuania • Taxes • Tax benefits for foreign investors • Favorable tax environment for small businesses • 5% (instead of 15%) of corporate income tax applicable to enterprises having less than 10 employees and with gross income below EUR 290k • Possibility to establish micro companies with no statutory capital and to apply tax thresholds on payments to its founders • 7 special economic zones with attached tax benefits • No corporate income tax for 6 tax periods, reduction of corporate income tax by 50% for 10 years afterwards • 0% corporate income tax on dividends • 0% VAT on goods and services supplied in free economic zones

  4. Tax incentives • Investment incentive relief (reduction of taxable profit up to 50% due to investment incentive project) • Research and development (R&D) incentive (taxable income reduced 3x by R&D costs) • Relief for financing production of a film (reduction of taxable income up to 75%) • Accumulated tax loss carry forward (up to 70% of the current year’s taxable profit)

  5. 2. Opportunities for Investment • Key PPP sectors: Energy Efficiency, Transport, Public order and security • On the table now: 3 hot investment opportunities (PPP) • New Detention Facility in Vilnius (40M EUR) • Cargo Port Development in Kaunas (11M EUR) • Road Reconstruction Vilnius-Utena (70M EUR)

  6. 3. Employment and education • Well educated: • 2x EU average of young people studying Engineering, Manufacturing and Construction  • Loyal: • Average employee turnover rate in international Shared Service Centers is 7-8%  • 69% of population aged 18-35 would like to work for an international company • Not expensive: • Minimum monthly wage – EUR 300.00 • Average monthly wage in the national economy – EUR 530.00 (second quarter of 2014) • * Information based on statistics published in the official site of Invest Lithuania: • http://www.investlithuania.com/lets-talk-lithuania/talent/

  7. 4. Lithuania’s program for EU regional funding 2014 – 2020 • Detailed plan of investments for 2014-2020 worth € 7.89 billion (€ 6.7 billion of EU investments and a national contribution of around €1 billion) for Lithuania to create employment and growth • Covers several key EU investment funds, i.e. (ERDF), (CF), (ESF), (YEI)  • More than half of investments business support, research and innovation, information and telecommunication technologies and low carbon economy • First calls for proposals planned for the end of 2014.

  8. II. Latvia • Tax benefits, such as tax rebate for large-scale investment projects • Corporate income tax a flat rate of 15 % • Personal income tax a flat rate of 23 % • Highly beneficial destination for holding countries • Four free ports and special economic zones with tax advantages

  9. Public guarantees andloansfor investments • Export credit guarantee • Other credit guarantees • Mezannine loans • Micro-loans (EUR 25 000) to SME • Risk capital investments from risk capital funds financed by the Latvian Guarantees Agency

  10. 2. Co-funding under EU Cohesian Policy 2014-2020 • EUR 4.51 billionintotalallocated to Latvianprivateindustriesandpublicentities • Samplesofprivateindustriesrelated major investmentpriorities: • Creation and the extension of advancedcapacities for product andservice development • Energyefficiencyanduseof RES intheenterprises, productionanddistributionofenergyfrom RES • HighgrowthenterprisesandSME’sinmanufacturing, aswellinthepriorityindustriescoveredbyR&IStrategy • Private businessinvestment in R&I

  11. III. Estonia • Favorable tax environment; for example no corporate income tax; only distributed profits are taxed • Personal income tax a flat rate of 21 % • General ease of doing business • Excellent IT infrastructure • Four free trade zones

  12. Thankyouforyourattention bnt | attorneys-at-law Kalinausko 24, LT-03107 Vilnius Phone +370 5 2121627 Fax +370 5 2121630 yvonne.goldammer@bnt.eu www.bnt.eu Bratislava | Budapest | Minsk | Nürnberg | Praha | Riga | Sofia | Tallinn | Vilnius | Warszawa

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