When thinking of creating your own business or developing it, building a factory, logistics center, warehouse, etc., the first thing to look for is a suitable land plot, and then one of the most optimal places becomes the FEZ, because here you can rent a plot of land for up to 99 years, without paying land tax, and in addition, get all the necessary infrastructure. Currently, there are 7 zones operating in Lithuania, where over half a dozen foreign and Lithuanian capital companies have settled.
The procedure and registration of companies in the FEZ is regulated by the Law on the Fundamentals of Free Economic Zones. A company acquires the status of a zone enterprise after the zone management company issues a permit to operate in the zone and the administrator of the Register of Legal Entities registers data and documents (including the articles of association of the company, a permit issued by the zone management company to carry out activities in the zone) related to the acquisition of the status of a zone company in accordance with the procedure established by the provisions of the Register of Legal Entities.
After starting activities, it is important to remember that in order to take advantage of other tax benefits, it is necessary to obtain an audit report that confirms compliance with the criteria of the FEZ:
- Be registered as a Zone Company;
- Reach the investment threshold:
For manufacturing companies – 1 million EUR
For service companies – 100 thousand EUR;
- 75% of the revenue generated from activities carried out in the territory of the FEZ;
- Carry out activities not prohibited by the Law on the Fundamentals of Free Economic Zones (Article 8.1);
- Service companies must have at least 20 employees in average annually;
There are long-term tax benefits that might be even more appealing*:
- Income tax – 10 years 0%, the next 6 years 50% of the rate valid at that time (currently it is 7.5%)
- Real estate tax relief is valid for the period of operation of the FEZ.
* Tax relief does not apply to companies engaged in trade activities and is applied to the extent that it is compatible with state aid restrictions.
Please contact us for more information regarding accounting of FEZ companies.