Lithuania Free Trade Zones
Lithuania Free Trade Zones, which are known more commonly as Free Economic Zones (FEZs), comprise of 7 FEZs. Activities conducted in a Lithuania Free Zone include commercial, production and export, banking, business and research activities.
An FEZ in Lithuania is a designated area for commercial and financial activities that abides to the Republic of Lithuania Law on the Fundamentals of Free Economic Zones. Since the FEZ is regarded as an area outside Lithuania, goods within the Free Zone will be charged import and export duties instead.
Businesses typically set up in Lithuania Free Trade Zones to enjoy preferential tax treatment and attractive incentives such as reduction in corporate income tax and exemption from real estate and dividend tax.
Free Economic Zones (FEZ)
The seven FEZs in Lithuania are the Kaunas, Klaipėda, Šiauliai, Panevėžys, Marijampolė, Kėdainiai and Akmenė FEZs.
Kaunas Free Economic Zone
- Located strategically next to the Kaunas airport, Kaunas FEZ is easily accessible through roads and railway systems.
- Manufacturing, administrative and storage facilities are readily available at the FEZ.
- Established in 1996, the FEZ has attracted more than EUR 680 million worth of investment of which 70% are foreign direct investments.
- The Kaunas FEZ can be broadly divided into three areas: Production and Logistics Area, Business Street and Airpark. The Productions and Logistics Area makes up the bulk of the FEZ and is mainly occupied by logistic terminals, pharmaceutical companies and high-tech companies while the Business Street consists of largely business centres and modern offices.
- The labour force in the region is skilled in the areas of industrial science and engineering. Approximately 30% of the students in the Free Zone major in technical science.
Klaipėda Free Economic Zone
- Established in 2002, the Klaipėda FEZ has attracted approximately EUR 643 million worth of investment since its opening.
- The revenue generated by investors in 2019 amounted to EUR 1.2 billion.
- Situated at the heart of Europe in Klaipėda, the Klaipėda FEZ provides easy access to surrounding EU markets, Scandinavian nations and Eurasian Customs Union countries through its extensive railway link, expressways, airport and sea network.
- Major industries in the Klaipeda FEZ include the plastics, electric components and transportation, food processing, assembly and logistics industries. Businesses in these industries conduct both manufacturing and R&D activities aimed at improving the efficiency and quality of production.
- It is easy to launch a business in the Klaipėda FEZ. Within 3 days, you will be able to rent the relevant facilities in the Free Zone. Subsequently, in less than 3 months, businesses can adjust the rented production facilities and office spaces to suit their needs.
Kėdainiai Free Economic Zone
- The Kėdainiai FEZ was established in 2014 through a joint partnership by Eika and PBS under the name of Investment Partner. Currently, the Investment Partner oversees 3 major industrial zones, including the Kėdainiai FEZ, Šiauliai FEZ and Vilnius industrial park.
- Located in the geographical centre of Lithuania, Kėdainiai has a well-integrated transport and communication network and fast-developing business support infrastructure, providing optimal conditions for conducting business activities.
- The Kėdainiai FEZ was created for the purpose of conducting commercial and financial activities. Traditionally, agriculture has been one of the strongest sectors in the Kėdainiai region.
- The Kėdainiai region is also well-known for its cultural and natural beauty, attracting numerous foreign and local tourists every year.
Šiauliai Free Economic Zone
- Established in 2015, the Free Zone attracts foreign direct investments from the manufacturing, agriculture, forestry and fisheries, and real estate industries.
- Šiauliai is the 4th largest city in Lithuania, with a strong engineering industry and a large number of foreign manufacturing companies in the Free Zone.
- Main business activities in the Šiauliai FEZ include activities in the engineering industries such as the production of metal, plastics, textiles, furniture and electronics. A majority of the students in the FEZ major in engineering-related courses.
Panevėžys Free Economic Zone
- Linked to other Baltic and European states such as Poland, Czech Republic, Latvia and Estonia through the European route E67, the Panevėžys FEZ provides businesses in the Free Zone with easy access to the surrounding European markets. The electric railway, Rail Baltica, that links Panevėžys to other European states, will also be completed around 2024.
- The Panevėžys Free Economic Zone is managed by the Ogmios Group, a leading Lithuania real estate developer that owns and administers more than 400,000 square meters of industrial and commercial buildings in Lithuania. The Ogmios Group provides commercial, residential, and manufacturing facilities in the Free Zone.
- The Ogmios Group also provides support to businesses setting up in the Free Zone. Support services include an experienced construction management team, consultation on the relevant procedures, legal and tax support services, land leases and the provision of ready-made industrial buildings.
- Main industries in the Free Zone include the automotive, electronics, metal processing and mechanical engineering, plastic processing, and wood and furniture industries.
Marijampolė Free Economic Zone
- Also known as the Baltic FEZ, the Marijampolė FEZ’s location at the Via Baltica highway provides it with convenient access to the surrounding European markets and allows businesses to transport their goods and raw materials to Europe, Russia and Asia easily through railway lines and automotive means.
- Main industries in the Marijampolė FEZ include the food, wood, furniture and textile industries.
- The Marijampolė FEZ provides business set-up services such as assistance in obtaining EU supports, consultations about business activities, leasing of land plots and warehouses, procurement of the relevant permits such as building permits and other administrative services.
Akmenė Free Economic Zone
- Developed in close cooperation with the Lithuanian Business Support Agency, Akmenė district municipality, national and regional authorities and the business community, Akmenė FEZ provides engineering infrastructure such as electricity, gas, water supply and sewage facilities to investors that set up in the Free Zone.
- The Akmenė FEZ also provides support to investors through consulting services and other financial support.
- Main business activities in Akmenė include the manufacturing of construction material such as cement, concrete, slaked lime and dolomite macadam. There is also huge potential for agricultural activities due to the availability of large farmland areas in the region.
- The rich minerals resources, low manufacturing costs and competitive labour costs are the main reasons why business owners set up in the Akmenė FEZ.
Advantages of Lithuania Free Trade Zones
Preferential Tax Treatment in Lithuania Free Trade Zones
- Businesses that set up in a FEZ in Lithuania do not have to pay corporate income tax in the first 10 years. Subsequently, they will enjoy a 50% reduction in corporate income tax for the next 6 years (i.e. 7.5% corporate income tax).
- They will also be exempted from real estate tax until 2045.
- There is no dividend tax for foreign investors in a Free Economic Zone.
Access to skilled labour in Lithuania Free Trade Zones
- Many Free Zones in Lithuania house multiple universities where majority of the students major in courses relevant to the main business activities conducted by the Free Zone.
- As such, the labour force is equipped with the relevant skill and expertise needed by the businesses in the Free Zone.
- Since a majority of investments in the Free Zones in Lithuania come from MNCs and other foreign companies, this will facilitate the transfer of managerial or technical skills to local Lithuanian employees when foreign companies hire local employees.
Provision of support infrastructure in Lithuania Free Trade Zones
- Many Free Zones in Lithuania have facilitated the growth of specific industries such as the engineering and technological industry by providing support infrastructure to help businesses in these industries set up in the Free Zone.
- Free Zones in Lithuania typically provide business support services such as consultation services, business set-up services and other legal and compliance services.
- They also offer ready-made offices, industrial land, distribution and storage facilities, and warehouses to support business activities.
Access to surrounding markets
- Many of the Free Zones are located close to airports or seaports and are connected to other cities via roads and railway systems.
- Some of the Free Zones even provide access to the surrounding European markets through expressways and railway roads. This allows businesses in the Free Zone to transport goods and products to and from surrounding countries at a lower cost.
Alternatives to Lithuania Free Trade Zones
- An industrial park in Lithuania is defined as an area that implements at least one green field investment project and is equipped with the necessary engineering networks and transport communications to encourage investment projects in the region.
- There are 9 industrial parks in Lithuania. Like a Free Economic Zone (FEZ), an industrial park in Lithuania is regarded as a type of Special Economic Zone (SEZ). Each industrial park specialises in different industrial activities and is administered by the local government.
- Industrial parks are fully equipped with the necessary business infrastructure and facilities are leased at favourable prices to business owners.
- Business owners that conduct manufacturing activities can consider setting up in an industrial park.
- In 2008, the Lithuania government approved five Valley development programmes, namely the Marine, Nemunas, Santara, Santaka and Saulėtekis Valley programme.
- The Valley development programmes are meant to improve the scientific research infrastructure in the country and encourage efficient cooperation between business and science through the establishment of new innovative companies.
- Most of these Valley development programmes are initiated by universities and research institutions and are meant to encourage students in the university community to set up new innovative technological enterprises. This is achieved by providing them with access to R&D infrastructure and support services to help them commercialise their knowledge.
- Each Valley specialises in different sectors. For example, the Marine Valley conducts maritime research while the Nemunas Valley mainly engages in research activities in the agriculture, forest and food sectors.
- Business owners that wish to conduct mainly R&D activities should consider setting up in a Valley.
How to proceed with registering a company in Lithuania Free Trade Zones?
Contact us to find out more information about how to register a company in Lithuania Free Trade Zone. Our team of experts will revert within the next 24 hours.
How many Free Trade Zones does Lithuania have?
- There are currently seven Free Trade Zones in Lithuania, namely the Kaunas, Klaipėda, Šiauliai, Panevėžys, Marijampolė, Kėdainiai and Akmenė Free Economic Zones (FEZs).
- Different FEZs specialise in different business activities. For example, the Kaunas FEZ mainly consists of industrial science and high-tech companies; the Klaipėda FEZ specialises in the plastics, electric components and transportation, food processing, assembly and logistics industries; the Šiauliai Free Economic Zone focuses on the production of metal, plastics, textiles, furniture and electronics.
What are the benefits of setting up in a Free Trade Zone?
- Companies that set up in a Free Trade Zone in Lithuania can enjoy preferential tax treatment such as exemption from real estate and dividend tax as well as other tax incentives. They are also not required to pay corporate income tax in the first 10 years. Subsequently, they will pay a reduced corporate income tax of 7.5% for the next 6 years.
- Furthermore, Free Trade Zones in Lithuania typically provide business support services such as consultation services, business set-up services and other legal and compliance services. Many of the Free Zones also provide easy access to the surrounding European and Russian market through airports, seaports, expressways and railway roads.
What are the popular Free Trade Zones in Lithuania?
- The more popular Free Trade Zones in Lithuania are the Kaunas FEZ and Klaipėda FEZ. In terms of population, Kaunas is the 2nd largest city in the country, while Klaipėda is the 3rd largest city. Both Free Trade Zones have attracted more than EUR 640 million worth of investment each, with a significant amount of these investments coming from foreign companies.
How to set up a company in a Lithuania Free Trade Zone?
- Business owners that wish to set up in a Lithuania Free Trade Zone must submit an application together with the relevant documents to the respective zone administration company.
- Tetra Consultants provides you with a fast and simple way to set up your company in a Free Zone in Lithuania through our service package which includes Lithuania company registration with State Enterprise Centre of Registers; provision of local company secretary and registered address; corporate bank account opening; and annual accounting and tax services. Based on your company’s business activities, Tetra Consultants will also recommend you the Free Zone to set up your company in.
Can a company in a Free Trade Zone be wholly foreign-owned?
- Yes, a Lithuanian company can be wholly foreign-owned since it is subjected to the same requirement of a regular limited liability company. There is no nationality or residence requirement for directors in a Lithuania Limited Liability Company.
How are the Free Trade Zones in Lithuania governed?
- A Free Trade Zone in Lithuania is leased to and administered by a zone administration company in accordance to the Republic of Lithuania Law on the Fundamentals of Free Economic Zones. The zone administration company can decide the type of business investment projects the Free Zone conducts, as well as the internal rules and conditions of the Free Zone. However, the zone administration company is required to use resources to develop the support infrastructure of the Free Zone and submit proposals to the Lithuania government who is in charge of supervising the Free Zone.