Lithuania seeks to attract fund managers

In the wake of Brexit, Lithuania has been making a concerted effort to position itself as a fund domicile.

“We have recently seen Lithuania’s regulatory environment being chosen not only by the fast-growing local private equity and venture capital community, but by international managers and investors as well,” said Šarūnas Alekna, chair of the Lithuanian Private Equity and Venture Capital Association (LT VCA).

In recent years, Lithuanian government officials have been working closely with the EBRD and the EIF to improve legal and tax arrangements to improve the country’s attractiveness for setting up funds, according to an update from law firm TGS Baltic.

Tax

Recent amendments have seen the country move its focus to one-level taxation, where investment returns are not taxed at any level within an investor structure as long as it does not reach a physical person.

“Physical persons are taxed applying very favourable rates – 15% PIT on dividends for residents and non-residents (provisions of the treaties on avoidance of double taxation shall be preserved), no PIT on capital gain for non-residents, 15/20% PIT on capital gain for residents,” commented Jūratė Zarankienė, managing partner at tax consultancy firm Persense, the Lithuanian correspondent firm of Mazars.

Fund structuring

Amendments have been made to better align national rules with international fund structuring practices for setting up a limited partnership. According to the statement released by TGS Baltic: “The set-up and operational costs of the ManCo in Lithuania are highly competitive in comparison to other EU countries such as Luxembourg or Dublin.”