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Lithuania Investment Incentives Guide 2026

Lithuania offers a comprehensive range of investment incentives designed to attract foreign direct investment, foster innovation, and support business growth. Key incentives include a 50% IIT exemption for relocated workers, free economic zones (FEZ) with corporate tax exemptions, CIT relief for R&D activities, and targeted support for start-ups and SMEs. Lithuania's competitive tax rates, EU membership, and strategic location make it an attractive investment destination in the Baltic region.

Overview — Investment Climate

Lithuania has established itself as a leading investment destination in Central and Eastern Europe, offering a combination of competitive taxation, a skilled workforce, EU market access, and a business-friendly regulatory environment. The country has been an EU member since 2004, adopted the euro in 2015, and is part of the Schengen area. The government actively promotes foreign investment through Invest Lithuania, the national investment promotion agency, which provides free support services to investors.

Relocation Incentive — 50% IIT Exemption

One of Lithuania's most attractive incentives for highly skilled workers is the 50% personal income tax exemption for relocated workers. Key details:

  • Eligibility: Individuals who have not been Lithuanian tax residents for at least 3 years prior to the move
  • Qualification: Employment requiring higher education (typically bachelor's degree or equivalent)
  • Benefit: 50% of employment income is exempt from IIT for the first 3 years of residency
  • Effective rate: The effective IIT rate on employment income drops from 20% to approximately 10% (for income up to EUR 101,844)
  • Family members: Spouses relocating with the employee may also qualify

This incentive is designed to attract international talent to Lithuania's growing tech, finance, and professional services sectors. The exemption is granted by the employer applying the reduced withholding rate.

Free Economic Zones (FEZ)

Lithuania operates several Free Economic Zones (FEZ) that offer significant tax incentives to qualifying businesses:

  • Kaunas FEZ
  • Klaipėda FEZ
  • Šiauliai FEZ
  • Panevėžys FEZ
  • Kėdainiai FEZ
  • Akmenė FEZ

FEZ benefits for qualifying companies:

  • CIT exemption: 0% CIT for the first 6 years (up to EUR 2 million investment), then 50% reduction for the next 10 years
  • Real estate tax exemption: Exemption from annual real estate tax for up to 6 years
  • Customs duties: Exemption from customs duties on goods imported into the FEZ
  • VAT: VAT exemption on certain services within the FEZ
  • Minimum investment: Generally EUR 1–2 million depending on the FEZ and project

FEZ incentives are structured to comply with EU state aid regulations.

R&D and Innovation Incentives

Lithuania offers substantial tax relief for research and development activities:

  • R&D tax relief: Companies can deduct up to 300% of qualifying R&D expenses from their taxable income (a super-deduction of 200% on top of the actual expense)
  • Qualifying expenses: Salaries of R&D personnel, materials and supplies, subcontractor costs, depreciation of R&D equipment
  • No cap: No maximum limit on the relief
  • Carry forward: Unused relief can be carried forward indefinitely
  • Cash refund: Start-ups and loss-making companies may claim a cash refund of the tax credit (up to EUR 100,000)

The R&D incentive makes Lithuania highly attractive for tech companies, pharmaceutical research, engineering firms, and any business conducting qualifying innovation activities.

Start-up Support

Lithuania has developed a comprehensive start-up ecosystem with government support:

  • 0% CIT for first year: Qualifying start-ups pay 0% CIT in their first tax year
  • 5% CIT for small companies: Reduced CIT rate for companies with revenue under EUR 300,000 and fewer than 10 employees
  • Start-up visa: A dedicated visa programme for non-EU entrepreneurs (Startup Visa Lithuania)
  • Innovation Agency Lithuania: Provides grants, subsidies, and support services for start-ups
  • Tech hubs: Vilnius has a thriving tech and fintech ecosystem with co-working spaces, accelerators, and incubators

Other Investment Incentives

  • Training subsidies: Government co-funding for employee training and upskilling
  • Green investment incentives: Support for renewable energy, energy efficiency, and environmental projects
  • EU structural funds: Access to EU funding for infrastructure, innovation, and regional development projects
  • Export promotion: Support for export-oriented businesses through ExportLT and trade missions
  • Workforce development: Partnerships with universities and vocational training institutions

FAQs

How do I apply for FEZ incentives?

Contact the relevant FEZ management company. The application process involves a business plan review and investment commitment. Invest Lithuania can assist with the application process.

Can any company claim R&D tax relief?

Any company conducting qualifying R&D activities in Lithuania can claim the relief. The activities must be systematic, investigative, and aimed at achieving scientific or technological advancement.

Is the relocation exemption available to all nationalities?

Yes, the 50% IIT exemption is available to all nationalities, including EU and non-EU citizens, as long as the qualifying conditions (3 years non-residence, higher education requirement) are met.

Disclaimer

This guide provides general information about Lithuanian investment incentives for the 2026 tax year. Incentive terms and conditions may change. Always consult with a qualified Lithuanian tax advisor or Invest Lithuania directly for advice specific to your situation. InvestmentKit does not provide tax advice.