Consider the benefits of investing in real estate in Lithuania
The Vilnius real estate market offers reasonable prices, with an average rate of 1,700 EUR per square meter. While new apartments in the Old Town and city center may be more expensive, ranging from 3,000 to 5,000 EUR per sq/m, prices outside of the city center are much more affordable, ranging from 1,700 to 2,200 EUR per m2.
The potential yield is around 6%, and buy-sell costs are exceptionally low, with the exception of new builds where the hefty 21% VAT is added. Notary and registration fees amount to less than 5%, while seller fees are around 3%.
Lithuania has shown excellent GDP growth, as proven by the fact that even during the pandemic, the economy only dropped by 0.8%. In comparison, the UK's GDP dropped by 9.9% in 2020. Furthermore, employment conditions have significantly improved, dropping from 17.8% in 2010 to just 6% in 2020.
Salary growth in Lithuania, similar to Latvia, has seen annual growth rates of between 5% and 15% in the past five years, with salaries rising from 500 EUR per month to 916 EUR per month in the past six years. Although the government debt grew during the pandemic, it only increased by 48%, compared to over 100% in the UK.
The fintech industry in Lithuania has benefited greatly from foreign investments, and the country is home to successful startups like Revolut.
Lithuania has a highly educated population, with 125,000 students in a country with a relatively low population. Additionally, tourism in Lithuania is on the rise, and the population is steady. These factors make Lithuania an attractive destination for property investment.
Residence permits on the grounds of company formation
If you are interested in obtaining a residence permit in Lithuania by forming a company, it is important to keep in mind that the requirements and options can change frequently. Contact Lee & Bronski Support to stay up-to-date on the latest information.
Currently, one option is to apply for a residence permit after six months of setting up a company. To do so, you must establish a company with a share capital of at least 29,000 EUR and employ three Lithuanian citizens or workers with residency permits.
If you want to obtain permanent residency, you must live in Lithuania for five years as a temporary resident.
Taxes & Rental income tax
Capital Gains Tax in Lithuania is set at 15%. Rental income is also taxed at 15%, with deductions of 30% allowed. However, if you receive over 163,000 EUR in rental income in a year, an additional 20% tax may apply. The good news is that there is no gift tax or inheritance tax in Lithuania. In terms of property tax, properties worth up to 150,000 EUR are exempt from property tax. Properties valued between 150,000 EUR and 300,000 EUR are subject to a 0.5% property tax, while properties worth between 300,000 EUR and 500,000 EUR are taxed at a rate of 1%. If your property is valued at 0.5 million EUR or more, you can expect to be charged a 2% property tax rate.
Other residence types in Lithuania
There are various other types of residence permits that you may be eligible for depending on your circumstances. These include permits based on factors such as education, marriage, and naturalization, among others. It is recommended to consult with a legal professional or immigration specialist to determine which type of residence permit is best suited to your situation.
Which residence permits offer a path to permanent residency and citizenship?
The Lithuanian passport is highly desirable as it provides visa-free access to 180 countries and territories, making it the 9th most powerful passport in the world. If you have lived in Lithuania for 10 years, you may be eligible to apply for citizenship, although you will need to pass a Lithuanian language test. In some cases, Lee & Bronski may be able to assist you in obtaining Lithuanian citizenship without fulfilling the standard requirements.
Restrictions & Challenges
While rental yields in Lithuania may not be exceptional, they are on the rise.