As a foreign investor doing business in Lithuania, you can purchase property. The process may be a little lengthy, but rest assured you will get through it, and there are plenty of houses in the market that meet growing demands from ex-pats looking for housing.

Vilnius is the capital of Lithuania, and here, there are plenty of residential spots for most people. You will find houses, shopping malls, corporate offices, bars, and restaurants. This city also has a highly active nightlife.

It is known to have plenty of historical architecture, which radiates Lithuania’s traditional vibe. For rentals, you can find one bedroomed apartment in the metropolitan area for around €400, while a three-bedroomed house goes for €700.

If you wish to live in a more relaxed environment, you might consider going to Visaginas, located in the eastern part of the country. This is a city that is well-known for its cleanliness and excellent environment. Children will especially enjoy living here because of the many recreational parks, playgrounds, and lakes that make for perfect family bonding on the weekends.

In visaginas, a one-bedroomed house rents for about €200 a month, and a three-bedroomed unit will cost you €350.

Who Can Buy Property And Land In Lithuania?

Similar to Estonia and Latvia, Lithuania has some pretty relaxed legislation for real estate ownership by foreigners.

Both non-EEA and EEA country citizens can purchase property freely with the only restrictions pertaining to building national buildings of strategic importance.

Additionally, property can be acquired in the absence of Lithuanian residency.

In general, property ownership laws in the Baltic region are based on an extreme real estate register. In both Latvia and Estonia, the right for acquisition of ownership is valid and binding.

In Lithuania, however, adherence is less pronounced. The acquisition of ownership right becomes binding on the agreement between both parties, irrespective of the registries' amendments.

With this being said, you are not allowed to transfer property that is either sold by a new owner or mortgaged until the register is amended.

These are minimal restrictions, which make it favorable to own property in Lithuania. However, when you have a closer look, Lithuania doesn’t demonstrate the classic characteristics of a maturing market, and it is probably not suitable for all.

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Acquiring Property in Lithuania

Over the last several years, there has been a considerable slow-down in the real estate market, and signs of new developments and regrowth have started showing. The trends in Lithuania are certainly not following what is being seen in the recovering markets of Europe, but prices are rising in all the major cities of Lithuania.

For example, in Cities such as Panevėžys and Siauliai’s, the average market price is €535 per sq. meter, as compared to Kaunas and Klaipeda, where the prices are €960 per sq. meter. 

However, the majority of the changes in the market can be seen in Vilnius, the capital. The current data for properties in the capital and the surrounding suburbs had indicated an average increase of 5% in the price of semi-detached and detached houses.

Fully refurbished apartments in the centre of Vilnius and the old historical town in Vilnius now range between EUR 1,800 and EUR 2,400 per sq. meter.

In the popular areas such as Zverynas, Antakalnis, and Valakampiai, the same old-styled apartments cost between EUR 1,600 and EUR 1,800 per sq. meter.

From these prices, it’s evident that the demand is very high for these prime locations.

This demand mostly stems from the new businesses that have moved to the capital, raising Lithuania’s rental and resale markets. Also, there is a growing market emerging for new properties that have been built outside of town.

Such properties are extremely popular with investors, and for as little as 10 km away from Vilnius, a property of around 120 sq. meters can cost around EUR 90,000 lighter.

Personal Income Tax - PIT

Regardless of the method of ownership of property, there is a limited difference in the income tax obligations.

Whether you purchase the property individually or do so through a foreign company, the withholding tax of 15% will be charged on the transfer and acquisition of real estate.

However, foreign investors are required to understand that the tax relates to the overall gross value of the proceeds. Therefore, the recalculations are only based on the sale in both cases, less all of the acquisition costs.

For Foreign investors wishing to register a domiciled company in Lithuania, the corporate income tax is fixed at 15% on all the capital gains on request for readjustment.

A foreign investor, under special circumstances, can be exempted from PIT if they have been residing in the property for the last two years before the resale or if, however, the resale occurs before that time. They can use the proceeds of the purchase to buy another residential property.

Value Added Tax

Well, new builds will likely produce better returns in the future as per the current markets, and this suggests popularity with the buyers outside of Vilnius. Again, additional taxes will be levied.

Lithuanian legislation for the sale of new buildings, including new buildings that have been in use for less than 24 months after they are completed, building the land, unfinished buildings, and land for the new building is subjected to a VAT tax fixed at 21%.

Real Estate Tax

You should make similar considerations for the total capital value of the property. From January of 2013, a new taxation rate was applied to certain real estate properties called Real Estate Tax – RET.

For residential properties with a gross value of more than LTL 1,000,000, which is approx. EUR 290,000, the RET is charged at 1%. Any property with an ownership value below this is tax-exempt.

This levy is the base average for the market property value and can range between 0.3% and 3%. Foreign Investors should ensure that they are aware of the RET tax and that it can be assessed by either mass valuation every five years or through replacement of cost value.

Documentation

For Land acquisitions, you should present the following documents;

-A title of the real estate – this is the official deed of the property that details the legal obligations and outstanding debts.

-Title of the land used – this shows that the property owner has got the legal right to the land and has also provided this right to the foreign investor, who is the buyer of the land on which the property is encumbered.

-The Sale-purchase agreement – this is for both parties, and it is under the conditions of pricing and paying for the property.

-Notarized sale and purchase agreement – this should be signed by all parties, and it authorizes the investors to register for a new title with the Lands Registry.

-Land title registration – this is not exactly required to establish the legally binding transfer of land ownership deeds. Still, it is necessary for any encumbrances that may be added to the property.

Are there any Restrictions to Buying Property in Lithuania?

Now, like most other EEA countries, Lithuania has got some additional restrictions when it comes to foreign ownership of land.

Under the constitution, the state of Lithuania is stated to be the exclusive owner of any subsoil, forests, internal waters, parks, and roads. These historical, cultural, and archaeological objects are of national significance.

The title of other lands, which includes designated forestland and farms, can be acquired by persons other than the State.

These persons include citizens of Lithuania as well as Foreign persons who meet the criteria for Union State.

Additionally, foreign investors, permanent residents, or citizens of any other country that is a member of the EEA, EU, OECD, or NATO and has a Lithuanian permanent residency may lawfully be eligible to purchase these lands.

Land that is considered to be agricultural carries some additional restrictions. 

Any foreign person that meets the union criterion must first demonstrate that they have been engaging in agribusiness activities in Lithuania for at least three years before purchasing any land.

Limited published criteria that detail what constitutes the subsets of land is a little problematic, as seen in other EEA countries.

Because of this, foreign investors are required to take some additional steps to ensure that there is a correct definition between agricultural land and farm.

Unlike Estonia and Latvia, Lithuania provides for the additional purchasing route where foreign investors can buy agricultural land without fulfilling the three-year condition.

This means that foreign organizations and foreign legal people who have established representative branch offices in the country can acquire small plots of agricultural land.

The country lands are also protected from excessive foreign ownership.

Lithuania also enforces a maximum quantity restriction on foreign nationals, including residents, which prohibits any of them from owning more than 500 hectares of land.

Land Tax and Municipal Property Taxes

All of the taxes pertaining to the possession and use of the real estate, such as land tax, real estate tax, or the state-owned lease tax, are paid to the local municipalities where the property is located.

The annual real estate tax is set on an annual basis by the municipalities and ranges between 0.3% and 1% of the taxable value of the real estate.

Additionally, the annual land rate tax is 1.5% of the taxable value of the land, and the annual rate of tax for the land that is state-owned varies between 1.5% and 4%.

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