Lithuania’s government has been active in constantly improving the business environment from a legal and tax perspective during the past several years, according to Triniti Partner Giedre Ciuladiene. With the recent change of the government in 2024, adjustments are expected in investment and tax policies, with potential effects on private equity, venture capital, stock options, and legal work around restructuring and deals.
“Over the past year, Lithuania has undergone a change in government, and with it, a changed policy-making approach seems to start being implemented,” Ciuladiene says. “For instance, the previous government was very active in supporting startups, and it introduced several benefits for venture capital and related investments, as well as facilitations required for the development of the startup business. Now, the current administration seems to have a slightly different perspective and focus on reducing social exclusion, which may lead to reduced attention to highly qualified talents.”
Nevertheless, “one of the most progressive instruments recently introduced is the investment account – a tax tool designed for natural persons,” Ciuladiene continues. “Essentially, it changes how investment income is taxed. Instead of being taxed on each individual transaction, investors are now taxed only when they withdraw money from the account. This means you can buy and sell listed shares, fund units, invest in crowdfunding, and other eligible financial instruments freely without triggering taxation every time. It’s quite a unique approach – Lithuania is currently the only country to offer such an instrument in the region, and it’s expected to stimulate investment activity. That said, the investment account only applies to a limited scope of financial instruments.”
“Interestingly,” Ciuladiene adds, “just recently, the government submitted a comprehensive tax package to the Parliament, prompting a wave of business resistance and efforts from stakeholders aiming to preserve the current regulatory framework or at least to balance it to keep the same goals towards economic growth. These ongoing discussions have become a particularly hot topic in both business and legal circles.”
Ciuladiene believes that these developments are significant for two reasons. “First, companies are increasingly exploring restructuring options, starting with selecting appropriate investment instruments,” she emphasizes. “Second, any reduction in investor confidence or rollback of benefits could lead to a drop in foreign investment, directly impacting deal flow and market activity.”
Separately, Ciuladiene notes, a major update to Lithuania’s construction law came into effect at the end of last year. “Lawyers working in construction regulation and planning are seeing clear changes in the types of projects being approved, as the new legal framework begins to shape the sector,” she adds.
“In addition, the topic of stock options, though not new, has returned to the spotlight,” Ciuladiene mentions. “A full tax exemption for options held for at least three years came into effect for options exercised starting from February 2023. In 2024-2025, the tax authority outlined how it intends to treat such options and whether they qualify for exemption, with an extensive list of the practical situations that are specific to startups and other companies. This has created a great deal of uncertainty, particularly within the venture capital community, which is concerned about how disputed cases will be handled.”
As a final note, the geopolitical situation stressed the need to focus on the defense sector. Accordingly, investments in this sector have significantly increased, which has resulted in raising funds for this purpose and in more sophisticated transactions as well.
