On 14 September 2016 the Parliament of the Republic of Lithuania adopted amendments to the Law on the Legal Status of Foreigners, which will enter into force on 1 January 2017. The amendments have improved the conditions for obtaining temporary Lithuanian residence permits for startup founders, highly-qualified employees (EU Blue Card), as well as for non-EU citizens who are setting up or managing a business in Lithuania.
Information on the most relevant changes for business is provided below.
As of 2017 startup founders will become eligible to obtain temporary Lithuanian residence permits. This will enable them to reside in Lithuania and to start business there without having to invest the required minimum amount in the capital of a company and without employing the minimum mandatory number of employees.
Foreigners will be able to obtain a residence permit if their startups meet the following criteria:
- startup activities are related to the development of new technologies or other innovations important for the country;
- startup founders possess the necessary qualifications, financing and business plan.
Before applying for a residence permit, startup founders will have to obtain a special document certifying that they comply with the applicable criteria. By 2017 the Ministry of Economy will set more accurate requirements applicable in order to obtain a permit.
A startup founder will have to establish a company and start its activities within 30 days after obtaining a residence permit. A permit will be issued for one year, with a possibility to extend it for one more year. In order to stay in Lithuania longer, after the first two years of their company’s operation startup founders will have to meet the standard requirements applicable to shareholders and/or General Managers (see below).
EU Blue Card
The amendments have brought good news for highly-qualified foreigners, e.g. a university diploma will no longer be necessary, the requirements for salary are reduced etc.
Not only a university diploma but also work experience will be suitable
From 2017, the opportunity to obtain an EU Blue Card will be open not only to those employees who have higher education, but also to those with at least five years of relevant work experience. By 2017 the Government should approve the conditions under which it will be possible to equate work experience to higher education.
These changes are particularly important for IT and other sectors, where job skills could be acquired while working and a university diploma is not necessary for successful career.
Lower salary requirements
The amendments have reduced the salary bar for an EU Blue Card – from now it will be sufficient to pay a salary not less than 1.5 of the average Lithuanian salary (currently slightly below EUR 1,160 gross). Until now, the requirement of an average of two Lithuanian salaries has applied.
Simpler process for employees in needed professions
Before applying for an EU Blue Card a decision of the Labour Exchange will not be necessary for those employees whose profession is included in the list of needed high qualification professions. Until now, in order to obtain an EU Blue Card, the Labour Exchange had to confirm that a foreigner’s work meets the needs of the Lithuanian labour market (i.e. there are no local employees who meet the employer’s requirements). The new system will help to obtain a temporary Lithuanian residence permit faster – processing should take one month less. The list of required professions approved by the Government is likely to affect employees of such areas as IT.
Residence permits for shareholders and General Managers
The amendments have changed the conditions applicable to shareholders and General Managers seeking to obtain a temporary Lithuanian residence permit.
There will be no requirement on the minimum number of employees
The requirement for the company to have at least three full-time local employees (Lithuanian, EU or EEA citizens or foreigners permanently residing in Lithuania) has been dropped and replaced by a new one. From 2017 the company should have an unspecified number of local employees, with the overall remuneration of at least two average Lithuanian salaries (currently slightly less than EUR 1,550 gross). The requirements on company equity and the value of the shareholder’s investment (respectively, equivalent to EUR 28,000 and EUR 14,000) as well as the duration of operation of the company (at least 6 months) remain the same.
Shareholders and General Managers who meet a higher level of residence permit requirements may obtain residence permits for longer than standard period (i.e. two instead of three years). Such possibility is available to foreign shareholders who invest EUR 260,000 in their company and create five job positions for local employees. General Managers will also be able to obtain an increased-duration temporary Lithuanian residence permit if the company’s equity is at least EUR 500,000 and it employs 10 full-time local employees (with a salary not less than the average Lithuanian salary, i.e. slightly more than EUR 770 gross) and/or foreigners with EU Blue Cards.
Possibility to start work without complying with all residence permit requirements
The new changes in the law should help reduce the risk of illegal employment related to the work of General Managers. Until now only General Managers with a special residence permit were able to conclude an employment contract with a Lithuanian company. One of the requirements for getting such permit is the duration of the company’s operations of at least 6 months before applying for a residence permit, therefore such regulation caused the risk of illegal employment for General Managers (i.e. they could not conclude an employment contract at least for the first half year of the company’s operations). From now on the General Managers of companies who hold EUR 28,000 equity capital or shareholders who have invested EUR 14,000 and hold at least 1/3 of the shares in a Lithuanian company will be able to legally conclude employment contracts. This means that they will legally be able to be employed and develop their business, even if the company does not yet comply with all requirements applicable to a recipient of a temporary Lithuanian residence permit (e.g. re the duration of company’s activities).
Limitations for members of Management Boards and Supervisory Boards
Members of Management Boards and Supervisory Boards will not be able to obtain a temporary Lithuanian residence permit based on business activities. This possibility is only open to shareholders and General Managers who meet the requirements.
Obtaining residence permits for family members
The new amendments have expanded possibilities to move to Lithuania together with family members.
Until now, the possibility of obtaining temporary Lithuanian residence permits for family members of foreigners residing in Lithuania has been very limited. The only foreigners who could apply for permits for family members were those with an EU Blue Card, who had invested a very large amount of money in a business in Lithuania, or who satisfied other strict requirements. From 2017, the opportunity to apply for a residence permit for family members will be open to the following foreigners:
- those who have an EU Blue Card;
- startup founders;
- executives and other professionals seconded within the same company group;
- all shareholders and General Managers who hold a temporary Lithuanian residence permit.
Other changes related to foreign employees
The amendments have also brought news for other foreigners working in Lithuania.
Employees in needed professions
From now on, when applying for a temporary residence permit in Lithuania, employees in needed professions do not need to obtain a decision from the Labour Exchange. Until now, in order to obtain a temporary Lithuanian residence permit, the Labour Exchange had to confirm that a foreigner's work meets the needs of the Lithuanian labour market (i.e. there are no local employees who meet the requirements of the employer). The new system should save about two months because there will be no need to publicize the vacancy and wait for a positive decision from the Labour Exchange.
Requirements for salaries
The law has also established new requirements for the salary of foreign employees. As before, the salary of foreigners must not be lower than the salary of local employees in the same position. However, if a company does not have other employees working in the same position, then the foreigner’s salary must not be less than the average Lithuanian salary (currently slightly above EUR 770 gross).
For students from abroad, there will be no need to obtain a Lithuanian work permit. They will be able to work up to 20 hours a week without additional permits.