Lithuania’s immigration reform scares away investors, but attracts local employers

The approved amendments to the Law on the Legal Status of Aliens will only come into force on 1 November 2014, however, they are already relevant to foreigners who have successfully obtained temporary residence permits to live in Lithuania, foreigners who are planning to come to Lithuania with the purpose of conducting business and for Lithuanian employers looking for highly qualified specialists from abroad.

Stricter procedure of issue of temporary residence permits

Before 1 November 2014, a foreigner may obtain a temporary residence permit in Lithuania, if they register a company, institution or organisation in the Republic of Lithuania as the owner (in such case, it is enough for a foreigner to found a company with minimum authorised capital) or as a co-owner holding the part of the authorized capital of the company with the nominal value of at least 50 thousand litas and their presence in the Republic of Lithuania is necessary for achieving the aims of the company, institution or organisation and performing its activities.

From 1 November 2014, a member of a private limited company with minimum authorized capital (LTL 10,000) founded in Lithuania will not be able to receive a temporary residence permit in Lithuania. Paragraph 1 of Section 1 of Article 45, the amendment of which will come into effect on 1 November 2014, sets rather high requirements for the volume of foreign investment, duration of company activities, created jobs, and equity.

According to the amendments of the Law, a temporary residence permit on the grounds of legal activities in Lithuania will be issued only to foreigners who are the members of a company, which has been performing the activities specified in the incorporation documents in Lithuania for at least 6 months prior to the application of a foreigner for a temporary residence permit and has created at least three job positions, in which the citizens of the Republic of Lithuania or the foreigners who are permanent residents of the Republic of Lithuania work full-time, and the value of equity of which (in case of a company other than public limited company or private limited company – of assets) is at least 100 thousand litas, from which at least 50 thousand litas are the funds or other assets invested by the foreigner, and the foreigner is a head, member of collegial management or supervisory body of the company, member entitled to conclude the transactions on behalf of the company or a shareholder of a public limited company or private limited company, who owns the shares with the nominal value of at least 1/3 of the authorised capital of the company. The temporary residence permit in Lithuania will also be issued to a foreigner, who is a head or a member of a collegial management or supervisory body of a company meeting the above requirements and the purpose of their arrival is the work in such company and to a foreigner who is released from the obligation to acquire a work permit.

From 1 November 2014, a temporary residence permit in Lithuania shall be issued for one year as before, and after one year, it shall be extended for 2 years. A privilege is applicable to a foreigner who has invested at least 900,000 litas in the equity (assets) of the company and the company has at least 5 job positions, in which the citizens of the Republic of Lithuania or the foreigners who are permanent residents of the Republic of Lithuania work full-time: a temporary residence permit will be issued and extended for three years for such foreigners.

In each case of issue or extension of a temporary residence permit in Lithuania to a foreigner, a strict evaluation will be carried out whether there are no serious grounds to believe that the company, the head or member of collegial management or supervisory body the foreigner is, is fictitious, i.e., established with a purpose for a foreigner to receive a temporary residence permit in Lithuania instead of carrying out the activities specified in the incorporation documents of a legal entity. If it is determined that the company is fictitious, the temporary residence permit issued to a foreigner in Lithuania may be revoked.

It is very likely, that new regulations shall make minor and middle foreign investments more complicated to implement in Lithuania.

Simplified procedure for issuing EU Blue Cards

The EU Blue Card is a license to legally reside and work in the territory of an EU member state and to move to another member state and do a job that requires high qualification. This card allows foreigners from third countries to work in any EU member state except for the United Kingdom, Ireland and Denmark. Most foreign specialists of high professional qualification in Lithuania are from Belarus, the USA, Ukraine and the Russian Federation.

Even though there is a shortage of highly qualified specialists in Lithuania, as there is in other countries, employers did not rush to implement this scheme for employing foreign nationals due to lengthy, inflexible and complex immigration procedures. In 2013, only 65 decisions were made in Lithuania as to the fit of an employment position requiring a highly qualified specialist to the demands of the labour market in the Republic of Lithuania. Most of these specialists are employed in Lithuania in the fields of engineering, computer technology and industry.

From 1 November 2014, a new and simplified procedure for acquiring permits for highly qualified specialists to temporarily reside in Lithuania will become valid. The immigration procedure for a highly qualified specialist previously could have taken up to 2-4 months, however, from 1 November 2014, the length of the employment procedure for a highly qualified specialist should be reduced to 2 weeks, if the employer commits to such specialist from a third country a wage that is not smaller than three times the national average before taxes (about LTL 7,025 LTL per month). Once the amendments to the Law on the Legal Status of Aliens enter into force, an employer will not be obliged to announce a vacant employment position and to contact the Lithuanian Labour Exchange, so that the latter could ascertain whether the Lithuanian labour market truly has a shortage of the required specialists, if the employer wishes to employ a highly qualified specialist from abroad. However, if an employer does not intend to pay the highly qualified specialist two times the national average wage (about LTL 4685 per month), then the employer will have to announce a vacant employment position and contact the Lithuanian Labour Exchange, so that the latter could confirm that the job position that requires a highly qualified foreign professional meets the demand of the Lithuanian labour market.

According to the amendments, a foreigner that intends to work in a job position that requires high professional qualifications may be issued with a permit to reside in Lithuania temporarily not for 1 year but for 3, and if the employment contract is to be valid for a shorter period of time than 3 years, the foreign national will be able to reside in the country for the duration of the employment contract and an additional 3 months.

The impact of foreign specialists (especially highly qualified specialists) on the Lithuanian economy is positive. It has been calculated that even if a foreign specialist is paid a wage that is only twice the national average, every such highly qualified holder of an EU Blue Card contributes LTL 2600 to the state budget every month.

Svetlana Naumčik is assistant to the attorney at law, professional law partnership iLAW