Why is It Worth for German Companies to Invest in Lithuania?

Openness to innovation, an increasingly digitized society, and a stamp of approval from hundreds of leading global companies. That’s Lithuania today. As Berlin intends to keep a military brigade which will consist of around 5,000 soldiers fully stationed in Lithuania until 2027, Lithuania has already just launched its largest-ever military project at Rūdninkai, building a base to house 80% of the German brigade. So far, Lithuania estimated that a third of them will come with their families. As a result, new opportunities are opening for German companies as well.

Green light for companies from defence industry

The Lithuanian government has already approved new procedures designed to lower administrative hurdles for foreign defense looking to open production facilities in the Baltic state. Some months ago, officials ratified a series of amendments that seek to short-circuit established procedures and reviews in the interest of time. The new language introduces “a new category of investment projects” that counts large-scale manufacturing projects in the defense sector as addressing “pressing national security needs.

Under the latest policies, these projects will benefit from certain managerial exemptions that will allow companies to shorten the setup time of their facilities from two years to six months.

For example, the package includes a provision whereby European defense producers could begin the construction of their plants in Lithuania without a permit, needing to obtain one only before the build completion.

The German defence industry giant Rheinmetall has moved to assist the development of Lithuania defence sector by signed a memorandum of understanding (MoU) focused on establishing a new ammunition factory in the country. Germany’s Rheinmetall is planning to spend more than EUR 180mn on an ammunition manufacturing facility in Lithuania.

Moreover, on 1 October 2024, the parliament of the Republic of Lithuania approved a draft law on the ratification of the Agreement between the Governments of Lithuania and Germany on defence cooperation. The law regulates issues such as entry, exit, access to military facilities for military cooperation purposes, taxation, jurisdiction, military post, recognition of driver’s licenses, registration of vehicles, movement, establishment of schools providing German educational programmes, establishment of military health care facilities, establishment of military shops and canteens, etc. The Agreement enables German soldiers, the civilian component, family members and employees of German state-owned enterprises to be issued with a status certificate and a Republic of Lithuania identity number. This shows Lithuania’s commitment to create the best conditions for the permanent deployment of a German brigade in Lithuania.

One of the largest fintech pools in Europe

As the largest Fintech hub in the EU by the number of licenses issued, Lithuania is a powerhouse of financial innovation. The country’s mature and high-quality Fintech ecosystem, supported by a robust regulatory framework and a deep talent pool, makes it an ideal location for both rapidly growing Fintech companies and established financial institutions.

Lithuania’s success in Fintech and Financial Services is driven by its highly skilled, multilingual workforce. Almost 100.000 finance professional are working in Lithuania. The country has more than 12.000 professionals in compliance and risk management area. The country boasts top talent in key areas such as AML/Compliance, equity research, business analytics and asset servicing, as well as in software development and customer support. This diverse expertise provides a robust foundation for financial innovation.

Lithuania hosts a range of prominent Fintech companies and financial centers, underscoring its position as a major player in the industry. The German Commerzbank is planning to open a new Representative Office in Lithuania, based in Vilnius, in December 2024. As part of its international growth strategy, the bank recognises the great importance of the Baltic region. Commerzbank will not only be assisting German companies looking to expand into the Baltics, it will also be pursuing opportunities to invest in renewable solutions – one of the company’s main strategic focus areas.

IT in Lithuania: A Hub for Innovation and Growth

Lithuania is a true tech hub, bolstered by skilled IT specialists, a forward-thinking approach to talent development, state-of-the-art digital infrastructure, and a dynamic startup scene. As a fertile ground for software development, Lithuania’s vibrant technology ecosystem supports rapid growth and long-term success, from IT support services to advanced cybersecurity solutions and transformative AI algorithms.

Lithuania boasts diverse and driven tech talent, perfect for powering technological growth. The country’s educational system and continuous investment in skill development ensure a steady supply of top-tier IT specialists. Lithuania is the 1^st in the world in terms of digital skill availability and the 1st in the EU for young specialists (age 15-34) joining the ICT sector.

Lithuania offers top-tier digital infrastructure, ensuring seamless connectivity and robust cybersecurity measures. This advanced digital environment equips IT and software engineering teams with the essential resources for success. Lithuania is the 1^st in the world for wifi speed and 5^th globally for fiber coverage.

NTT DATA, the German arm of renowned global IT innovator NTT Group, has joined forces with Lithuanian end-to-end IT consulting provider Reiz Tech supporting global market leaders to co-found LITIT. The joint venture is planning to bring up to 100 specialists on board in its first year of operations, with plans for a strong expansion in the next few years. The new company will be focused on providing IT consultancy and IT-based solutions, including custom software development, strategic IT consulting, and support for applications and data platforms. The DACH region will be its geographic focus and industries such as automotive, financial services, and logistics will be a strategic target.

Why Lithuania?

Lithuania remains an increasingly attractive for German investors. According to the latest statistical data (2023), Lithuanian export to Germany are growing, and Germany remains the No 1 investor in Lithuania (EUR 5.7 billion). Ranked 11th globally for the ease of doing business, you’ll find a close and supportive business environment that is geared to help you exceed your targets.

The fact that oil and liquefied natural gas (LNG) terminals operator KN (Klaipėdos Nafta AB) was selected by German energy company Uniper to provide the operational services of the floating LNG terminal under construction in Wilhelmshaven on the North Sea coast, is yet another proof that the decision taken by Lithuanian authorities more than a decade ago were just and far-sighted.

Here are some other reasons why Lithuania is especially attractive for German investors:

Strategic Location. Lithuania is centrally located in the Baltic region, providing easy access to both European and Eastern markets. Its proximity to major markets in Poland, Scandinavia, and Russia is a key advantage.
Skilled Workforce. Lithuania is th 1st globally for digital skills availability. Lithuania boasts a highly educated and skilled labor force, particularly in sectors like IT, engineering, and finance. The country has a strong emphasis on education and innovation.
Education system. For children up to 5, Lithuania offers a wide range of options in terms of both languages and methods. Kindergartens are available with supervision in English, Lithuanian, Russian, German, Polish and French.
The Lithuanian tax system is simple and has a range of incentives for large-scale investors and those willing to conduct R&D activities.
Growing economy. Lithuania is the 1st in the EU for real GDP per capita growth 2000-2020. Lithuania has experienced steady economic growth, driven by a diverse economy that includes manufacturing, technology, and services. This growth creates opportunities for investment in various sectors.
Competitive Costs: Compared to Western Europe, Lithuania offers lower labor and operational costs, making it an appealing destination for companies looking to reduce expenses while maintaining quality.
Sustainability Focus. Lithuania is committed to sustainability and green initiatives, aligning with the growing global emphasis on corporate responsibility and environmental stewardship.
Supportive Investment Climate: Organizations like Invest Lithuania provide support for foreign investors, offering assistance with permits, funding opportunities, and local market insights.