In Lithuania, Changes to Legislation are Expected to Attract Fintech Talentby Fintechnews Baltic December 12, 2022
Earlier this year, the Lithuanian parliament approved amendments to the Labour Code, a development which the government hopes will help attract more highly qualified technology specialists from abroad but also entice highly skilled Lithuanian citizens who have left the country to come back home.
In accordance with the new provisions, highly skilled engineering, information technology (IT), physical sciences and biotechnology specialists are now eligible to lump-sum payments to help cover part of the relocation costs, the Seimas, the Lithuanian parliament, said. The program also includes a financial incentive for employers that hire highly skilled employees from abroad.
The program, which kicked off on July 01, 2022, aims to attract talent to Lithuania in priority economic sectors, increase the country’s competitiveness and attract more investors, the parliament said. The government estimates that the revenue generated by the newly attracted and recovered tax residents will exceed the costs of attracting or getting them back to the country.
The one-off compensation to cover part of the relocation costs for a newcomer in Lithuania amounts to around EUR 3,000. For companies, the financial incentive for recruiting a highly qualified worker from abroad stands at a maximum of about EUR 5,200.
Financial incentives are also available to citizens of Lithuania with professions in short supply and in niche sectors who have left the country but are now returning to their homeland. These professionals must have not been residents and taxpayers in Lithuania for more than five years.
To be eligible for the relocation aid, the professional recruited from aboard must have an open-ended employment contract with a company based in Lithuania. They must also receive an average gross monthly salary of at least EUR 3,000, or 4.1 time the current minimum monthly salary (MMA), for a six month period from the start of employment.
These professionals can start applying for the relocation aid after having worked for at least six months in Lithuania, but no later than two years. Companies, on the other hand, can apply for the financial incentive after the overseas professional they hired has worked for at least 12 months after the start of the contract but no later than two years.
The Lithuanian government has also introduced facilitated procedures and eased requirements to help highly skilled refugees from Ukraine relocate to Lithuania and access employment.
For instance, eligibility criteria for relocation aid have been relaxed, requiring Ukrainian citizens to only have an open-ended employment contract with a local company, and receive an average gross monthly salary of at least EUR 1,750. Ukrainians are also exempted from the requirement to have a profession included in the list of missing professions.
Eligible Ukrainians can apply for the financial incentive after just three months of working in Lithuania, but not later than two years after the commencement of their employment in the country.
Over the past years, Lithuania has worked towards establishing a solid foundation for emerging technology and digital businesses to thrive. Fintech, in particular, has been a top area of focus for the central bank, which has sought to capitalize off the withdrawal of the UK from the European Union (EU) to entice fintech companies to set up shop within its borders and benefit from passporting advantages.
The government’s strategy has so far been centered around streamlining regulation, allowing, for instance, a fintech company to secure an electronic money license from the central bank in as little as three months. In comparison, in most European jurisdictions, the term for obtaining a payment or e-money license stands from 12 to 15 months, according to technology and consulting company Advapay.
So far, the strategy has been a success, allowing Lithuania to see its fintech industry grow from just 55 companies in 2014 to now about 265. About half of these companies, or 147, are licensed as electronic money institutions, payment institutions, or specialized banks, a figure which the central bank claims is the highest across the whole bloc.
In addition to amendments to the Labour Code, 2022 also saw changes being made to Lithuania’s Anti-Money Laundering and Counter-Terrorist Financing Law (AML Act) to regulate business activities involving virtual assets. The amendments, which came into effect on November 01, 2022, give a clear definition of virtual currencies and establish additional requirements for cryptocurrency companies that provide crypto-asset exchange and custody services.
Among other things, these companies must have a registered share capital of at least EUR 125,000, and a local AML officer/money laundering reporting officer (MLRO) who is a permanent resident of Lithuania. They must also conduct all or part of their business in Lithuania, and carry out mandatory customer identification and not open anonymous accounts, according to law firm Sorainen.