transforms to indefinite;
•
If throughout the lease term the lease
agreement was not breached by the tenant, the
tenant preserve “first hand” right to continue to lease the
property;
•
If the title of the leased property is transferred to the third
party, the acquirer of the property can choose to terminate the
lease, unless the lease agreement is registered with the Real
Estate Register;
•
Prior termination date the landlord may terminate the lease
agreement if: (i) the tenant damages the property or uses it
contrary to its purpose; (ii) the tenant fails to pay the rent fee;
(iii) the tenant does not maintain the property if undertook so;
(iv) there are other grounds specified in the lease agreement;
•
Prior termination date the tenant may terminate the lease
agreement if: (i) the landlord does not maintain the property
if undertook so; (ii) the property without fault of the tenant
becomes impossible to use; (iii) the landlord does not transfer
the property or hinder the proper use of the property; (iv)
there are other grounds specified in the lease agreement.
Î
Rent fee and indexation
•
Rent is usually paid monthly and does not include any utilities
or costs of other energy resources paid by the tenant;
•
The Civil Code allows the parties to agree on any means of rent
payment and calculation, i.e. fixed fee, periodical fee, services,
improvement of quality of the leased property, etc.;
•
If the rent fee or its calculation is not set in the lease agree-
ment, the parties may turn to the court to appoint inde-
pendent experts to calculate the rent fee;
•
Generally, the parties agree on annual adjustment of rent fee
based on Customer Price Index released by the Department of
Statistics of the Republic of Lithuania. Other common prac-
tice is to agree on annual change of the rent fee on mutual
agreement. Pursuant to the Civil Code, the rent fee cannot be
adjusted for more than twice a year.
TaX
From the 1st January 2013, Lithuania imposed a new taxation on
certain real estate properties, deemed Real Estate Tax (RET).
The annual rate of the real estate tax is set annually by the local
municipalities and ranges between 0.3% – 3% of the real estates’
taxable value.
Residential properties with a gross value in excess of LTL
1,000,000 (EUR €290,000) are now subject to 1% RET, however
properties with a total family-wise-ownership value below this
threshold are exempted.
Î
Direct acquisition of a property
•
The acquisition of a property gives rise to either personal
income tax or value added tax (VAT).
•
If the property is acquired by legal entities:
- 15% personal income tax, and
- 21% VAT must be paid.
•
If the property is acquired by private individual :
- Personal income tax is not payable if the property is
maintained for more than 5 years (if not – 15% income
tax must be paid);
- If the transaction is an individual, VAT is not applicable;
Investor Guide to Europe 2014
| 59
If a
private indi-
vidual is engaged
in this kind of economic
activity – 21% VAT must be
paid.
•
In addition, typical property transfer fee to
notary public is around 0.45% of the purchase price;
however, the cap of maximum fee is LTL 20,000.
Î
acquisition of shares in a company holding a
property
•
If company‘s shares are transferred by legal entity:
- Personal income tax is not payable if the company’s
shares current vendor is maintained for at least 2 years;
- VAT for transfer of shares is not applicable.
•
If company‘s shares are transferred by private individual:
- 15% personal income tax from earned incomes is appli-
cable;
- VAT is not applicable.
