Doing Business 2019 Lithuania Economy Profile Lithuania Page 1 Doing Business 2019 Lithuania Economy Profile of Lithuania Doing Business 2019 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as post-filing processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 Lithuania About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Lithuania Ease of Doing Business in DB 2019 Rank Region OECD high income 190 1 Lithuania Income Category High income 14 DB 2019 Ease of doing business score Population 2,827,721 0 100 City Covered Vilnius 80.83 DB 2019 Ease of Doing Business Score 0 100 84.64: Denmark (Rank: 3) 82.95: Norway (Rank: 7) 80.83: Lithuania (Rank: 14) 80.35: Finland (Rank: 17) 79.59: Latvia (Rank: 19) 77.80: Regional Average (OECD high income) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Lithuania 7 3 7 1 18 19 26 31 28 38 44 55 85 82 Rank 109 136 163 190 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Ease of Doing Business Score on Doing Business topics - Lithuania 100 97.83 93.18 92.96 88.43 88.66 84.86 78.80 80 70.00 66.67 Score 60 46.87 40 20 0 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Page 4 Doing Business 2019 Lithuania Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Lithuania Starting a Business - Lithuania Standardized Company Legal form Private Limited Liability Company (UAB) Paid-in minimum capital requirement EUR 2,500 City Covered Vilnius Indicator Lithuania OECD high Best Regulatory income Performance Procedure – Men (number) 4 4.9 1 (New Zealand) Time – Men (days) 5.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 0.5 3.1 0.0 (Slovenia) Procedure – Women (number) 4 4.9 1 (New Zealand) Time – Women (days) 5.5 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 0.5 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 17.5 8.6 0.0 (117 Economies) Figure – Starting a Business in Lithuania and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 94.31: Norway (Rank: 22) 94.13: Latvia (Rank: 24) 93.18: Lithuania (Rank: 31) 92.52: Denmark (Rank: 42) 92.43: Finland (Rank: 43) 91.19: Regional Average (OECD high income) Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2019 Lithuania Figure – Starting a Business in Lithuania – Procedure, Time and Cost Time (days) Cost (% of income per capita) 0.45 5 0.4 Cost (% of income per capita) 0.35 4 0.3 Time (days) 3 0.25 0.2 2 0.15 0.1 1 0.05 0 0 1 2 3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2019 Lithuania Details – Starting a Business in Lithuania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Open bank account and deposit minimum capital requirement 1 day no charge Agency : Commercial Bank Some banks apply charges for issuing a bank certificate, which evidences payment of share capital. Accumulation bank account can be opened online in most large banks of Lithuania, for example, DNB bank, Dankske bank, Citadele, Šiaulių bank, Swedbank and Seb bank. However, it requires e-signature, and thus is not widely used. In order to transform it to a regular one, the Managing Director (the MD) of the company shall visit the respective bank division in- person (the MD shall fill in questionnaires regarding the UBOs of the company and sign the contract directly). 2 Obtain a confirmed electronic signature 1 day EUR 0.5 Agency : Center of Registers, Mobile operator, Migration Department, Banks In order to check and reserve company name online as well as register employees with SODRA, a company must have electronic signature. Electronic signature in USB form costs about EUR 43.33 plus about EUR 7.00 annual fee. Almost all mobile operators provide electronic key for price in amount from EUR 0.30 to 10.00 plus monthly fee in the amount of EUR 0.29 - 0.87. At this moment in Lithuania are three types of electronic signatures. 1) Electronic signature issued by state Center of Registers. Costs – EUR 43.33. Certificate of electronic signature is valid for 2 years. After 2 years certificate must be updated. Costs – EUR 8.23. 2) Electronic signature issued by mobile operators. Cost depends on mobile operator and range from EUR 0.30 to EUR 10. The monthly fee is about EUR 0.30 - EUR 0.90. 3) Electronic signature issued by Migration Board with the personal identity card. Electronic signature does not cost anything but costs of personal identity card range from 8.6 EUR to 31.6 EUR. 3 Check and reserve the name of the company (limited liability company) Less than one day EUR 16.22 Agency : Register of Legal Entities and State Commission of Lithuanian (online procedure) Language Reservation of the new company name is compulsory for registration of business. Checking of the name is free of charge, and reservation costs EUR 16.22. As of May 2013, the changes of the Regulations of the Register of legal persons came into effect. Now the State Commission of the Lithuanian Language must check every new company name and give its consent on the use of a particular name. Lithuanian Government by decision No. 1292 adopted on 09 12 2015 amended Regulations of the Register of Legal Entities. Nothing has changed how is related with reservation of company name, just new wording of Regulation has been adopted. https://www.e-tar.lt/portal/legalAct.html? documentId=a02cbd30a40011e58fd1fc0b9bba68a7 4 Register at the Company Register, including registration with State Tax 3 days EUR 57.34 Inspectorate (the Lithuanian Revenue Authority) for corporate tax, VAT, and State Social Insurance Fund Board (SODRA) Agency : Register of Legal Entities According to Article 44 and 45 of the Regulations of the Register of Legal Entities (updated on October 11, 2017), before the application for registration of a company is submitted to the Register of Legal Entities, notary public must verify the correctness of the particulars entered into the application, the compliance of the statutes with the statutory requirements and the fact that the company is eligible for registration. Article 46 of the Regulations provides a possibility to submit the documents electronically directly to the Register of Legal Entities, without verification of a notary (certain conditions apply, such as using only standard forms of incorporation documents, using electronic signatures, etc.). The following documents must be submitted when incorporating a private limited liability company: 1. Application for registration; 2. Founding act/Founding agreement; 3. Articles of association; 4. Consent use of address (if the founder is not an owner of premises). Article 128 of the Regulations provides that after on-line filling in required data, documents for company incorporation and registration, listed above, are generated automatically on-line. On-line registration grows up increasingly. When documents of legal entities are submitted directly to the Registrar electronically, incorporation is performed in one working day, except for the cases when other terms of registration are set in the Regulations. The Registrar shall check that there are no obstacles to register or enter the object, instruments of incorporation of the Register into the Register, and register or enter the data of the Register. Takes place simultaneously with previous procedure. Page 8 Doing Business 2019 Lithuania Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any • Registering and selling the warehouse after its other employees who are technical or licensed experts, such as geological or completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 9 Doing Business 2019 Lithuania Dealing with Construction Permits - Lithuania Standardized Warehouse Estimated value of warehouse EUR 715,697.10 City Covered Vilnius Indicator Lithuania OECD high Best Regulatory income Performance Procedures (number) 13 12.7 None in 2017/18 Time (days) 74 153.1 None in 2017/18 Cost (% of warehouse value) 0.3 1.5 None in 2017/18 Building quality control index (0-15) 13.0 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Lithuania and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 86.94: Denmark (Rank: 4) 84.86: Lithuania (Rank: 7) 78.86: Norway (Rank: 22) 75.79: Finland (Rank: 34) 75.41: Regional Average (OECD high income) 73.46: Latvia (Rank: 56) Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Figure – Dealing with Construction Permits in Lithuania – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.14 70 0.12 Cost (% of warehouse value) 60 0.1 50 Time (days) 0.08 40 0.06 30 20 0.04 10 0.02 0 0 1 2 *3 *4 5 6 7 8 9 10 11 12 13 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 10 Doing Business 2019 Lithuania Figure – Dealing with Construction Permits in Lithuania and comparator economies – Measure of Quality 15 13.0 12.0 11.5 11.0 Index score 10.0 10.0 10 5 0 Lithuania Denmark Finland Latvia Norway OECD high income Details – Dealing with Construction Permits in Lithuania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain certificate of ownership of the land plot 0.5 days EUR 3 Agency : Center of Registers Documents evidencing ownership or any other right allowing construction activities on the land plot should be requested from the Center of Registers, Land and Real Property Registry. The Extract from the Register of Immovable Property proving the ownership of the land plot should be submitted to the Municipality in order to obtain a set of design conditions for the construction works. 2 Obtain topographic survey of land plot 21 days EUR 175 Agency : Private company Before developing the architectural plans of the warehouse, BuildCo must obtain a topographic survey of the land plot. The cost is defined by each private licensed company, with the average being around EUR 175. The time it takes to complete the survey is three weeks. 3 Request and obtain special architectural requirements for construction 14 days no charge works Agency : Municipality BuildCo must obtain special architectural requirements from the municipal administration. The Municipality shall issue these Requirements within 15 working days from the receipt of builder's request. These Requirements shall be followed while preparing the Design Documentation. 4 Request and obtain design requirements for water and sewage connection 14 days no charge Agency : Vilnius Water (“Vilniaus vandenys”) BuildCo shall submit an application together with a certificate proving its ownership of the land to Lithuania Water Company personally or via e-mail at info@vv.lt. Lithuania Water Company will issue the requirements for water and sewage connection within 15 days from the submission of the request. After Requirements for water and sewage are issued, the builder should start preparing a project for water and sewage connection under the issued Requirements. This project is submitted together with Design Documents. 5 Request and obtain approval of the design documentation and obtain the 14 days EUR 78 building permit Agency : Architectural and Engineering Commissions of the City Development Department The builder shall submit Design Documentation and other supplementary documents, which are necessary for obtaining construction permit, by submitting hard copy or via internet using "Infostatyba" (www.planuojustatyti.lt). Competent agencies, as prescribed by laws, shall verify and approve the Design Documentation and other supplementary documents. After that, the construction permit is issued. The entire process shall take 10 working days. 6 Request and obtain water and sewerage connection approval and sign 7 days EUR 348 contract Agency : Vilnius Water (“Vilniaus vandenys”) After the construction permit is issued, the construction company shall install water and sewerage connection according to the project prepared and approved earlier. After that, the builder shall submit the request for signing a contract with Lithuanian Water Company. 7 Request and obtain deeds of inspection and testing of engineering 5 days no charge networks for water and sewage connection Agency : Operators of Engineering Networks and Systems The inspection and test are performed by operators of the corresponding engineering networks and systems. The inspection verifies that the engineering networks for water and sewage connections are connected appropriately and issues a certificate confirming the proper connection. 8 Connect to water services 5 days no charge Page 11 Agency : Vilnius Water (“Vilniaus vandenys”) Doing Business 2019 Lithuania 9 Hire private cadastre company and obtain cadastral measurement of the 5 days EUR 579 structure Agency : Private Company The file is prepared by private companies licensed to carry out cadastral measurements and approved by the SE Center of Registers. This procedure is necessary for registering with the Land and Real Property Registry. 10 Request certificate of completion of construction 0.5 days no charge Agency : State Territorial Planning and Construction Inspectorate under the Ministry of Environment BuildCo must submit the request along with other supplementary documents necessary to obtain the certificate of completion of construction from the subdivision of The State Territorial Planning and Construction Inspectorate under The Ministry of Environment of the Republic of Lithuania. BuildCo can submit a hard copy of the request or via internet using “Infostatyba” (www.planuojustatyti.lt). A Commission of Completion of Construction is then formed to carry out an on-site inspection. 11 Receive final inspection 1 day no charge Agency : State Territorial Planning and Construction Inspectorate under the Ministry of Environment After the successful completion of the final inspection, the Commission issues the approval. 12 Obtain the certificate of completion of construction 14 days no charge Agency : State Territorial Planning and Construction Inspectorate under the Ministry of Environment The Certificate of Completion of Construction shall be issued within 10 working days from the submission of the request and other supplementary documents. 13 Register with the Land and Real Property Registry 1 day EUR 825 Agency : Land and Real Property Registry Upon completion and approval of construction, the building must be registered with the Land and Real Property Registry. The general term for the registering of warehouse is 10 working days, but it is possible to register it in 1 working day if a supplementary fee is paid. The price for the building registration depends on whether natural or legal person registers the building and on the average market value of the building. The terms and conditions of payment for the registering services were settled by the 2007-06-06 Legal Act of the Government of the Republic of Lithuania, which came into force on June 17, 2007. Takes place simultaneously with previous procedure. Page 12 Doing Business 2019 Lithuania Details – Dealing with Construction Permits in Lithuania – Measure of Quality Answer Score Building quality control index (0-15) 13.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in Licensed 1.0 compliance with existing building regulations? (0-1) architect; Licensed engineer. Quality control during construction index (0-3) 2.0 What types of inspections (if any) are required by law to be carried out during construction? Inspections by in- 1.0 (0-2) house engineer. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 1.0 inspections are always done in practice. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 4.0 What are the qualification requirements for the professional responsible for verifying that the Minimum number 2.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) of years of experience; University degree in architecture or engineering; Passing a certification exam. Page 13 Doing Business 2019 Lithuania What are the qualification requirements for the professional who supervises the construction Minimum number 2.0 on the ground? (0-2) of years of experience; University degree in engineering, construction or construction management; Passing a certification exam. Page 14 Doing Business 2019 Lithuania Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and obtaining final supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property income per capita) because the warehouse has access to a road. - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor the ranking on the ease of getting electricity. Page 15 Doing Business 2019 Lithuania Getting Electricity - Lithuania Standardized Connection Price of electricity (US cents per kWh) 8.3 Name of utility AB ESO City Covered Vilnius Indicator Lithuania OECD high Best Regulatory income Performance Procedures (number) 4 4.5 3 (25 Economies) Time (days) 85 77.2 18 (3 Economies) Cost (% of income per capita) 38 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 8 7.5 8.0 (27 Economies) Figure – Getting Electricity in Lithuania and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 90.58: Norway (Rank: 19) 90.22: Denmark (Rank: 21) 88.98: Finland (Rank: 25) 88.43: Lithuania (Rank: 26) 85.47: Regional Average (OECD high income) 82.24: Latvia (Rank: 53) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Page 16 Doing Business 2019 Lithuania Figure – Getting Electricity in Lithuania – Procedure, Time and Cost Time (days) Cost (% of income per capita) 40 80 35 Cost (% of income per capita) 70 30 60 Time (days) 25 50 20 40 15 30 20 10 10 5 0 0 1 2 *3 4 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Figure – Getting Electricity in Lithuania and comparator economies – Measure of Quality 8 8 8 8 7.5 7 7 7 6 Index score 5 4 3 2 1 0 Lithuania Denmark Finland Latvia Norway OECD high income Page 17 Doing Business 2019 Lithuania Details – Getting Electricity in Lithuania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to AB ESO and receive estimate as well as technical 7 calendar days EUR 0 conditions Agency : AB ESO The customer submits an application for a connection to the utility. The utility issues technical conditions and estimate of costs. 2 Sign connection service agreement with AB ESO and await completion of 75 calendar days EUR 5,436.2 external works Agency : AB ESO Customer signs the agreement either via online e-services portal www.manogile. It or in Customer service center. After the customer pays the estimate to AB ESO via e-services portal www.manogile.lt or by bank transfer, the following steps are carried out by the Utility: - preparation of the design of the external electricity network; - assignment of the work order to the annual contractor. In most of the cases, annual contractors are selected once a year by the public tender and no addition procurements are carried out after the customer signs The New Connection Service Agreement; - construction work for the electricity network of AB ESO. All the necessary material is provided by the Utility and Customer does not need to buy any material for the construction of external electricity network. 3 Obtain internal wiring inspection and certificate from State Energy 7 calendar days EUR 0 Inspection Agency : State Energy Inspection An internal inspection can be done in parallel with AB ESO works (the external connection works). The customer must apply to the State Energy Inspection, a Division of the Ministry of Economy, and request a Certificate of Completion. The customer can request the internal inspection already when the Construction Permit is obtained. The internal wiring is the responsibility of the customer and someone from the customer's party is requested to be present during the inspection. The State Inspection examines the constructed warehouse and its documentation and signs the certificate “Completion of Works”. 4 Sign supply contract with AB ESO, receive meter installation and electricity 3 calendar days EUR 0 turn-on Agency : AB ESO The electricity supply agreement can be signed online on the utility website, where the customer can choose the preferred tariff plan, and make payment. The meter is installed after the utility receives the Certificate from the State Energy Inspection, which indicates that the internal wiring is successfully completed and that the utility works up to the meter are completed as well. The meter is installed by AB ESO and by the same department that is doing the connection works. There is also an inspection done of the utility’s external connection work by the State Energy Inspection. The utility independently requests the State Energy Inspection to inspect the utility work (external inspection). This is the sole responsibility of the utility and the customer does not have to be present. Takes place simultaneously with previous procedure. Page 18 Doing Business 2019 Lithuania Details – Getting Electricity in Lithuania – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 8 Total duration and frequency of outages per customer a year (0-3) 3 System average interruption duration index (SAIDI) 0.4 System average interruption frequency index (SAIFI) 0.2 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of Yes supply? Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.e- tar.lt/portal/lt/legalAct /61a5a940e70c11e7 acd7ea182930b17f Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 19 Doing Business 2019 Lithuania Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. • Official costs only (such as administrative fees, - Has no trees, natural water sources, natural reserves or historical monuments of duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 20 Doing Business 2019 Lithuania Registering Property - Lithuania Indicator Lithuania OECD high Best Regulatory income Performance Procedures (number) 3 4.7 1 (4 Economies) Time (days) 3.5 20.1 1 (New Zealand) Cost (% of property value) 0.8 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 28.5 23.0 None in 2017/18 Figure – Registering Property in Lithuania and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 92.96: Lithuania (Rank: 3) 89.88: Denmark (Rank: 11) 87.26: Norway (Rank: 13) 81.45: Latvia (Rank: 25) 80.73: Finland (Rank: 28) 77.17: Regional Average (OECD high income) Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Figure – Registering Property in Lithuania – Procedure, Time and Cost Time (days) Cost (% of property value) 3.5 0.5 3 Cost (% of property value) 0.4 2.5 Time (days) 0.3 2 1.5 0.2 1 0.1 0.5 0 0 1 2 3 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology ). For details on the procedures reflected here, see the summary below. Page 21 Doing Business 2019 Lithuania Figure – Registering Property in Lithuania and comparator economies – Measure of Quality 30 28.5 26.5 24.5 25 23.0 21.5 Index score 20.0 20 15 10 5 0 Lithuania Denmark Finland Latvia Norway OECD high income Details – Registering Property in Lithuania – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Notary orders the verification and clarification of the property data Less than one day, EUR 3.62 Agency : Information system of the Real Estate Agency online Resolution No. 527 of the Government of the Republic of Lithuania as of May 4, 2011 On the amendment of Resolution No. 1129 of the Government of the Republic of Lithuania of July 12, 2002 On the approval of the Real Estate Cadastre regulations stipulates that a notary public, at the initial stage of preparing an immovable property transaction, is required to order verification and revision of cadastral and registration data of an immovable item that are necessary for the execution of the immovable property contract. The Information System of Public E-Services for Immovable Property Transactions shall generate a notice on the future transaction and submit it to the Registrar of Real Estate. Having received the notice, the Registrar of Real Estate shall verify and, if necessary, revise the cadastral and registration data of the immovable item that are necessary for the execution of the immovable property transaction (or, in certain cases, refuse to revise the data due to specific reasons) and make a relevant note of the data revision with the Real Estate Register. The note shall be valid for 30 calendar days after the data revision. Data of the Real Estate Cadastre and Register required for the execution of the immovable property transaction must be verified and the notes of data revision or refusal to revise them must be made latest in 8 working hours or, in certain cases subject to the status of cadastral and registration data of the immovable item held by the Real Estate Register, latest in 3 working days from the receipt of notice of pending transaction from the Information System of Public E-Services for Immovable Property Transactions. Page 22 Doing Business 2019 Lithuania 2 Notarization of the sale-purchase agreement 1 day EUR 3,220.64; Agency : Notary Public (Notary fees: 0.45% Pursuant to the Resolution No. 1129 of the Government of the Republic of of property price, but Lithuania from July 12, 2002 "On the approval of the Real Property Register not less than € 28.96 Regulations", Civil Code, Law on Land and Law on Companies of the Republic of and not exceeding € Lithuania with later amendments thereof, a contract of purchase and sale of an 5,792.40 (€ 14,481, if immovable item must be made in a notarial form. Failure to comply with the requirements of the form shall render the contract invalid. The contract of more than one object purchase and sale of an immovable item may be used against third parties and is transferred) have legal implications for them only in case it is registered with the public register in the statutory Procedure (procedure 3). The title (right of ownership) to In addition, EUR 3.62 the immovable item shall devolve to the buyer from the moment of transfer of the is a fee payable to item. The transfer and acceptance of the immovable item shall be documented in the Center of a statement of transfer and acceptance signed by the seller and the buyer or in Registers for another document specified in the contract of purchase and sale. Likewise, the verification and provisions regarding the transfer and acceptance of the immovable item may be revision of cadastral inserted in the contract of purchase and sale. In such a case, the item and the and registration data title thereto shall transfer to the buyer at the moment of signing the contract. of an immovable item as well as for the The Directive 2010/31/EU of European Parliament and Council of 19 May 2010 on the energy performance of buildings was enforced in Lithuania. Respective making of data amendments to the Republic of Lithuania Law on Construction as from 9 January revision notes (by the 2013 came into force. The energy efficiency certification is mandatory in case of Center of Registers)) sale of the property. The seller of a building being sold must provide the buyer with a valid energy efficiency certificate of a building or part thereof, save as in cases established by the Law on Construction (e.g., the energy efficiency certification shall not be mandatory for non-residential buildings of low energy consumption used for industrial, warehousing and agricultural management purposes). The list of documents to be submitted to notaries include: • Articles of association of private limited liability companies; • Power-of-Attorney issued by the CEO of a private limited liability company, if another authorized person, instead of the CEO, is acting on behalf of the company; • Personal ID of the representatives of the parties to the contract • Resolution of the board of a private limited liability company (if this body has been formed) in cases when the book value of the immovable property to be sold exceeds 1/20 of the authorized capital of the company or any other value established in the articles of association of the company. Where no board is formed in the company, such resolution shall be passed by the CEO of the company. • Where so is specified in the articles of association of a private limited liability company, approval of the aforementioned resolutions of the board or CEO (if the board is not formed) by the general meeting of shareholders; • Land plot plan; • Documentary proof of seller's title to immovable items (legal basis for the acquisition of the immovable item, for example, a contract of exchange, a contract of purchase and sale, etc., on which basis the title to the immovable item has been registered); • Energy Performance Certificate (an original document or a copy) shall be submitted to a notary. In case if the energy consumption of the building is low/the building is not heated, the provision of the energy certificate is not required; • Other documents, if requested subject to factual circumstances. Page 23 Doing Business 2019 Lithuania 3 Register the transfer of title to the property in the Real Estate Register 2 days EUR 2,469.03; (10 Agency : Notary Public / State Enterprise Center of Registers business days Due to revisions of Law on Real Property Register of the Republic of Lithuania (regular Procedure), and Regulations of the Real Property Register mentioned previously, one-stop- but can be done in 3 shop principle was fully implemented in the immovable property transfer process, business days by i.e. a buyer and a seller only visit the notary public office in order to conclude the paying a 30% mark- property transfer and to register the ownership rights. After notarizing (with digital signature) the prepared agreement, the notary orders the registration of new up on the price (fast- ownership rights online in the Centre of Registers immediately. However, the track Procedure) ownership transfer will be reflected in the system of the Register no later than 1 in 2 business days working day. with a 50% mark-up (fast-track Due to introduction of euro in Lithuania on 1 January 2015, registration fees Procedure), and in 1 remained the same, only ranges of average market value for calculation of business day with a registration fees of buildings and land plots were adjusted. Therefore, the 100% mark-up (fast- corrections are given below: track Procedure)) Average market value of building - registration fee: Up to EUR 14,500 = EUR 37.65 From EUR 14,501 to EUR 232,000 = EUR 37.65 + 0.05% difference between building's average market value and EUR 14,500 From EUR 232,001 to EUR 870,000 = EUR 146,26 + 0.055% difference between building's average market value and EUR 232,000 More than EUR 870,000 = EUR 496,70 + 0,05% difference between building's average market value and 870,000, but not more than EUR 1448,10 (the ultimate cap fee for registration Average market value of land plot - registration fee: Up to EUR 2,900 = EUR 23.17 From EUR 2,901 to EUR 29,000 = EUR 23.17 + 0.3% of the difference between land plot's average market value and EUR 2,900 From EUR 29,001 to EUR 290,000 = EUR 101.37 + 0.3% of the difference between land plot's average market value and EUR 29,000 More than EUR 290,000 = EUR 883.34 + 0.2% of the difference between land plot's average market value and EUR 290,000, but not more than EUR 1448.10 (the ultimate cap fee for registration) Legal basis: Law Amending Articles 17, 23, 26 and Invalidating Article 25 of the Law on Real Property Register No I-1539 of the Republic of Lithuania as of 23 June 2015 No XII-1833; Resolution No 1194 of the Government of the Republic of Lithuania as of 18 November 2015 on Amendment to Resolution No 379 of the Government of the Republic of Lithuania as of 23 April 2014 on Approval of the Real Property Register Regulations Takes place simultaneously with previous procedure. Page 24 Doing Business 2019 Lithuania Details – Registering Property in Lithuania – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 8.0 What is the institution in charge of immovable property registration? The State Enterprise Centre of Registers In what format are the majority of title or deed records kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: The State Enterprise Centre of Registers In what format are the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Single database 1.0 or mapping agency kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the Yes 1.0 same identification number for properties? Transparency of information index (0–6) 4.5 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://info.registru centras.lt/ Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://www.registr ucentras.lt/p/85 Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://www.registr ucentras.lt/p/86 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the Yes 0.5 immovable property registration agency? Number of property transfers in the largest business city in 2017: 40260 property transfers Who is able to consult maps of land plots in the largest business city? Anyone who 0.5 pays the official fee Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Page 25 Doing Business 2019 Lithuania Link for online access: http://www.registr ucentras.lt/p/773 Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: http://www.registr ucentras.lt/p/773 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 8.0 Are all privately held land plots in the economy formally registered at the immovable property Yes 2.0 registry? Are all privately held land plots in the largest business city formally registered at the Yes 2.0 immovable property registry? Are all privately held land plots in the economy mapped? Yes 2.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 8.0 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Is there a specific compensation mechanism to cover for losses incurred by parties who Yes 0.5 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Notary; Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Notary; Is there a national database to verify the accuracy of identity documents? Yes 1.0 For a standard land dispute between two local businesses over tenure rights of a property Vilnius County worth 50 times gross national income (GNI) per capita and located in the largest business Court (Vilniaus city, what court would be in charge of the case in the first instance? apygardos teismas) How long does it take on average to obtain a decision from the first-instance court for such a Less than a year 3.0 case (without appeal)? Are there any statistics on the number of land disputes in the first instance? Yes 0.5 Number of land disputes in the largest business city in 2017: In 2017, there were 485 disputes in the land lease heard in Lithuania (in first instance courts) Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 26 Doing Business 2019 Lithuania Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 27 Doing Business 2019 Lithuania Getting Credit - Lithuania Indicator Lithuania OECD high Best Regulatory income Performance Strength of legal rights index (0-12) 6 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 6.7 8 (42 Economies) Credit registry coverage (% of adults) 51.6 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 96.8 65.3 100.0 (25 Economies) Figure – Getting Credit in Lithuania and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 85.00: Latvia (Rank: 12) 70.00: Denmark (Rank: 44) 70.00: Lithuania (Rank: 44) 65.00: Finland (Rank: 60) 64.12: Regional Average (OECD high income) 55.00: Norway (Rank: 85) Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Figure – Legal Rights in Lithuania and comparator economies 8 9 8 7 7 6 6.1 6 Index Score 5 5 4 3 2 1 0 Lithuania Denmark Finland Latvia Norway OECD high income Page 28 Doing Business 2019 Lithuania Details – Legal Rights in Lithuania Strength of legal rights index (0-12) 6 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and No enforcement of functional equivalents to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a Yes specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and Yes replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be No secured between parties; and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by Yes asset type, with an electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency Yes procedure? Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? Yes Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization No procedure? Does the law protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow Yes the secured creditor to sell the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Lithuania and comparator economies 8 8 8 7 6.7 6 6 6 6 Index Score 5 4 3 2 1 0 Lithuania Denmark Finland Latvia Norway OECD high income Page 29 Doing Business 2019 Lithuania Details – Credit Information in Lithuania Depth of credit information index (0-8) Credit Credit Score bureau registry Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative credit data distributed? Yes No 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries Yes Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes Yes 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Total Score ("yes" to either public bureau or private registry) 8 Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 1,640,346 931,281 Number of firms 170,180 34,862 Total 1,810,526 966,143 Percentage of adult population 96.8 51.6 Page 30 Doing Business 2019 Lithuania Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 31 Doing Business 2019 Lithuania Protecting Minority Investors - Lithuania Indicator Lithuania OECD high Best Regulatory income Performance Extent of disclosure index (0-10) 7.0 6.5 10 (13 Economies) Extent of director liability index (0-10) 4.0 5.3 10 (Cambodia) Ease of shareholder suits index (0-10) 7.0 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 6.0 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 6.0 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 10.0 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Lithuania and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 75.00: Norway (Rank: 15) 66.67: Denmark (Rank: 38) 66.67: Lithuania (Rank: 38) 64.21: Regional Average (OECD high income) 63.33: Latvia (Rank: 51) 58.33: Finland (Rank: 72) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Figure – Protecting Minority Investors in Lithuania and comparator economies – Measure of Quality Lithuania 10 4 7 6 6 7 Denmark 9 5 7 5 6 8 Finland 9 4 6 2 6 8 Latvia 8 4 5 5 7 9 Norway 10 5 7 8 7 8 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 0 5 10 15 20 25 30 35 40 45 50 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 32 Doing Business 2019 Lithuania Details – Protecting Minority Investors in Lithuania – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 6 Extent of disclosure index (0-10) 7.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) Shareholders or 1.0 board of directors including interested parties Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of 2.0 all material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Extent of director liability index (0-10) 4.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if negligent 1.0 2) Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by No 0.0 shareholders? (0-1) Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Only in case of 0.0 fraud or bad faith Ease of shareholder suits index (0-10) 7.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying No 0.0 specific ones? (0-1) Can the plaintiff directly question the defendant and witnesses at trial? (0-2) Yes 2.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) Yes 1.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-10) 7.3 Extent of shareholder rights index (0-10) 6.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of Yes 1.0 shareholders? Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Page 33 Doing Business 2019 Lithuania Do shareholders automatically receive preemption rights every time Buyer issues new Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? Yes 1.0 Are changes to the rights of a class of shares only possible if the holders of the affected No 0.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a No 0.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 6.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board No 0.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum Yes 1.0 period set by law? Extent of corporate transparency index (0-10) 10.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? Yes 1.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting Yes 1.0 agenda? Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 34 Doing Business 2019 Lithuania Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The Total tax and contribution rate (% of commercial machinery seller is registered for VAT and excess input VAT incurred in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 35 Doing Business 2019 Lithuania Paying Taxes - Lithuania Indicator Lithuania OECD high Best Regulatory income Performance Payments (number per year) 10 11.2 3 (Hong Kong SAR, China) Time (hours per year) 99 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 42.6 39.8 26.1% (32 Economies) Postfiling index (0-100) 97.52 84.41 None in 2017/18 Figure – Paying Taxes in Lithuania and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 91.14: Denmark (Rank: 9) 90.64: Finland (Rank: 11) 89.74: Latvia (Rank: 13) 88.66: Lithuania (Rank: 18) 84.84: Norway (Rank: 30) 83.32: Regional Average (OECD high income) Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Figure – Paying Taxes in Lithuania and comparator economies – Measure of Quality 97.52 98.11 100 93.09 89.06 84.41 80 Index score 62.65 60 40 20 0 Lithuania Denmark Finland Latvia Norway OECD high income Page 36 Doing Business 2019 Lithuania Details – Paying Taxes in Lithuania Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Social 1.0 online 34.0 30.98% gross salaries 35.17 security contributions Corporate 1.0 online 18.0 15% taxable profit 5.92 income tax Real estate 1.0 online 1% assessed 0.98 tax property value Environmenta 1.0 online 39.77 Eur/ton ton of waste 0.29 l tax in January - April 2016 71.13 Eur/ton in May - December 2016 Vehicle tax 1.0 online EUR 286 + fixed fee 0.15 EUR 753 depending on type of vehicle Land tax 1.0 online 0.01% - 4% assessed 0.06 land value Contributions 0.0 online and 0.2% gross salaries 0.00 included in to guarantee jointly social security fund contributions Value added 1.0 online 47.0 21% value added 0.00 not included tax (VAT) Fuel tax 1.0 included into 0.00 small amount fuel price Employee 0.0 jointly 9% gross salaries 0.00 withheld paid - Social security contributions Tax on 1.0 online various rates fuel 0.00 pollution from consumption mobile sources Tax on 1.0 online various rates packaging 0.00 small amount pollution from use packaging Totals 10 99 42.6 Page 37 Doing Business 2019 Lithuania Details – Paying Taxes in Lithuania – Tax by Type Taxes by type Answer Profit tax (% of profit) 5.9 Labor tax and contributions (% of profit) 35.2 Other taxes (% of profit) 1.5 Page 38 Doing Business 2019 Lithuania Details – Paying Taxes in Lithuania – Measure of Quality Answer Score Postfiling index (0-100) 97.52 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? Yes Restrictions on VAT refund process None Percentage of cases exposed to a VAT audit (%) 0% - 24% Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) 2.1 95.8 Time to obtain a VAT refund (weeks) 6.2 94.27 Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 0% - 24% Time to comply with a corporate income tax correction (hours) 1.5 100 Time to complete a corporate income tax correction (weeks) No tax audit per 100 case study scenario Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 39 Doing Business 2019 Lithuania Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies The time for customs clearance would be recorded as 24 hours because the actual • Covers all documents required by law and in procedure took 24 hours. practice, including electronic submissions of Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 40 Doing Business 2019 Lithuania Trading across Borders - Lithuania Indicator Lithuania OECD high Best Regulatory income Performance Time to export: Border compliance (hours) 7 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 58 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 3 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 28 35.2 0 (20 Economies) Time to import: Border compliance (hours) 0 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 0 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 1 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 0 24.9 0 (30 Economies) Figure – Trading across Borders in Lithuania and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 97.83: Lithuania (Rank: 19) 96.97: Norway (Rank: 22) 95.26: Latvia (Rank: 26) 94.21: Regional Average (OECD high income) 92.44: Finland (Rank: 34) 100.00: Denmark (Rank: 1) Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Figure – Trading across Borders in Lithuania – Time and Cost Time (hours) Cost (USD) 8 70 7 7 58 60 6 Time (hours) 50 Cost (USD) 5 40 4 28 3 30 3 20 2 1 1 10 0 0 0 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 41 Doing Business 2019 Lithuania Details – Trading across Borders in Lithuania Characteristics Export Import Product HS 87 : Vehicles other than railway or HS 8708: Parts and accessories of motor tramway rolling-stock, and parts and vehicles accessories thereof Trade partner Russian Federation Germany Border Medininkai border crossing Poland-Lithuania border crossing Distance (km) 35 160 Domestic transport time (hours) 1 4 Domestic transport cost (USD) 73 290 Details – Trading across Borders in Lithuania – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required 3.0 58.0 by customs authorities Export: Clearance and inspections required 0.0 0.0 by agencies other than customs Export: Port or border handling 4.3 0.0 Import: Clearance and inspections required 0.0 0.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 0.0 0.0 Page 42 Doing Business 2019 Lithuania Details – Trading across Borders in Lithuania – Trade Documents Export Import CMR waybill CMR waybill Certificate of origin Commercial invoice Certificate of conformity Packing list Customs Export Declaration Intrastat Commercial invoice Packing list Page 43 Doing Business 2019 Lithuania Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 44 Doing Business 2019 Lithuania Enforcing Contracts - Lithuania Standardized Case Claim value EUR 25,892 Court name Vilnius District Court City Covered Vilnius Indicator Lithuania OECD high Best Regulatory income Performance Time (days) 370 582.4 None in 2017/18 Cost (% of claim value) 23.6 21.2 None in 2017/18 Quality of judicial processes index (0-18) 15.0 11.5 None in 2017/18 Figure – Enforcing Contracts in Lithuania and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 81.27: Norway (Rank: 3) 78.80: Lithuania (Rank: 7) 73.92: Denmark (Rank: 14) 71.66: Latvia (Rank: 20) 67.65: Regional Average (OECD high income) 66.40: Finland (Rank: 46) Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Figure – Enforcing Contracts in Lithuania – Time and Cost Time (days) Cost (% of claim value) 700 30 Cost (% of claim value) 600 582.4 23.3 23.1 23.6 25 485 485 21.2 500 469 Time (days) 20 16.2 400 400 370 15 300 9.9 10 200 100 5 0 0 Denmark Finland Latvia Lithuania Norway OECD high income Page 45 Doing Business 2019 Lithuania Figure – Enforcing Contracts in Lithuania and comparator economies – Measure of Quality Lithuania 3 4.5 4 3.5 Denmark 2.5 4.5 3.5 3.5 Finland 2.5 2 2.5 1.5 Latvia 3 4.5 2 3 Norway 2.5 4 4 3.5 OECD high income 2.5 3.1 2.3 3.6 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Lithuania Indicator Time (days) 370 Filing and service 40 Trial and judgment 240 Enforcement of judgment 90 Cost (% of claim value) 23.6 Attorney fees 8.6 Court fees 6 Enforcement fees 9 Quality of judicial processes index (0-18) 15.0 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 4.5 Court automation (0-4) 4.0 Alternative dispute resolution (0-3) 3.0 Page 46 Doing Business 2019 Lithuania Details – Enforcing Contracts in Lithuania – Measure of Quality Answer Score Quality of judicial processes index (0-18) 15.0 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 4.5 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil Yes case? 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? Yes 2. Adjournments 0.5 2.a. Does the law regulate the maximum number of adjournments that can be No granted? 2.b. Are adjournments limited to unforeseen and exceptional circumstances? Yes 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? Yes 3. Can two of the following four reports be generated about the competent court: (i) time to Yes 1.0 disposition report; (ii) clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the Yes 1.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 4.0 1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the Yes 1.0 competent court? 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the Yes general public through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme Yes court level made available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 Page 47 Doing Business 2019 Lithuania 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 48 Doing Business 2019 Lithuania Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 49 Doing Business 2019 Lithuania Resolving Insolvency - Lithuania Indicator Lithuania OECD high Best Regulatory income Performance Recovery rate (cents on the dollar) 40.6 70.5 None in 2017/18 Time (years) 2.3 1.7 0.4 (Ireland) Cost (% of estate) 15.0 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 0 .. .. Strength of insolvency framework index (0-16) 8.0 11.9 None in 2017/18 Figure – Resolving Insolvency in Lithuania and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 92.81: Finland (Rank: 2) 85.44: Norway (Rank: 5) 85.13: Denmark (Rank: 6) 75.21: Regional Average (OECD high income) 59.60: Latvia (Rank: 54) 46.87: Lithuania (Rank: 85) Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Figure – Resolving Insolvency in Lithuania – Time and Cost Time (years) Cost (% of estate) 2.5 2.3 15.0 16 14 Cost (% of estate) 2 1.7 12 Time (years) 1.5 10.0 9.3 10 1.5 8 1.0 1 0.9 0.9 6 4.0 3.5 4 0.5 1.0 2 0 0 Denmark Finland Latvia Lithuania Norway OECD high income Page 50 Doing Business 2019 Lithuania Figure – Resolving Insolvency in Lithuania and comparator economies – Measure of Quality Lithuania 4 2.5 1 0.5 Denmark 6 3 2 1 Finland 6 3 3 2.5 Latvia 5 2.5 2 2.5 Norway 5 2.5 3 1 OECD high income 5.3 2.8 2.2 1.9 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Lithuania and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 100 92.0 88.5 88.3 80 70.5 60 40.6 41.1 40 20 0 Lithuania Denmark Finland Latvia Norway OECD high income Page 51 Doing Business 2019 Lithuania Details – Resolving Insolvency in Lithuania Indicator Answer Score Proceeding liquidation (after Mirage management is interested in saving the business. Additionally, if the management does an attempt at not initiates reorganization, BizBank will start recovery procedure and this will lead the company to reorganization) liquidation. However, reorganization is likely to fail, because BizBank will be interested in getting paid as soon as possible and will not approve the reorganization plan. If reorganization plan is not approved, the court will terminate reorganization proceedings and initiate liquidation. Outcome piecemeal sale Upon declaring the enterprise bankrupt and adopting a resolution to put the enterprise into liquidation by reason of bankruptcy, the court shall confirm the amount of revised claims of each creditor, the procedure of liquidation, other orders and instructions necessary for carrying out the liquidation procedure. In this stage pledged assets – the real estate - shall be sold at an auction. Time (in years) 2.3 Mirage management will file a petition for commencement of reorganization proceedings and send a notice of it to the creditors and to the Authority of Audit, Accounting, Property valuation and Insolvency Management under the Ministry of Finance of the Republic of Lithuania. The court will decide whether to initiate reorganization proceedings within 1 month of receiving the petition. Decision of the court to initiate reorganization proceedings stays all other enforcement actions against the debtor. An administrator will be appointed and creditors must submit their claims within specified period (usually 30 to 45 days). The claims must be approved by the court in order for the creditors to vote on the reorganization plan. A creditors' meeting will be held 30 days after the creditors' claims are approved, creditors will elect a creditors' committee. Mirage management must submit a reorganization plan within 6 months of the date when the decision on the opening of reorganization proceedings is made. Creditors representing at least 2/3 of the aggregate amount of certified claims must vote in favor of the plan, in order for it to be approved. If the creditors fail to approve the plan, reorganization proceedings will be terminated. After reorganization proceedings are terminated, there is no automatic conversion of proceedings into liquidation. However, BizBank will be able to petition the court to open liquidation proceedings. The court will issue a liquidation order and liquidation proceedings will commence. A bankruptcy administrator will be appointed, who must sell the assets to satisfy the creditors' claims. Immovable property must be sold at a public auction. Movable property and immovables not sold at an auction will be sold in accordance with the decision of the creditors. Claims of secured creditors have priority over all other claims, including employment and tax claims, and will be paid first from the proceedings of the sale. Cost (% of 15.0 Major expenses will include remuneration of the insolvency administrator (around 8%), attorneys' estate) fees (up to 5%), and fees of accountants and other professionals (up to 2%). Recovery rate 40.6 (cents on the dollar) Page 52 Doing Business 2019 Lithuania Details – Resolving Insolvency in Lithuania – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 8.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, but only one of them needs to be complied with Management of debtor's assets index (0-6) 4.0 Does the insolvency framework allow the continuation of contracts supplying essential goods Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after No 0.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (c) No priority is 0.0 assigned to post- commencement creditors Reorganization proceedings index (0-3) 0.5 Which creditors vote on the proposed reorganization plan? (a) All creditors 0.5 Does the insolvency framework require that dissenting creditors in reorganization receive at No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, No 0.0 does each class vote separately and are creditors in the same class treated equally? Creditor participation index (0-4) 1.0 Does the insolvency framework require approval by the creditors for selection or No 0.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information No 0.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 53 Doing Business 2019 Lithuania Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2018. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 54 Doing Business 2019 Lithuania Labor Market Regulation - Lithuania Details – Labor Market Regulation in Lithuania Answer Hiring Fixed-term contracts prohibited for permanent tasks? No Maximum length of a single fixed-term contract (months) 60.0 Maximum length of fixed-term contracts, including renewals (months) 60.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 424.8 Ratio of minimum wage to value added per worker 0.2 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 5.5 Premium for night work (% of hourly pay) 50.0 Premium for work on weekly rest day (% of hourly pay) 100.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? No Whether nonpregnant and nonnursing women can work the same night hours as men Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 20.0 Paid annual leave for a worker with 5 years of tenure (working days) 20.0 Paid annual leave for a worker with 10 years of tenure (working days) 23.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 21.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? Yes Priority rules for redundancies? Yes Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure 4.3 Notice period for redundancy dismissal for a worker with 5 years of tenure 4.3 Notice period for redundancy dismissal for a worker with 10 years of tenure 4.3 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 4.3 Severance pay for redundancy dismissal for a worker with 1 year of tenure 8.7 Page 55 Doing Business 2019 Lithuania Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.7 Severance pay for redundancy dismissal for a worker with 10 years of tenure 8.7 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.7 Job quality Equal remuneration for work of equal value? Yes Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 126.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? No Minimum contribution period for unemployment protection (months)? 18.0 Page 56 Doing Business 2019 Lithuania Business Reforms in Lithuania In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. = Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2019 Protecting Minority Investors: Lithuania strengthened minority investor protections by introducing greater requirements for the disclosure of the compensation of directors and other high-ranking officers on an individual basis. Paying Taxes: Lithuania made paying taxes easier by merging the filing and payment of two labor contributions and issuing pre-populated value added tax returns. Trading across Borders: Lithuania made exporting easier by enhancing its automated customs data management system. Labor Market Regulation: Lithuania changed legislation on working hours, paid annual leave, as well as notice period and severance payments in case of redundancy. DB2018 Dealing with Construction Permits: Lithuania made dealing with construction permits easier by reducing the time needed to obtain technical conditions and the building permit. Getting Electricity: Lithuania made getting electricity easier by streamlining procedures and imposing deadlines for issuing internal wiring inspection certificates. Protecting Minority Investors: Lithuania strengthened minority investor protections by increasing corporate transparency. Paying Taxes: Lithuania made paying taxes easier by introducing electronic system for filing and paying VAT, CIT and social security contributions. On the other hand, the environmental tax was increased. DB2017 Getting Electricity: Lithuania made getting electricity faster by introducing time limits on the utility to conduct necessary connection procedures and lowering the connection tariff. DB2016 Starting a Business: Lithuania made starting a business easier by introducing online VAT registration. Getting Electricity: The utility in Lithuania has reduced the time of the connection works by enforcing the legal time limit to perform the external connection works. Protecting Minority Investors: Lithuania strengthened minority investor protections by prohibiting subsidiaries from acquiring shares issued by their parent company. DB2015 Starting a Business: Lithuania made starting a business easier by eliminating the need to have a company seal and speeding up the value added tax (VAT) registration at the State Tax Inspectorate. Dealing with Construction Permits: Lithuania made dealing with construction permits easier by reducing the time required for processing building permit applications. Enforcing Contracts: Lithuania made enforcing contracts easier by introducing an electronic filing system for court users. DB2014 Getting Credit: Lithuania strengthened its secured transactions system by broadening the range of movable assets that can be used as collateral, allowing a general description in the security agreement of the assets pledged as collateral and permitting out-of-court enforcement. DB2013 Starting a Business: Lithuania made starting a business easier by introducing online registration for limited liability companies and eliminating the notarization requirement for incorporation documents. Resolving Insolvency: Lithuania made resolving insolvency easier by establishing which cases against the company’s property shall be taken to the bankruptcy court, tightening the time frame for decisions on appeals, abolishing the court’s obligation to individually notify creditors and other stakeholders about restructuring proceedings and setting new time limits for creditors to file claims. Page 57 Doing Business 2019 Lithuania DB2012 Protecting Minority Investors: Lithuania strengthened investor protections by introducing greater requirements for corporate disclosure to the public and in the annual report. Resolving Insolvency: Lithuania amended its reorganization law to simplify and shorten reorganization proceedings, grant priority to secured creditors and introduce professional requirements for insolvency administrators. Labor Market Regulation: Lithuania allowed fixed-term contracts to be concluded for permanent tasks (until 31 July 2012). DB2011 Starting a Business: Lithuania tightened the time limit for completing the registration of a company. Getting Credit: Lithuania’s private credit bureau now collects and distributes positive information on borrowers. Paying Taxes: Lithuania reduced corporate tax rates. Trading across Borders: Lithuania reduced the time to import by introducing, in compliance with EU law, an electronic system for submitting customs declarations. Resolving Insolvency: Lithuania introduced regulations relating to insolvency administrators that set out clear rules of liability for violations of law. DB2010 Paying Taxes: Lithuania made paying taxes more costly for companies by increasing the corporate income tax rate. Resolving Insolvency: Lithuania made resolving insolvency easier through amendments to the Enterprise Bankruptcy Law. DB2009 Registering Property: Lithuania made registering property easier by merging the procedure for obtaining the real estate transaction certificate with the notarization procedure. Page 58 Doing Business 2019 Lithuania Page 59