New Legislation Establishes a Concept of a Start-up
The Government has approved amendments to the Law on SME Development drawn up by the Ministry of Economy and Innovation, which provides a legal definition of a start-up. The concept has long been used but had not been incorporated into the legislation so far. The new legislation defines a start-up as a very small or small enterprise with a large and innovation-based business development potential, operating for less than 5 years.
“Hitherto there was no definition of a start-up in Lithuania. Although this business model is relatively well understood by society, and by business and scientific communities and politicians, the absence of legally binding concept hindered the development of a start-up friendly business environment. The definition of a start-up by means of law will allow to further strengthen one of the priority areas of the country’s economy – a start-up ecosystem”, – says Virginijus Sinkevičius, the Minister of Economy and Innovations.
At the end of 2018, there were 520 start-ups in the database of Enterprise Lithuania. Last year, Lithuanian start-up community achieved a record level of investment – 183 million EUR have been invested by foreign and Lithuanian investment funds. The Ministry of Economy and Innovation aims to increase the number of start-ups in Lithuania to 1000 by 2020.
“Last year, the Ministry of the Economy and Innovation allocated 11 million euros of European Union investments to start-ups. An additional 30 million euros were allocated to venture capital funds. The emergence of the Accelerator Fund, which will provide more access to funding for early stage start-ups, was a crucial boost for the ecosystem. A legal definition of a start-up creates more solutions for further improvement of a start-up environment this year”, – says V. Sinkevičius.
Ministry of Economy and Innovation has already made proposals for a more flexible taxation of options. It intends, along with other institutions, to develop the procedures for “Startup Employee Visa“. The “Startup Employee Visa“ will enable attracting, retaining and integrating foreign talents in Lithuania. Moreover, the Ministry of Economy and Innovation seeks to simplify the procedures of “Startup Visa” which would facilitate the arrival of founders of foreign start-ups’.
In addition, the EU investment tool “Fin Tech LT”, with the value of nearly 2 million euros, will be launched in this year. This tool will help to establish 20 new start-ups in the field of financial technologies by 2020.