Lithuania defence market entry: FDI screening, export controls and compliance risks
The growing demand for security technology is boosting international interest in the Lithuanian defence market. Due to strict regulations, a preliminary legal assessment is crucial. Ecovis experts advise foreign defence companies to carefully analyse the relevant regulatory requirements before entering the market.
Foreign companies interested in the Lithuanian defence market should secure the legal aspects of their investments and market entry, as there are numerous risks in this highly regulated environment.
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What are the critical challenges
- FDI screening rules may apply to investments in sectors considered sensitive to national security. This can affect share acquisitions, the establishment of local entities, and strategic partnerships, and may result in notification obligations or government review procedures
- Export control and dual-use regulations impose strict requirements on the movement of goods, technologies, and technical knowledge. Even intra-EU transactions may require authorisation depending on classification and end use
- Sanctions compliance remains a key risk area, particularly due to evolving EU restrictive measures and exposure through complex supply chains.
In addition, companies operating in the defence ecosystem may become subject to cybersecurity and critical infrastructure requirements, including risk management obligations and incident reporting duties.
We support your market entry – from investment analysis, advice on sanctions regulations, and applications for defence-related authorisations, to ensuring compliance with cybersecurity requirements.
Kęstutis Kvainauskas, Partner, Attorney-at-Law, ECOVIS ProventusLaw, Vilnius, Lithuania/Latvia/Estonia
Recommendations for companies
Companies planning entry into the Baltics should conduct a regulatory feasibility assessment before finalising investment decisions or contractual commitments. Early structuring helps avoid delays in approvals, licensing obstacles, and unexpected compliance burdens.
The tax aspects of investments
Lithuania provides a range of income tax incentives to foster entrepreneurship, innovation, and investment, including tax holidays for start-ups, benefits for technology development, deductions of up to 100% for major upgrades, and incentives for large-scale projects.
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