Alternative investment fund in Lithuania

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Alternative investment fund in Lithuania

It’s a collective investment funding structure. This organization holds monetary means of specific investors and directs the collected capital in accordance with predetermined strategies. Functioning of alternative investment fund in Lithuania is accompanied by a definite procedure and norms, as well as offers a number of profits and prospects.

Requirements for investment management companies registered in Lithuania

In order to run investment funding structure, in most cases fund manager license is required. An application for a license is submitted to the Bank of Lithuania. The application for a license must have:

  • a business plan with details of and its location;
  • constituent documents;
  • confirmation of choice of depositary and auditor;
  • a detailed description of fund or information about the investors;
  • in case fund is part of a structure of several funds, the legal address of the main structure.

Taxation of AIF in Lithuania

The taxation of income derived from investment funds depends on several important factors, such as the residence and legal form of the investor, as well as the type of specific fund, type of income, and other similar circumstances. In addition, in the case of certain types of funds, the legislation provides certain investors with significant tax benefits or establishes different taxation conditions from the usual ones.

To apply the relevant tax rules, you first need to know whether the investor’s income has arisen from the so-called growing units or income units.

In the case of progressive units, the income or loss received by the fund is expressed in the change in the net value (the net value of the unit either increases or decreases) of the fund’s units or shares (hereinafter referred to as units). Investor gets incomes from the fund if the redemption price of his redeemed unit exceeds the purchase price of the unit.

In the case of income shares, the income received by the fund or part of it is distributed among investors in the form of payments from the fund without redemption of the shares. The payment is usually made in cash, but payments to investors can also be made in the form of an issue of additional units from the income of the fund.

Benefits of registering a small alternative fund in Lithuania

Registration of an investment fund in Lithuania has plenty of advantages.

  • Ease of establishment.

The small alternative fund registration process takes up to 60 days.

  • Governance transparency.

The management and representation of the interests of the fund is carried out by the fund supervision company according to the pre-established policies and provisions of foundation agreement of funding organization.

  • Universal activities.

Possibility of making cumulative investments in ventures, stocks, cryptocurrencies, derivatives, precious metals, etc.

  • Limited liability.

The liability of investors is in any case framed by their shares.

Structural elements of Lithuania alternative investment fund

Functioning of such funds is carried out via interaction of fund’s manager and alternative investments fund (AIF) in Lithuania itself, registered in the Commercial Register as a separate legal entity – a limited fund. The list of tasks and responsibilities of the fund manager related to European Union investment in Lithuania, among others, includes next-mentioned:

  • formation of investment policies;
  • making commercial decisions;
  • placement of AIF assets;
  • representing the interests of the fund before third parties;
  • attracting new capital holders;
  • organizing issue of fund shares;
  • organization of redemption of funding structure’s units;
  • sharing of income between the holders of shares;
  • accounting and financial reporting;
  • interaction with the regulator and other government agencies.

Any services provided to retail investors are strictly supervised. There’re some exceptions allowing you to raise capital from retail investors. Alternative funds allow you to attract retail clients if the fund’s offer is not public, so a small alternative fund would be a good choice to start an investment business.

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Frequently asked questions

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