New taxes for construction on state land do not apply to the VCIIP Operator and Investors

In March 2022, amendments to the Law on Land came into force that are relevant to those planning construction on leased state land. They provide that tenants of state land wishing to exercise the option, set out in the state land lease agreement, to build new and/or reconstruct existing buildings or structures will be obliged to pay, in the manner established by the Government, a fee for the opportunity to build on state land. This fee is due before the issuance of a construction permit or, where a construction permit is not required, before the start of construction of new buildings or structures and/or the reconstruction of existing ones.

Thus, pursuant to these amendments (the amendment of Articles 9 and 24 and the supplementing of the Law with Article 9-1), a developer, regardless of whether the structure is enlarged or reduced, would have to pay a fee of the corresponding amount. The fee is calculated on the basis of the total premises area planned to be increased and/or the total built-up area of the land plot compared with that registered in the Real Estate Register. The amount of the fee may range from 5 per cent to 75 per cent of the average market value of the state land plot.

Taking into account that the territory of the Vilnius City Innovation Industrial Park is recognised as a State-important economic project (Resolution No. 1411 of the Government of the Republic of Lithuania of 23 December 2015), to which the provisions of Article 9(6)(3) of the Law on Land apply and which therefore falls outside the scope of Article 9¹ of the Law on Land, the VCIIP Operator Northtown Vilnius approached the Vilnius City Municipal Administration and the National Land Service under the Ministry of Agriculture. It requested clarification and confirmation as to whether, on the basis of these provisions, the fee for the right to build on state land should not apply in this case to the VCIIP Operator and VCIIP investors.

According to the response of the National Land Service under the Ministry of Agriculture, it is established that the fee for the opportunity to build and/or reconstruct buildings or structures on a leased state land plot in the territory of the Vilnius City Innovation Industrial Park does not have to be paid by VšĮ „Northtown Vilnius“ or by the industrial park companies to which the park operator has subleased the land plot (or parts thereof).