Brussels okays Lithuania's updated RRF plan, but refuses to revise tax reform deadlines

  • 2023-10-24

VILNIUS – The European Commission said on Tuesday that it has approved Lithuania's updated package, worth 3.85 billion euros, under the EU Recovery and Resilience Facility (RRF). 

"Lithuania has added further investments to its original plan, notably two funds that will provide loans for the clean energy transition," the Commission said in a press release. 

"One of these funds will incentivize the uptake of renewable energy by businesses, while the other will boost the transition of businesses towards green and high value-added technologies," it said. 

However, the EU's executive body rejected Lithuania's request to adjust the country's objectives in the plan in relation to tax changes.

"For four out of 48 measures related to taxation included in Lithuania's plan, the Commission has found that the reasons underpinning Lithuania's request for an amendment to the plan do not justify it," according to the press release.  

The Commission "has shared its preliminary conclusions with Lithuania, which now has one month to present possible additional observations on the matter", it said.

Finance Minister Gintare Skaiste told the Ziniu Radijas radio station last week that Lithuania had asked the Commission to revise the deadlines for the tax targets in the RRF plan, but admitted that the EU's executive body was reluctant to do so and "on the contrary, proposes to increase the level of ambition in the context of the fiscal package".

The Commission "sees the imperfections of our tax system as a major obstacle to the path towards Western economic prosperity", she said.

Lithuania's RRF plan will now consist of 2.3 billion euros in EU grants and 1.55 billion euros in loans.

The Commission notes in the press release that "the modified plan has a very strong focus on the green transition by devoting 37.4 percent of the available funds to measures that support climate objectives". 

The European Council now has four weeks to approve the Commission's assessment.

"The Council's endorsement would allow Lithuania to receive 150 million euros in pre-financing of the REPowerEU funds," according to the press release.