Accounting Services for Cryptocurrency Companies
Accounting is an obligatory requirement in the conduct of activities on behalf of a Lithuanian company. All companies and subsidiaries of foreign companies operating in Lithuania are subject to accounting from the moment of first registration.
Company in Lithuania UAB offers accounting services for companies engaged in crypto activities. According to the Law on Corporate Income Tax and the Law on Personal Income Tax, «Virtual currency» is a negotiable asset that can be used as a means of payment for goods and services. On the VAT side, the virtual currency is considered to be the same currency as the euro.
Income received in virtual currency shall be taxed in the same way as income received in traditional currency. For the purpose of taxation, the virtual currency purchase and sale price or the income received shall be converted into euros based on the current exchange rate (market price) on the date of transaction or on the date of receipt of income. The source of the published virtual currency rate used in accounting should be recorded in the internal accounting rules.
Accounting is an obligatory requirement in the conduct of activities on behalf of a Lithuanian company. All companies and subsidiaries of foreign companies operating in Lithuania are subject to accounting from the moment of first registration.
TAXATION OF CRYPTOCURRENCY TRANSACTIONS
With regard to virtual currency, taxable income may arise as follows:
- Selling of virtual currency
From the point of view of Lithuania’s corporate income tax, at the moment of production of the virtual currency tax does not arise. A tax arises when a virtual currency is sold. Taxable income is calculated by subtracting the value of production/acquisition of virtual currency from the sale price. The documents supporting the costs on which the costs are based should contain all the required accounting particulars.
- Exchange for a traditional FIAT currency
In Case C-264/14, the Court of Justice of the European Union held that exchanging Bitcoin for traditional currency and vice versa for consideration constitutes a supply of services that is exempt from VAT. The VAT treatment of other crypto-assets and related services depends on their characteristics and the nature of the transaction.
- Brokering services are provided for tokens considered as coupons
The issuance of tokens treated as shares or equivalent securities for VAT purposes does not constitute a supply of goods or services for consideration and is therefore outside the scope of VAT. This treatment does not automatically apply to tokens classified as payment instruments or vouchers.
If brokering services are provided for tokens considered to be securities, such brokering services provided in Lithuania pursuant to provisions of Article 28(5) of the Law on VAT, exempt from tax. If brokering services are provided for tokens considered as coupons, such brokering services provided in Lithuania are taxed using the standard VAT rate.
It is necessary to record the amount of fiat money received and the amount of cryptocurrency assets acquired during each month. All the company’s cryptocurrency assets shall also be recorded in terms of euros on a monthly basis.
The cost of accounting services provided to a cryptocurrency company depends on the number of transactions, documents to be processed and the number of company employees. Staffing requirements depend on the company’s legal form and regulated activities. A Lithuanian UAB must have a manager employed under an employment contract, but there is no universal requirement for every Lithuanian legal entity to have at least one employee.
