Cryptocurrency Regulation in Lithuania
Finding a crypto-friendly jurisdiction and mastering its legal frameworks will most likely set any financial innovator on the path to growth. If you’re wondering where to anchor your crypto business, look no further, as Lithuania’s Fintech ecosystem is ranked among the world’s top countries, according to the Global Fintech Index.
Its infrastructure, including cryptocurrency regulations, is constantly being optimised to cater for the most innovative and dynamic global entrepreneurs who can be assured that their businesses operate in a secure environment as the activities of crypto wallet operators and crypto exchange service providers are thoroughly supervised by the Lithuanian Financial Crime Investigation Service (FCIS). Its nearly impeccable performance is recognised by the global AML Basel Index, where Lithuania is ranked 9th among the lowest risk jurisdictions.
When operating in Lithuania, it’s imperative to guarantee transparency by ensuring that your crypto company’s publicly available information isn’t misleading and is compliant with the legal requirements, otherwise your company may be banned by the authorities.
One of the main advantages of the Lithuanian crypto ecosystem is that blockchain-based technology companies can expect to connect with plenty of Fintech companies selling the most innovative solutions to those who’re looking for an integral system of fiat money and cryptocurrencies.
It’s an enormous plus for the crypto world newbies to receive qualified support from the government. To encourage, accelerate and efficiently regulate crypto related activities in Lithuania, the Bank of Lithuania manages a blockchain-based sandbox “LBChain” which allows companies to test their business solutions in a controlled environment by providing regulatory and technological infrastructure.
In order to start operating in Lithuania, you must obtain a crypto licence. There are two types of licences related to cryptocurrency transactions in Lithuania:
- Crypto Wallet Exchange Licence which enables licence holders to manage crypto wallets possessed by their customers.
- Crypto Exchange Licence which enables licence holders to provide cryptocurrency-to-fiat-currency exchange services and vice versa, as well as cryptocurrency-to-cryptocurrency exchange services.
If you think that Lithuania’s crypto regulatory environment and business oriented initiatives suit your crypto business vision, take a step further by learning about the process of applying for a cryptocurrency licence in Lithuania.
Key Application Requirements for a Lithuanian Crypto Licence
Applications for a cryptocurrency licence are submitted to the Bank of Lithuania. It takes less than a month to finalise the process of the crypto activities authorisation, provided that all the required stakeholders are verified, and the documentation is carefully prepared which our team here at Company in Lithuania UAB can help you with. If your application is successful, the licence will be issued by the State Enterprise Centre of Registers, and you’ll be able to start operating.
Now, what steps will you need to take that will ensure your success in obtaining a crypto licence in Lithuania? Here are the key things to take into consideration:
- In order to apply for the Lithuanian cryptocurrency licence, you first have to own, establish or buy a Limited Liability Company (UAB) in Lithuania. You may be able to do so electronically if all the paperwork is prepared and the minimum share capital of 2,500 EUR is ready for the transfer.
- The company’s owners and directors don’t have to be permanent residents of Lithuania, but absence of criminal records is a prerequisite, which is why they will have their background checked.
- Having a process in place for customer identification is also mandatory, as it will demonstrate that you’re committed to maintaining secure transactions during your company’s operations. All the collected data will be subject to sharing with FCIS.
- In addition to a variety of procedures inherent to the establishment of a company, you’ll have to appoint an AML compliance officer who will perform frictionless reporting for FCIS as well as help the business avoid customer identification, transaction monitoring and other errors.
There’s no requirement to hire local staff, so you don’t need to plan for it when applying for a crypto licence, which saves your time.
Taxation of Crypto Related Activities
Taxation of cryptocurrency exchange and wallet services is regulated by the State Tax Inspectorate who considers the following activities taxable: mining, initial offering, buying, selling, mediation, settlement in such currencies for purchased or sold goods or services. Depending on the type of coins/tokens and specifics of crypto activities, your business might be subject to paying the following taxes:
- Corporate Income Tax of 15% (one of the lowest in the EU) is applied to the revenue generated by the crypto licence holders in Lithuania, although some allowances might be available for software related R&D projects.
- Value Added Tax (VAT) is usually added to the sales of crypto related services (e.g. paid promotion of other platforms).
Examples of tax exemptions:
- Security tokens are Corporate Income Tax exempt.
- Revenue generated from exchange of cryptocurrencies and security tokens is VAT exempt.
All in all, when it comes to paying Corporate Income Tax, based on the content and economic meaning of the transactions, cryptocurrencies are recognised as short-term assets that can be used or held as a means of payment for goods and services. In terms of VAT, cryptocurrencies are considered to be the same currencies as fiat money (euro, dollar, etc.).
While Lithuanian crypto environment is booming and boasts plenty of advantages, its regulatory system might require a professional explanation. If you’re looking for the most innovative personalised advice on the cryptocurrency licence in Lithuania, we’re here to help. Company in Lithuania UAB has created an all-in-one package “Company and Crypto Licence in Lithuania” which includes assistance in establishing or purchasing a Lithuanian company as well as help in applying for a cryptocurrency licence in Lithuania.
We pride ourselves in our commitment to entrepreneurial customer satisfaction and strong expertise in Lithuanian legislation. Contact us today to receive comprehensive guidance on how to successfully start a crypto business in one of the friendliest Fintech jurisdictions in the entire world.
Our team here at Company in Lithuania UAB is also dedicated to providing such services as financial accounting for cryptocurrency companies, renting either a physical or a virtual office in Lithuania, as well as to supporting recruitment of a local company director and an AML compliance officer.