Lithuania is one of the few member states in the European Union where cryptocurrencies can be used for legal financial transactions.
2019 to 2020,Lithuanian Financial Crimes Bureau(FCIS: Financial Crime Investigation Service) has successively issuedVirtual assets, ICOLegal frameworks such as the 2019 Amendment and the 2020 Amendment provide a friendly, standardized and transparent legal environment for companies providing cryptocurrency exchange services and cryptocurrency wallet services.
Because the regulations are more flexible and there are no special requirements for company directors and shareholders, the cost is reduced.Lithuania has become a compliance choice for many crypto institutions.
Since 2020, cryptocurrency exchangesBinanceStarted holding authorization for Lithuanian cryptocurrency exchange and cryptocurrency depository wallet for European market.
Next, this article will introduce the Lithuanian crypto license categories and application procedures in detail.
Licence Type
Regarding virtual currency transactions, the Lithuanian Financial Crime Investigation Bureau (FCIS) hasTwo types of encryption licenses :
Cryptocurrency exchange license
Cryptocurrency exchange license
Lithuania’s crypto exchange license coversConvert fiat to crypto, crypto to fiat, and crypto to cryptoServices for cryptocurrency exchanges.
Crypto wallet and custody service licenses
Crypto wallet and custodian services license
Virtual currency wallet service meansGenerate keys for customers or store customers' encryption keysServices available forSave, store and transferVirtual currency.
Application requirements
1. Establish a cryptocurrency limited company (UAB) in Lithuania to provide cryptocurrency exchange or storage services.
UAB in Lithuania means a closed joint stock company. The authorized capital of a UAB is divided into shares which can be sold in full or in part, donated or hereditary.
The UAB must have at least one owner (natural or legal person) and one director (natural person) authorized to sign on behalf of the company.
2. Criminal record certificate of all company members.
3. Appoint an anti-money laundering officer.Anti-money laundering officers must have professional experience and pose no reputational risk. It is not mandatory for them to reside in Lithuania.
4. All customers must undergo background checks and identity confirmation procedures.
5. Customer data must be saved, for submission to regulatory authorities.
6. Internal control and risk assessment procedures must be established.
7. Resumes of all project participants holding key positions in the company.
8. Be prepared to report to the regulator (Financial Crime Investigation Department) at any time.
9. Licensed companies must comply with AML/KYC rules.
Taxation Policy
1. Taxation of cryptocurrency companies
Virtual currency exchange services are not subject to VAT.Services provided and accounts paid in virtual currencies are subject to normal VAT rules.
Cryptocurrency companies’ profits by15% tax rateMicro-companies with less than 10 employees and annual gross revenues of less than EUR 30 can0-5% tax ratetax.
The wage income tax (WHT) of 15% is levied on distributed profits (dividends paid).
2. Taxation of cryptocurrency transactions
The taxation of virtual currency transactions depends on the nature of the transaction.If the tokens sold or purchased are similar to securities, investments, or other currencies, no direct tax is required.
Virtual currency transactions must be valued in Euros and taxed according to Lithuanian VAT rules.
FAQ
1. Why get a crypto license in Lithuania?
The application process is fast and the cost is low.In Europe, Lithuania is the most favorable jurisdiction for cryptocurrency projects. Lithuania only needs one or two cryptocurrency licenses to comply with the regulations for crypto activities, which can be obtained in as little as one month. Secondly, the financial costs of the Lithuanian legal sector are also much lower than those of other European countries.
2. How long is the validity period of a cryptocurrency license?
In Lithuania, cryptocurrency licenses are issued for an indefinite period.
3. What difficulties might you encounter in obtaining a cryptocurrency license in Lithuania?
The most common issue currently is the licensing of cryptocurrency companiesrevokedThese cryptocurrency companies change owners in the process and fail to inform the regulator. Another common problem is that the anti-money laundering officers are not qualified for the position and cannot properly perform their duties.
4. Can non-Lithuanian residents own crypto companies and be members of the board of directors?
Foreigners/non-residents in Lithuania can legally engage in crypto-related activities in the country, and owners or board members of cryptocurrency companiesNo need to be in Lithuania.
5. What is the minimum authorized capital for a cryptocurrency service provider?
The minimum authorized capital is2500 eurosThe registered capital must be paid in full before submitting the application.No support for cryptocurrency, the funds must be deposited from the owner's personal account into the company's account in a Lithuanian bank or an electronic money institution registered in Lithuania.
