Сrypto-currency space is relatively young, but its popularity is only growing annually. Plenty of private capital-holders view crypto-currencies as means of investing and preserving capital; it entails large cash injections into the industry. Since the sphere of crypto-currencies is becoming more identified with investment tools and financial markets, this area doesn’t go unnoticed by regulative establishments and governmental authorities. Lithuania isn’t exception in that perspective.
Our team is ready to give you fully-comprehensive professional assistance in getting and purchasing a crypto-license in Lithuania and other countries worldwide. We possess a huge amount of expertise and highly-qualified background; it makes us the best in our business-niche. Contact our lawyers and they’ll offer you a first consultation; it’ll help determine the direction of further cooperation.
Overview of Crypto-Regulations and Policies in Lithuania
In Lithuania – as an EU member – there’s legislative frameworks for getting a crypto-license. Regulations regarding any crypto-asset in Lithuania make it an attractive variant if the goal is to legally operate with crypto-currencies in the EU.
There’re two available variants looking as next-mentioned:
- register organization under your brand;
- purchase a ready-made solution; it’s an already fully-established firm with configured crypto-authorization (this variant is available with or without a banking account).
Establishing a firm and getting a crypto-permit in this jurisdiction will provide capital-holders with opportunities to offer services for exchanging crypto-currencies and storing crypto-assets in the legal field of the EU, and on the territory of other states, without breaking the legislative basis. At the beginning of 2020, AML/CFT was introduced into the current legislation of this jurisdiction a package of amendments, within which the circle of persons obliged to apply AML/CFT measures was expanded to include crypto-exchanges, crypto-exchangers and other blockchain projects providing services for the exchange or storage of crypto-currencies, token and other virtual assets, as well as persons conducting ICO.
Interested entrepreneurs may get one of the next-mentioned permits.
- Permit for crypto-exchange or crypto-wallet. Lithuania has an excellent environment for running a fintech business. A startup environment has been created in the jurisdiction, within which two types of crypto-permits have been introduced; it’s operator for exchange of any crypto-product and crypto depository wallet operator. The current global and local regulation has significantly simplified the procedure for obtaining a crypto-permit.
- Crypto-exchange operator permit. Organization, affiliate or registered legal representative has the right to exchange between digital currencies and receive a commission for exchange services additionally to spreading services for exchanging fiat currencies for crypto and vice versa.
- License for crypto-wallet in Lithuania. Organization, affiliate or registered legal representative possess rights to manage and secure crypto escrow wallets owned by consumers and other third parties.
Local Central Banking establishment seeks to strictly separate traditional financial establishments from crypto-service providers; it’s companies that purchase, vend, keep or exchange crypto-currencies. Nevertheless, any digital asset may be shown in the circulation of traditional market participants.
Compliance with AML/CTF regulations and Taxation
In Lithuania, for organizations engaged in activities in the niche of crypto-currency, there’re standards and rules for initial capital. According to these normative points, the initial capital needs to be at least 125,000 EUR. After establishing a firm, capital-holders must immediately deposit at least 25% of the initial capital (31250 EUR) into the organization account. Supplementary, at least 50% of the initial capital (62,500 EUR) must be continuously held in the account of VASP and demonstrated by the end of each reporting year. These normative points ensure the availability of sufficient capital for the stable operation of the firm and maintaining reliability in the field of operations with any crypto-product in Lithuania.
Special attention is paid to the reputation of board members and owners of organizations engaged in crypto-related activities. These persons must have an impeccable reputation, which is an important rule.
- Complete and timely accounting and provision of reporting to ensure transparency and control of financial transactions.
- Mandatory appointment of a local resident AML-officer, who can only be appointed in one crypto-firm at a time.
It ensures that there’s a resident executive responsible for ensuring meeting the standards, rules and regulation basis associated with crypto-transactions.
Standard corporate income tax rate is 15%. However, this rate can be reduced to 0% or 5% if certain next-mentioned conditions are met.
- Average number of workers doesn’t exceed 10 people.
- Income for the tax period doesn’t exceed 300,000 EUR.
- Shareholders may only be individual capital-holders.
- Activities of enterprise must continue, that is, the enterprise mustn’t be liquidated or reorganized, and the shares of the enterprise mustn’t be transferred to new shareholders in 3 tax periods.
Tax-rate on dividends is 15%. Standard VAT-rate is 21%.
Services provided and invoices paid in virtual currencies are subject to normal VAT rules. It means next-mentioned: such transactions may be subject to VAT at the applicable rates. Valuation currency services and wallet services aren’t considered market services and are therefore not subject to VAT.
Advantages of Acquiring a Crypto License in Lithuania
Registering organization whose activities related to virtual currencies through the current Lithuanian legislation has many advantages:
- compared to other EU-countries, more convenient, simplified conditions for getting a permit;
- active support from the state in terms of development of this niche;
- low costs for establishing a private organization for ICO;
- there aren’t complex, specific normative points in relation to the directors and shareholders of the enterprise;
- the shortest possible time in terms of creating and establishing a crypto-company in Lithuania;
- you can carry out all the necessary establishment steps remotely;
- low corporate tax-rate compared to other EU-countries.
European member-space is distinguished by the presence of designated goals for the effective development of financial technologies. Jurisdiction is a convenient space for getting a cryptolicense valid in Europe, and is also suitable for the creation and further operation of crypto projects and fintech-businesses. Main privileges include the relative simplicity of the licensing procedure and a fairly short time-frame and moderate costs of getting authorization to operate with crypto-assets.
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