Crypto License in Lithuania

The main advantages of choosing a crypto license in Lithuania include the relative simplicity of the licensing procedure for this type of activity, as well as a fairly short time and moderate cost of obtaining a permit to work with cryptocurrency assets. Also among the advantages:

Regulated environment
Lithuania provides a clear and supportive regulatory environment for cryptocurrency companies. The country has developed specific laws regulating cryptocurrency activities, providing legal clarity and certainty for companies in this sector.

Access to the EU market
Lithuania is a member of the European Union and the European Economic Area, making it easier for cryptocurrency companies licensed in Lithuania to access the wider EU market. This can simplify operations and allow for expansion within EU countries.

Company reputation
Lithuania has gained recognition as a favorable jurisdiction for cryptocurrency companies due to its progressive approach to financial innovation and technology. Owning a cryptocurrency license from Lithuania can improve the company’s reputation and credibility in the industry.

Compliance Standards
Owning a cryptocurrency license from Lithuania allows companies to demonstrate their willingness to adhere to high compliance standards and best practices in the cryptocurrency industry.

Access to banking services
Owning a cryptocurrency license in Lithuania can improve access to banking services, which can be difficult for cryptocurrency companies in countries with stricter regulations or less developed cryptocurrency structures.

Supporting ecosystem
Lithuania has created a supportive ecosystem for fintech and blockchain startups by providing various initiatives and programs to foster innovation and entrepreneurship in the cryptocurrency sector.

Cost of obtaining and renewing a license
Lithuania does not charge a fee for applying for and renewing a crypto license, which helps save money for aspiring crypto entrepreneurs.

Favorable taxation
The standard VAT rate for crypto companies is 15%, which is lower than in many jurisdictions. A reduced corporate tax rate (0-5%) is also available for micro-companies.

The activities of cryptocurrency companies in Lithuania are under constant supervision of the relevant authorities to prevent money laundering. The following mandatory requirements apply to companies providing cryptocurrency services:

Company registration
To obtain a virtual currency license in Lithuania, it is necessary to register a company in the form of a limited liability company (UAB). There is no need to visit Lithuania in person. Company formation can be done completely remotely.

Share capital
According to the current legislation, all companies engaged in cryptocurrency activities must have a minimum authorized capital of 125,000 EUR. At the same time, there are currently no requirements and solutions to monitor equity without actually depositing funds.

Requirements for management and Shareholders
To establish a cryptocurrency company in Lithuania, a minimum of 1 shareholder and 1 director (who can be a shareholder) is required. The nationality and residence of shareholders and board members are not limited.

Owners and board members of a cryptocurrency company who are foreigners or non-residents of Lithuania can operate remotely without the need to be physically present in the country.

Reputation and professional experience
Licensed cryptocurrency companies in Lithuania must provide information about the beneficiaries, as well as the members of the board of directors and owners of the company, who must have an impeccable reputation and no criminal record.

Company office
To conduct cryptocurrency activities in Lithuania, it is required to have an office in the country. It is allowed to use a virtual address.

Customer data verification
For all cryptocurrency companies registered in Lithuania, it is mandatory to implement procedures for identification and verification of customers’ identity, including verification of documents, origin of funds, absence in sanctions lists, and PEP (politically exposed persons) lists. It is also mandatory to develop principles for secure storage of customer-related information.

Accounting and tracking of all cryptocurrency deals and transactions
Under the new requirements of the regulator (FCIS), Lithuanian cryptocurrency companies must keep a log of all customer transactions, verify them, and monitor them for money laundering and terrorist financing.

KYC/AML Compliance Specialist
Lithuanian cryptocurrency companies must appoint an AML/CFT specialist responsible for identifying suspicious transactions and interacting with the regulator.

The position of KYC/AML compliance officer can be held by the owner of the company. However, according to the amendments, such an employee must have the relevant education, work experience, and necessary skills to implement a risk-based approach within the company. According to the new legislation in force, an AML officer appointed to a cryptocurrency company must be a permanent tax resident of Lithuania and be an employee of only one cryptocurrency company.

Compliance with other FCIS regulations

Other FCIS requirements include:

• developing and implementing anti-money laundering and countering the financing of terrorism (AML/CFT) policy;
• compliance with existing international sanctions regimes;
• implementation of a risk-based approach to AML/CFT in carrying out licensed activities;
• reporting of suspicious transactions and individual operations.

It is worth remembering that crypto-business legislation is being updated all the time. For up-to-date information, we recommend consulting Fast Offshore Licenses specialists.

Setting up a company in Lithuania is a fairly simple and standard procedure, which includes these steps:

• Choosing the structure of your business.

As we have already mentioned, the Closed Joint Stock Company is the most common structure for crypto business because of the simplicity of its creation and the protection of the limited liability of the owners.

The founders of a cryptocurrency company in Lithuania can be both individuals and legal entities, and they do not necessarily have to be residents of the country. However, it is important to keep in mind that the founders and management of the company must have an impeccable business reputation to successfully pass the licensing procedure and meet the requirements of local legislation.

• Register your company.

Use the Registrų Centras website to register your company. This user-friendly platform simplifies the process. You will need a prepared Memorandum and Articles of Association, which will set out your company’s objectives, share capital, and management structure.

• Minimum Share Capital.

The minimum share capital for registering a cryptocurrency company in Lithuania is €125,000, with at least one-quarter of this amount to be contributed upon incorporation. It is important to note that these funds must be deposited into the company’s account before the company begins operations. This capital can be used to cover start-up costs and investment in business development.

• Open a corporate bank account.

You will need a Lithuanian bank account to deposit the share capital and conduct future business operations.

• Register for the tax authorities.

Register your company with the Lithuanian State Tax Inspectorate to fulfill your tax obligations.

• If you plan to hire employees, you will need to register with Sodra, the Lithuanian Social Security Administration.

Also note that while a physical office is not mandatory, you will need a registered address in Lithuania. Virtual office services are a viable option.

For more information and legal advice, it is crucial to consult with a professional familiar with Lithuanian business law. Contact the experts at Fast Offshore Licenses – they can help you understand the intricacies of the process and ensure compliance with all regulations.

The Financial Crimes Investigation Service (FCIS) is responsible for controlling transactions with virtual assets in Lithuania.  This law enforcement agency, which is part of the Ministry of the Interior, is part of an international network of financial intelligence units.

The main task of FCIS is to counter money laundering, terrorist financing, and sanctions violations. The service is also authorized to investigate financial crimes such as tax fraud, money laundering, and illegal receipt or use of financial assistance from the EU. FCIS plays an active role in the implementation of the National Crime Prevention and Anti-Corruption Program and constantly improves methods of public involvement in the fight against financial crime. The activity of the service is regulated by orders detailing certain aspects of AML/CFT legislation, which are binding for the persons concerned.

The Lithuanian Commercial Registry Registrų Centras controls the register of companies licensed to work with cryptocurrencies.

Until 2022, Lithuania had a system of two types of licenses for dealing with virtual currencies:

1. Cryptocurrency exchange license (“stock exchange license”). Holders of such licenses had the right to exchange cryptocurrency for fiat money or other cryptocurrencies, receiving a commission for their services.
2. Custodial license for cryptocurrency wallets. Licensed companies could manage their customers’ cryptocurrency wallets, ensuring that encrypted keys were created and stored.

In 2022, to minimize the risks associated with money laundering, the Lithuanian government took steps to tighten regulation of the cryptocurrency market. As part of this initiative, the Anti-Money Laundering and Countering the Financing of Terrorism (AML/CFT) Law was revised to increase transparency and encourage further development of the legal cryptocurrency sector in the country. New amendments drafted by the Ministry of Finance and the Central Bank of Lithuania introduced stricter rules for operators of virtual currency exchanges and depositories.

With the amendments to the legislation, Lithuania simplified the process of obtaining a license to work with cryptocurrencies by introducing a single crypto-license, and Registrų Centras became the responsible body for controlling compliance with formal requirements, such as the deposit of authorized capital, the presence of a local AML manager in the company structure, etc.

Among other things, the amendments to the law tightened the rules of customer identification and prohibited anonymous accounts. Starting from February 1, 2023, Registrų Centras will publish on its website a list of companies licensed for operations with virtual currencies, both exchange and custodial. This measure is aimed at increasing the transparency of the market of cryptocurrency service providers.

For new companies, these requirements became mandatory from November 2022, and for already registered companies – from December 2022.

The taxation of cryptocurrency businesses in Lithuania is governed by the general taxation system, which includes several types of taxes applicable to individuals and companies. What cryptocurrency business owners should consider:

• Value Added Tax (VAT) applies to the sale of services and payment of invoices in virtual currencies.

VAT is 15% of the income generated from cryptocurrency. A reduced corporate tax rate ranging from 0% to 5% is available for micro-companies with less than ten employees and a gross annual income of less than €300,000.

Virtual currency exchange services are exempt from VAT.

• Profits distributed in the form of dividends are taxable at 15%.
• Taxation of virtual currency transactions depends on their nature, similar to the taxation of securities, investments, or other currencies.
• State social insurance.

When hiring staff, a cryptocurrency company is responsible for paying state social insurance as part of payroll taxes. The employee is not allowed to start work without registering with the Social Security tax office. Registration is done by filing a Form 1-SD notifying the start of personal income. This must be done at least one day before the start of work.

Cryptocurrency companies in Lithuania are not subject to mandatory reporting to regulators but must comply with general accounting rules and AML/KYC requirements supervised by FCIS. FCIS has the authority to issue regulations and request information on the activities of cryptocurrency companies, focusing on ensuring compliance with AML/KYC requirements.