Gogagah.com | Obtaining a crypto license in Lithuania. All you need to know
GENERAL REGULATIONS
There are several regulations to be aware of when working on any sort of project. When you’re dealing with something related to cryptocurrencies, you have to know and abide by the rules set by each of the jurisdictions. In case you want to obtain a Lithuania crypto license, you will have to submit some paperwork and meet some requirements. Every adjustment that you make after receiving proper accreditation, no matter how insignificant, still has to be reflected in the national registry. The application is reviewed by the Financial Crime Investigation Service and the license is used by the Lithuanian Business Register. Both governing bodies seem to be very concerned about fraud and false advertisement. If you’re going to do a project related to cryptocurrencies, make sure you keep these regulations in mind.
LICENSING PROCESS
The first step you have to take is to create an LLC (UAB). This company can provide crypto exchange or safekeeping services. The minimal capital requirement is €2,500. The entire process of creating a business in this country can be done remotely. This country is very progressive and they are happy to embrace the opportunities provided by blockchain and blockchain-centric businesses. That’s why they simplify the process of company creation for foreigners.
A company has to have at least one member. That same person can be the CEO, a board member, and an AML officer. Please note that in order to qualify for the position of AML officer, one has to have relevant experience and good standing. The company that successfully completes the licensing process is required to add and store all the data related to the clients, transactions, and services provided. All of that is to comply with the AML/KYC guidelines.
REQUIREMENTS FOR THE COMPANY
There are certain things that you need to do in order to run your business licensed in Lithuania:
- You must verify the identities of all customers;
- Client data must be stored safely so that it can be accessed in the future;
- There have to be preventative controls based on risk assessment;
- There has to be a KYC/AML compliance officer on the payroll;
- You have to submit reports to the authorities;
- All members of the board and owners of the business have to have a perfect reputation and no troubles with the law (no past criminal record).
The good news is that there are no citizenship or physical presence requirements when it comes to registering or running a company in this country.
There are certain documents that must be submitted in addition to the application. Some of the documents are: CVs, apostilled documents confirming the identity of all personnel, documents proving lack of criminal record, detailed business plan, KYC/AML procedures, and more. Listing all the documents is very time-consuming and you should examine the official list of documents on your own.
REQUIREMENTS FOR COMPANY MEMBERS
At this point, you have to have a good understanding of what is required from the company members involved in the business. The requirements are as follows:
- ≥1 owner. You have to have one owner at the very least. There are no limitations when it comes to citizenship or nationality.
- ≥1 board member. It’s perfectly acceptable for companies to appoint the same person as the owner and a member of the board. He or she can also act as an AML compliance officer if certain requirements are met.
- 1 AML/KYC compliance officer. This person has to have relevant experience and a certificate of no criminal record as well.
- 1 office. It’s possible to use a virtual office, there are no official requirements on a physical office.
In order to make sure that these and other requirements are met, you will be asked to supply some important documentation. These documents include: state-issued IDs, company overview, CVS, proof of no criminal record, and more.
REPORTING REQUIREMENTS
It’s important to keep up with the right reporting procedure. You should follow the official reporting process when dealing with Lithuanian authorities. There are no special reporting requirements set for crypto businesses. So, they have to interact with the tax authorities in very much the same way as other Lithuanian companies. There are not that many intricacies when it comes to reporting and taxation. Please keep in mind that the Financial Crime Investigation Service can always submit requests for a company to disclose information. If there’s suspicion, it can be done, it’s not up to you if you want to comply with this request. You will have to provide all the data that is requested. If everything is in order, then you don’t really need to worry. Lithuanian authorities are very transparent and just in their role of safeguarding the privacy and money of citizens.
TAXATION OF CRYPTOCURRENCY COMPANIES IN LITHUANIA
An important part of the entire compliance process is dealing with taxation. Crypto exchange services are NOT subject to value-added tax while services that are remunerated in crypto ARE subject to value-added tax. It’s a very simple matter, which means that it’s hard to get confused whether or not your profit is taxable. Crypto profits are subject to taxation at the rate of 15%. If your business has less than 10 people on the payroll, it’s possible to qualify for a lessened tax rate of 0-5% if your yearly turnover is less than €300,000. Dividends are also subject to taxation at the exact same rate of 15%.
If you choose to hire a company that will assist you in setting up a crypto company in Lithuania, they can also help you optimize taxes. These companies know the ins and outs of current tax legislation, which can result in a lower overall tax rate. It’s possible to save money by hiring a business that provides these types of legal services, and this is where blockchain startups in Lithuania have the advantage: there are many reputable businesses that are willing to provide such services at very affordable rates. The speed at which the world is changing is accelerating has to be taken into account – perhaps beneficial taxation rates are something you should consider today.
Photo by Kanchanara on Unsplash
Gogagah.com | Obtaining a crypto license in Lithuania. All you need to know
