Lithuania is a country where the crypto industry is developing rapidly, so many crypto enthusiasts live here. Large corporations are required to obtain a Lithuanian crypto license, but what are the rules for individuals who must obtain a work permit, and what are the taxation rules?
Investing in Cryptocurrency
In connection with the growth of capital investment in virtual currency, investors are faced with the question of what tax they will have to pay on profits.
In Lithuania, activities related to cryptocurrency exist legally.
The acquisition of virtual currency is an additional income in the country. Therefore, many Lithuanians invest their savings in cryptocurrency trading, wanting to earn on the difference in price from buying/selling.
Crypto investing can bring a lot of income, but it doesn’t hurt to be careful not to lose your funds.
Taxation
Since such a business is legal, you will have to pay a fee to the state treasury.
If you receive income in the current year, you must submit an income declaration and pay taxes in the first half of the following year (before May 1). Otherwise, there will be a fine.
If your investment is irregular and the profit will be less than 2500 € per year, you will not have to pay a fee.
If the profit is more than 2500 € per year, you must pay GPM (personal income tax), and with systematic investments, you must obtain a certificate of individual activity.
Cryptocurrency mining
Mining (extraction, acquisition) in Lithuania is also income and is related to taxation, but only sometimes.
You can purchase virtual currency in any amount, and you do not need to pay a fee.
But, if you decide to sell the acquired crypto, the profit received from its sale is considered income and must be declared.
Therefore, before selling what you have acquired, calculate the fee you will pay.
Investor groups
Profit from cryptocurrency activities is divided into three types:
- Annual profit – up to 2500 €. If you belong to this group of investments, you will not need to enter them in the declaration – there is no taxation. It is the type of investor who “carefully tries” himself in this area and does not set as his goal – a significant annual profit.
- Annual profit – more than 2500 €. If your goal is to make more profit, you will pay income tax on the amount exceeding the limit. The annual income was 4000 €. A non-taxable 2500 € is deducted from this amount, and tax is taken from the difference: 4000 – 2500 = 1500 €. GPM pays only 1500 €. If your income during the year amounted to 7000 €, but in the same year, you suffered a loss of 6000 €, then GPM does not build.
- Investing is a regular financial activity. If you want to invest regularly and get more profit, you must pay GPM and other taxes that apply to individual organizations.
As mentioned above, you need to obtain a certificate (individual entrepreneurial activity) for this type of investment. And to get it, you need to meet specific criteria: annual profit is more than 2500 € and regular (without breaks) to invest.
There is an exception for a married couple because they do not have to pay the fee if their annual income does not exceed 5000 €. You don’t need to declare it.
Taxable income
Consider who must declare income and what state duty will be paid after receiving the profit.
If the annual income is more than 2500 € (for spouses – more than 5000 €), it is subject to taxation.
There would be no tax if you sold a cryptocurrency for €2,000 after buying it for €1,000. If you purchased for 6000 € and sold for 9000 €, then pay GPM. The income is entered in the declaration, and then you pay the automatically calculated tax to one of the accounts indicated in the VHI.
The value of GPM depends on the size of the annual profit. If your taxable income is not more than 120 VDU (average republican salary), you will be taxed at a rate of 15%, and if more than 120 VDU, then 20%.
If you currently do not have enough finances to pay the fee, then there are two ways out:
- apply for a payment deferral;
- apply for repayment in installments.
As we see in Lithuania, they make concessions if they suddenly have financial difficulties with the timely payment of taxes.
The country loyally solves issues related to cryptocurrency in matters of jurisdiction. Stability is an incentive for registering investors. These investments are among the most promising in the European Union.
Licensing of Crypto Exchanges
For investors who want to engage in cryptocurrencies on a larger scale, obtaining a license for the firm is an option.
There are 2 types of licenses for crypto business:
- for a cryptocurrency exchange, which allows you to exchange virtual currency for money (and vice versa), take a commission.
- to the manager of the deposit storage, which stores the cryptocurrency. With such a license, a code with a cipher is created for access by clients who can control it.
By the way, it is possible to obtain two licenses for the company at once.
What does Lithuanian Law Imply?
Permission to operate with cryptocurrency is advisory. Making an entry in the registry is more accessible than getting a document confirming your crypto license. In Lithuania, there are laws regulating the activities of the crypto industry.
Therefore, before starting to apply for registration and registration, it is better to thoroughly study the Lithuanian laws related to this field of activity. If you plan to use tokens (a unit of the account needed to control your assets’ digital balance), then study the law on securities and the financial market.
AML Policy in the Country
Lithuania is the country in which the AML system is effectively working – in the fight against illegal money laundering. This structure consists of highly qualified specialists and experts with extensive experience, able to solve complex problems and help you gain stability and confidence. Authorized regulators constantly monitor the transactions carried out by companies and systematically conduct checks with them. In the structure of the companies themselves, there is a department whose work is aimed at AML policy with a mandatory head of department (AML officer).
Many different consultations and courses are held when clients seek help. Therefore, falling under the evil influence in Lithuania is minimized, which guarantees success for the growth and development of your crypto activities.
Advantages of Cryptocurrency Activities in Lithuania
Conducting crypto activity in this country has many advantages, among the most important are:
- The European Fintech Center recognized it.
- The presence of a comfortable financial sphere.
- There are simple registration conditions for licensing.
- A short period passes from the beginning of registration to the receipt of a crypto license.
- Low taxes (5% – if employees are up to 10 people and 15% – if more than 10) and double taxation are excluded.
- Possibility of remote registration.
- There are no conditions for residents and shareholders of the company.
In Lithuania, it is promising, reliable, and as safe as possible to invest in cryptocurrency.
Suppose you have questions about the taxation of cryptocurrency activities of individuals in Lithuania or want to understand any issue in more detail. In that case, our specialists will always help you. Our team comprises only experienced experts with a high professional level in cryptocurrency activities.
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