Taxation is one of the essential elements in choosing the proper jurisdiction. Lithuania is hugely popular among crypto organizations. Many companies have already received permission to operate here, including Binance, Huobi, and CoinGate. It is because this jurisdiction establishes straightforward rules for regulating the crypto industry and favorable taxation. Today we want to discuss why you should get a cryptocurrency license in Lithuania and how much taxes you must pay.

How much taxes does my company have to pay?

This jurisdiction has established the most simple rules for taxing the crypto industry, which many firms like.

The exchange of assets is not taxed. You do not need to pay VAT if you exchange one crypto asset for a friend or fiat. However, you must pay VAT if you decide to pay for goods or services with crypto assets. At the same time, the taxation rules will be the same as when using conventional fiat currencies. It is worth saying that in most countries, currency exchange is taxed.

Organizations are also forced to pay 15% income tax. Organizations must regularly submit income declarations and pay taxes on their basis. It is worth saying that small companies with less than 10 employees and income of fewer than 300 thousand euros can receive preferential terms and pay income tax in the amount of 0 to 5%. It makes it possible to direct profits to business development and purchase new equipment. For comparison, in Estonia, the income tax is 20%.

In addition, there is a tax on dividends of 15%. All payments to shareholders from your organization’s activities are subject to this tax.

Even though the official currency of Lithuania is the litas, the declaration must be submitted in euros, and taxes must also be paid in this currency.

Benefits of this jurisdiction

Favorable taxation is not the only advantage of this jurisdiction. You can get a work permit here within a month; for comparison, in the UK, it takes about 6 months, and in the Czech Republic – it takes about 3 months.

This country is very loyal to the crypto industry. The fact is that this country was part of the USSR, so after gaining independence, it had a bad economy. In a short period, this country has carried out large-scale reforms to support the IT business, which allowed the economy to develop overgrowing. It was one of the first EU countries to take the first steps in regulating the crypto industry and has achieved tremendous results. It has led to the fact that today many crypto enthusiasts live here who want to invest in the crypto industry.

Another advantage of this jurisdiction is that getting a permit here allows you to work legally throughout the EU. It enables startups to scale and grow.

How to get a work permit?

As already mentioned, obtaining permission here takes about a month. During this time, you need to go through several necessary steps:

• Register an organization in that jurisdiction;
• Rent an office and hire local staff;
• Make sure your organization meets all requirements;
• Open an account with a local bank;
• Apply for a permit.

To go through this process successfully, firms should know in advance all the requirements of this jurisdiction and build their company with them in mind. Particular care must be taken to convince the selection of employees. Your organization must employ at least 2 people – the owner and the shareholder. Your company must have an AML officer (who may also be a shareholder). If you are a foreigner, your organization must have a local director. All team members must have an impeccable reputation (no criminal record), specialized education, and several years of experience in relevant positions. The main proof of their professionalism is a thoughtful business plan.

You must ensure all documents are in order to obtain a work permit. We advise you to involve specialized lawyers from the Gofaizen Sherle company, who will help you understand tax issues, answer all your questions, and help you collect the entire package of documents. They have extensive experience in this industry and have helped many organizations obtain permission to operate in this jurisdiction.

In the end

This country is an excellent jurisdiction where your organization can successfully develop and expand the number of clients. Obtaining a work permit in this country helps to enjoy all the benefits of a respectable jurisdiction and save on taxes.