Lithuania has long been a hub for cryptocurrency and blockchain technology. The country is home to the first cryptocurrency exchange in Eastern Europe, and as such, has had to grapple with the implications of this new technology for some time now. In fact, the Lithuanian government has taken steps to regulate this new industry from the outset, establishing tax laws to do so. In this article, we’ll go over the crypto taxation laws in Lithuania, as well as the implications for residents who operate there.
What is cryptocurrency taxation?
Cryptocurrency taxation is the assessment of tax on cryptocurrency sales, minus any expenses that may have been incurred. Some tax codes also require reporting of cryptocurrency transactions, which can be an added burden for users.
How does cryptocurrency taxation work in Lithuania?
Cryptocurrency taxation in Lithuania centers around two laws: the Income Tax Act and the Law on the Taxation of the Financial System. The Income Tax Act covers all taxable income, including interest, dividends, and foreign currency exchange. In this case, cryptocurrency is considered a “precious metal or a financial asset,” and is taxed accordingly. The Law on the Taxation of the Financial System outlines the rules for the taxation of financial transactions. One of the requirements for taxation is that cryptocurrency transactions must meet the “fit for purpose”.
What you need to know about cryptocurrency taxation in Lithuania
Investors who operate businesses using cryptocurrency in Lithuania will be subject to corporate income tax at the rate of 15%. This is the same rate that applies to other types of business income, and can’t be reduced by expenses. Businesses using cryptocurrency will also be required to file a tax return, including information on business income, expenses, and other relevant details. For example, if you operate a bar that accepts cryptocurrency, you’ll need to report the amount of cryptocurrency income you received from customers along with the price of goods or services. You’ll also need to include details about any expenses you incurred in operating your business, such as rent, utilities, and staff wages.
What are the taxes for a crypto company in Lithuania?
- Exchange services are not subject to VAT
- Income tax on dividends – 15%
- 15% tax is withheld from the profits of a cryptocurrency company, companies with up to 10 employees and an annual gross income of less than €300,000 may be taxed at a rate of 5% corporate tax./li>
Lithuania is one of the first countries to tax cryptocurrency transactions. While it can be a bit of a hassle to comply with these rules, it’s a good idea to comply if you plan on doing business in the country. If you operate a cryptocurrency-based business, you’ll need to file a tax return, report income and expenses, and pay corporate income tax on any profits made. Still have questions about cryptocurrency taxation? Let us know in the comments below! If you would like to get a general advice or a comprehensive corporate law service, please contact us! We will respond to you within one working day or sooner.
If you would like to get a general advice or a comprehensive corporate law service, please contact us! We will respond to you within one working day or sooner.