Lithuania Unveils Detailed Cryptocurrency and ICO Guidelines
Lithuania’s Ministry of Finance has published comprehensive guidelines for cryptocurrency and initial coin offerings, covering four areas including regulations, accounting, and taxation.
Ministry of Finance’s Guidelines
The Ministry of Finance of the Republic of Lithuania has published guidelines for cryptocurrency and initial coin offerings (ICOs). They are divided into four areas – regulation, taxation, accounting, and Anti-Money Laundering/ Combating the Financing of Terrorism (AML/CFT).
Although the guideline document is entitled “ICO Guidelines,” three of the four sections focus on cryptocurrency.
The Lithuanian Minister of Finance, Vilius Šapoka, clarified that the guidelines “describe only part of the aspects examined by relevant institutions, in case of discrepancy between guidelines and positions of institutions, the latter shall prevail,” adding:
We acknowledge that the brave new crypto economy world is here to stay, this is why we encourage and invite its participants to innovate and create in Lithuania.
“Organizing ICO is not regulated by specific legislation,” the finance ministry explains in the Regulatory section, adding that “taking into account different ICO models and different characteristics of tokens, in some cases, such activity may be subject to the requirements of the legislation of the Republic of Lithuania and supervision of the Bank of Lithuania.”
Furthermore, the ministry notes that “If funds collected during ICO are intended for the formation of the capital of a newly established FMP [Financial Market Participants] – the capital formation requirements applicable to a specific form of financial institution shall apply.”
We are one of the first ones in Europe who prepared comprehensive guidelines on the legal framework for ICO projects covering regulatory as well as taxation and accounting.
Tax Treatment of Cryptocurrency
The taxation section outlines the treatment of cryptocurrency for different tax purposes, as well as tax exemptions and deductions.
For corporate and personal income taxes, “virtual currency is recognized as current assets that can be used as a settlement instrument for goods and services or stored for sale.”
For VAT, it is “considered as the same currency as euros, dollars etc.” For other tax purposes, “other types of instrument, e.g. certain types of tokens, may be recognized as a virtual currency as well.” The document details:
Income received from individual purchases and sales of virtual currencies will be taxed standard 15% fixed income tax rate.
As for crypto mining, the finance ministry states that “When virtual currency is mined, no goods/services are usually supplied for consideration, therefore, the mining of virtual currency is not subject to VAT,” emphasizing that “the sale of such [crypto] currency in Lithuania is VAT exempt.”
Accounting and AML/CFT
The accounting section provides guidelines such as when tokens should be recorded as costs in profits and loss statements, in off-balance accounts, or accounted at fair value.
“Accounting of tokens circulated by the token promoter depends on whether they are attributed to payment, utility and securities tokens,” the finance ministry noted, adding that “Accounting of acquired tokens also depends on the type of tokens.”
The document also highlights the accounting and “evaluation of cryptocurrencies used as payment means according to Business Accounting Standards (Lithuania GAAP).”
For AML/CFT, the relevant ministries are working on the amendments to the 5th AML Directive. The finance ministry describes:
First round of amendments will concentrate on provisions relevant to virtual currency exchanges and wallet services operators, aiming at increasing transparency and clarity of regulation together with stability and security of the financial market.
What do you think of Lithuania’s guidelines for cryptocurrencies and ICOs? Let us know in the comments section below.
Images courtesy of Shutterstock and the government of Lithuania.
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The post Lithuania Unveils Detailed Cryptocurrency and ICO Guidelines appeared first on Bitcoin News.
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