Analyzing Crypto Licensing: Estonia vs. Lithuania vs. Dubai
Feature | Dubai | Lithuania | Estonia |
|---|---|---|---|
Cost | 20 000€ | 20 000€ | 25 000€ |
License Type & Government fee | 1. 9,700€ - Advisory Services & VA Transfer and Settlement Services | 1. Cryptocurrency exchange license
2. Crypto wallet and custodian services license
| 1. Cryptocurrency exchange license
2. Crypto wallet and custodian services license
|
2. 24,250€ - Broker-Dealer, Custody, Exchange, Lending and Borrowing & VA Management and Investment Services | No additional fee | 10 000€ | |
Audit | May be required by VARA | Not required | Monthly and yearly are needed |
Office | Required | Can be virtual | Required |
AML (Anti-Money Laundry Officer) | Can be any nationality | Local needed | Local needed |
AML monthly salary | 5000€ | Starting from 1200€ | Starting from 2000€ |
Local director | Can be any nationality | Can be any nationality | Can be of any nationality, but have to live in Estonia |
Share capital terms | Immidiately | 25% now, 75% within a year.
| Immediately |
Required share capital | 24,250€ (Advisory Services) - 194,000€ (Exchange Services)
| 125 000€ | 100 000€ - Crypto wallet and custodian services license.
250000€ - Cryptocurrency exchange license |
Our Clients
Baltic's Blockchain Prodigy: Unmasking Lithuania's Crypto Landscape
Lithuania, a fellow tech-forward Baltic nation, is steadily crafting its unique space in the realm of cryptocurrency. The Financial Crime Investigation Service was ahead of the curve, rolling out guidelines as early as 2017, long before many countries had even caught sight of the crypto bandwagon.
Lithuania offers a Virtual Currency Exchange and a Custodian Wallet Service license, mirroring its Estonian counterpart.
Their regulatory watchdog, the FCIS, leaves no stone unturned when it comes to ensuring compliance and transparency.
But, why Lithuania, you may ask?
-
Unambiguous regulatory guidelines: Their early leap into the fray ensures their regulatory rules are crystal clear.
-
Gateway to the European market: As a member of the European Union, Lithuania serves as a conduit to the expansive European market.
-
Speedy licensing process: Lithuania holds the crown as one of the fastest countries to secure crypto licenses in Europe.
The Tax Tale
Lithuania imposes a standard corporate tax of 15%, which, in contrast to many Western European nations, doesn't feel like a gut punch. Moreover, smaller businesses with an annual turnover of less than €300,000 benefit from a more palatable rate of just 5%. Not too hard to swallow, right?
Navigating the crypto taxation landscape, Lithuania seems to get the balance just right. For private investors, the sale of cryptocurrencies is deemed personal income and attracts a flat tax rate of 15%. On the business front, conversions from crypto to fiat currency are subject to corporate tax.
But hold your horses, here's the interesting bit - trades between cryptocurrencies and crypto mining activities enjoy a tax-free status! This policy, designed to kindle the flame of crypto-related pursuits and innovations, might just be the sweet serenade many crypto aficionados have been waiting for.
Dubai: A Crypto Mecca in the Desert
Dubai, famed for its towering structures and lavishness, is fast becoming a hotbed for crypto enterprises. While not a sovereign nation, this Emirate enjoys a degree of independence in financial regulation. As for their rules? They're playing coy, to say the least.
The VARA (Virtual Assets Regulatory Authority) dons the mantle of overseeing and regulating the distribution, application, and trading of virtual assets that either hail from or are disseminated within Dubai's domain.
But what's the big draw about Dubai?
Geographical perks: Nestled at the nexus of Europe, Africa, and Asia, Dubai serves as a prime hub for crypto businesses eyeing these markets.
A pro-business climate: With its malleable regulations and tax incentives, Dubai might just be the goose that lays the golden eggs for crypto ventures.
From Baltic to Binary: Estonia's Crypto Revolution
Estonia, often compared to the Silicon Valley due to its tech-driven ethos, was a trailblazer in setting up a framework for crypto licenses. In fact, they have a single license that covers two service areas - one for converting crypto to fiat currency and another for custody & wallet service providers. This petite Baltic nation, known for its technological prowess, has rolled out the red carpet for crypto businesses. But don't misconstrue Estonia’s open-armed approach as lenient regulation. Their overseers are as vigilant as they come.
The Financial Intelligence Unit (FIU) is the body that governs all things crypto. They're the ones who scrutinize your application, and their say is the final word.
The bar for a license is set high. A squeaky-clean criminal record, a comprehensive business plan, and stringent anti-money laundering procedures are just the starting point.
But what makes Estonia the bee's knees?
-
Speedy and streamlined process: Post your application submission, the FIU typically whips up a response within a swift 30 days. Now that's fast!
-
Sensible pricing: A licensing government fee of 10,000€, which doesn't make you baulk when stacked against the global mean.
-
Appealing tax regime for crypto: Estonia's got an enviable tax setup for crypto businesses.
Taxation in Estonia
Estonia's business environment, including the crypto sector, has a unique tax framework that's too good to ignore. Hold on to your hats, because here's the big reveal - Estonia imposes a stunning 0% corporate tax rate on profits that are retained or reinvested. You read it right - nada, nothing, nil.
In the convoluted world of taxes, Estonia shines like a lighthouse amid a storm. Here's how it breaks down:
-
Corporate Tax Freedom: If a business, including those dealing in crypto, chooses to reinvest its profits or just hold onto them, it can sidestep corporate tax completely. It's only when profits make their way to shareholders in the form of dividends that a standard corporate tax rate of 20% is applied.
-
No Capital Gains Tax: Here's the icing on the cake - Estonia doesn't slap a capital gains tax on the sale of cryptocurrencies. This attractive tax structure can be a real game-changer for crypto companies eyeing growth or reinvestment, fueling potential expansion and scalability.
In a nutshell, Estonia's appeal to crypto businesses extends far beyond its cool Baltic climate. The 0% corporate tax policy plays a major role in shaping Estonia as a land of promise for the pioneers of the crypto world.
Why Consulting24?
Over 500 Crypto Licenses Acquired and Counting
Consulting24 Team
Mardo Soo
Founder
As the CEO of Consulting24, my purpose is to act as a compass for entrepreneurs charting their course in Estonia's vibrant crypto realm. We pride ourselves on our knack for untangling knotty procedures. Our unwavering commitment to smoothing out the licensing journey underscores our unique role in this global sea-change.
Lena Elvbakken
Co-Founder
As a co-founder at Consulting24, our aim is to guide trailblazing entrepreneurs into the buzzing crypto cosmos of Estonia. Our steadfast dedication to demystifying the licensing maze underscores our standout role in this global paradigm shift.