In its recent announcement, the Lithuanian State Tax Inspectorate (STI) together with the Ministry of Finance issued comments regarding the new tax regulations directly associated with cryptocurrencies and ICOs. This means that very soon Lithuania could become one of the first countries to have tax regulations for cryptocurrencies and any practices associated with them. Exciting news!
The comments were published in order to have an open discussion with the public and any parties involved in these practices. The main points of the new regulation state that the income tax only applies if a cryptocurrency is sold for profit. However, profit deductions can be made due to expenses, for instance, electricity bills. Meanwhile, according to the Lithuanian STI, any crypto acquired through mining is not subject to income tax.
The comments also featured possible ICO regulations. According to them, there can be three types of ICOs: when the cryptocurrency or token has attributes of a bond, when it provides the option of using the services of the platform and when the cryptocurrency or token is treated as a financial asset.
The news was long-awaited, and the market experts see it as a positive sign, although, they say, there’s still plenty of room for improvement. Modestas Kaseliauskas, one of the founders of “Crypto Tax & Legal”, an advisory company for cryptocurrency and ICO start-ups and a former head of STI said he’s happy to see the tax office is finally showing interest in the subject.
However, he also pointed out that most of the answers regarding cryptocurrency and ICO taxation were already given by the USA, Australian and Japanese regulators back in 2014 while the most revolutionary was the ruling by the European Court of Justice saying that VAT did not apply to cryptocurrencies.
Although still at an early stage, the proposed Lithuanian tax regulations for cryptocurrencies and ICOs show that the government is open for discussion on the subject. After the comments were made public, the STI has asked any associated entities or individuals to submit their own suggestions which will then be also reviewed and taken into considerations when preparing the new tax regulations.
Debitum Network core team is based in Lithuania. For us it is good news that local tax offices know what’s going on in the crypto world, trying to adapt to it by issuing laws. Regulation is great thing, because everyone knows rules in particular sphere and can act according to them. This only brings more clarity.