Lithuania for fintech business in 2023
Lithuania is one of the most attractive jurisdictions for fintech companies. Only in 2022, 224 financial institutions interested in obtaining a fintech license applied to the regulator, and that is three times more than the previous year. And there is every reason to believe that the opening of a fintech business in Lithuania in 2023 will exceed these figures due to the growing demand for online shopping and money transfers.
Features of the Lithuanian fintech market
Bank of Lithuania estimates that local fintech companies serve over 25 million customers worldwide. Among the reasons are the following:
- Local laws are aimed at the development of fintech businesses.
- Developed digital infrastructure.
- Fast and easy business registration with minimal bureaucracy.
- Preferential treatment for start-ups.
- Highly qualified personnel.
- Sustainable development of Lithuania in the credit, insurance, and payment sectors.
- A highly secure jurisdiction as Lithuania actively combats money laundering and terrorism financing.
- Advanced CENTROlink payment system from the Bank of Lithuania, which ensures entry into the Single Euro Payments Area (SEPA) and is widely used by financial companies.
- Financial incentives from the government - near-zero-rate loans, partial compensation of employees' wages, etc.
Small companies with no more than ten employees and income up to €300,000 are exempt from income tax for the first tax period. If the following year's income has not increased, they can pay at a rate of 5% compared to the standard 15%. Shareholders must be individuals to qualify for the exemption.
The government also offers a reduction in taxable income for the company's investments in its technological upgrades.
Which niches are in demand
Companies developing digital wallets for storing electronic money, transactions, and issuing prepaid cards in addition to money transfers are popular. Recently, there has been a significant increase in the number of companies that develop financial software.
Notably, there are no restrictions on fintech activities in Lithuania. The only thing is that the regulator does not allow banks to work with virtual assets. This prohibition does not affect the work of fintech companies with other licenses, nor does it limit their ability to operate crypto-businesses.
Types of license for fintech activities
For a company to be able to engage in financial activities, it must obtain one of the following licenses:
- Payment institution - placing money in accounts, transactions, currency exchange, payment transactions, etc.
- Electronic money establishment license - the same as the previous license, plus the issuance of electronic money;
- A specialized banking license - deposits, loans, investment terms, currency exchange, issuance of securities, etc.
If a fintech company is going to provide financial services, its work will be monitored by the Bank of Lithuania.
Work permit for foreign employees
If a fintech company employs a foreign employee, the general rules for obtaining a work permit in Lithuania apply:
- EU citizens - no work permit is needed. They must apply for a residence permit and declare a local address if they intend to live here for more than three months within half a year.
- Non-EU citizens - a work permit is required unless their country has additional agreements with the local government that exempt them from getting a work permit (e.g., Australian, British, Canadian, Japanese, US citizens, etc). After obtaining a permit, they must apply for a long-term national visa or a residence permit, entitling them to reside in Lithuania.
How to register a fintech company in Lithuania
Contact IT-OFFSHORE experts to open a fintech company in Lithuania.