Declaring Income from Cryptocurrency Trading in Lithuania: What You Need to Know

2025-04-08

Cryptocurrency trading continues to gain popularity in Lithuania, attracting individuals with the potential to earn income from digital assets. However, it is important to remember that such additional income must be declared, which often raises many questions. Tax regulations are already complex, and declaring income from crypto trading requires even greater attention and expertise.

Taxation of Cryptocurrency Income

The taxation of cryptocurrency income in Lithuania depends on the nature of the activity:

If cryptocurrencies are bought and sold occasionally with the aim of long-term profit, the income is treated as capital gains from the disposal of other assets and taxed at a 15–20% personal income tax rate.
If trading is carried out regularly and systematically, it may be considered as individual activity, taxed at a 15% personal income tax rate.

According to Lithuanian law, cryptocurrency trading is treated as the provision of financial services and is not subject to VAT. This means traders are not required to register as VAT payers. However, income must still be declared in compliance with tax reporting rules, and the result of each transaction must be calculated precisely.

When to Declare and Common Mistakes

When declaring income from cryptocurrency, it is essential to accurately track and store data on both the purchase and sale prices. Keep in mind that many platforms retain transaction data for a limited time, so regularly saving your transaction history is strongly recommended.

Income must be declared when cryptocurrencies are:

Sold
Exchanged for another currency
Used to pay for goods or services

In practice, a common issue is the inaccurate calculation of acquisition cost due to purchases made at different times and prices. If data is not properly tracked or multiple exchanges are used, discrepancies may arise in the income declaration. Another frequent mistake is failing to declare income when exchanging one cryptocurrency for another (e.g., Bitcoin to Ethereum), even though such transactions are considered disposals and any gains must be declared.

How to Avoid Mistakes and Tax Surprises?

The cryptocurrency market is highly dynamic, and its legal framework is continuously evolving. In January of this year, the Markets in Crypto-Assets (MiCA) regulation came into effect in the European Union, significantly impacting the crypto market and its participants. This shift promotes greater transparency and accountability in financial operations. Regulatory authorities are increasingly focusing on cryptocurrency transactions, whether conducted via local or foreign exchanges.

As a result, market participants should carefully review their practices to ensure proper accounting and declaration of all income.

Like any business activity, cryptocurrency trading can be profitable. However, it demands additional knowledge in tax reporting. To declare income correctly, each transaction must be accurately calculated according to applicable regulations. It is also important to remember that not only profits must be declared, but all income, including that from crypto-to-crypto exchanges or payments for goods and services.

If you have doubts about how to declare cryptocurrency income or need help with complex situations, it is advisable to consult with professionals who specialize in this field. Proper income accounting and reporting can save time and help avoid potential tax issues in the future.