To successfully develop a business in the field of FinTech, it is necessary to choose a favorable environment for registering a legal entity and obtaining a license. If we compare the conditions in European jurisdictions, then Lithuania is a good solution, since a license for electronic money or a payment institution can be obtained in a fairly short time and without excessive procedural complications.

 

Note! More than 100 payment institutions and e-money issuers have already been registered in Lithuania, which confirms in practice how attractive the country is for fintech entrepreneurship.

 

The team of Lawrange Law Firm offers a full package of legal services for launching a fintech business in Lithuania from registering a company for obtaining a license and directly starting work. The cost of services is calculated individually upon request after reviewing the business plan.

 

What is EMI?

The abbreviation EMI stands for Electronic Money Institution. Sometimes the concepts of e-money, EMI, electronic money operator are used, which have a similar meaning.

 

Important! EMI is a licensed legal entity that has the right to: a) provide payment services to customers; b) issue electronic money; c) to carry out the circulation of electronic money.

 

The financial system today includes many different institutions in addition to banks. Technology makes it possible to provide almost all banking services without opening a banking institution in the traditional sense of the word. An e-money license provides the ability to provide such services. The only stumbling block for the development of EMI is a significant distrust and misunderstanding of the essence of such financial activities. Choosing between electronic money (so-called e-wallets) and traditional banks are still often preferred by business representatives. The reason is the lack of faith in the reliability of payment services.

 

Note: An e-wallet is a digital means of payment, like offline money coins and banknotes. With the help of an electronic wallet, you can pay for purchases on the Internet, receive and send money transfers without using a bank account. Transactions between wallets are instantaneous.

 

Among the main differences between banks and EMIs are:

 

  • EMIs do not have the right to issue loans and issue credit cards, while for banks, lending is the most important way to make a profit.
  • For customers, EMI opens sub-accounts inside their bank account – e-wallets are created.
  • EMI accounts can be opened completely remotely for both individuals and firms. Most banks require a personal visit at least to open an account.

 

EMI License

Authorized Electronic Money Issuer (EMI) licenses are issued by the Bank of Lithuania (Central Bank of Lithuania). This state regulator, like other licensing institutions in Europe, is guided in its activities by Directive 2009/110/EC – a document that is the legal basis for issuing electronic money.

 

In Lithuania, you can get two types of licenses related to electronic money: Payment Institution (PI) and Electronic Money Institution (EMI). The latter is broader and includes all the features of the PI license. In particular, unlike a PI, an EMI license provides the ability to hold clients’ funds in accounts for a longer period than required to complete a transaction.

 

Payment Institution has the right to accept funds to the account only together with the payment order to be executed. Funds from the PI payment account must be credited to the recipient’s account on the next business day at the latest. Alternatively, you can agree on the day of crediting the funds. However, if the institution violates the rules regarding the retention of funds in the account, there may be sanctions from the state regulator, up to the revocation of the license.

 

 Important! If you get an EMI license in Lithuania, you can:

 

  • issue Visa and Mastercard vendor cards linked to the customer’s account;
  • open IBAN accounts for clients of the institution;
  • link existing bank cards to customer sub-accounts;
  • make payments in USD/EUR/GBP and other currencies around the world;
  • create your own card payment system.

 

The presence of an EMI license provides the right to provide customers with the following services:

 

  1. Issuance of electronic money (e-wallets, prepaid cards, etc.).
  2. International money transfers.
  3. Crediting cash to the payment account and withdrawing cash from the account.
  4. A set of necessary operations for full-fledged work with a payment account.
  5. Direct Debit is the debiting of funds from customer accounts in favor of third parties (creditors), taking into account the payment order.
  6. Execution of credit transfers.
  7. Issuance of payment instruments.
  8. Acquiring of payment transactions.

 

Varieties of EMI Licenses in Lithuania

An EMI License in Lithuania is a beneficial tool that opens up new perspectives for your business development.

 

By obtaining an Electronic Money Institution License in Lithuania, you automatically get permission to conduct a wide range of activities, such as:

 

  • issuing electronic money and payment instruments;
  • storing electronic money on behalf of clients;
  • providing payment account services, including account management and transactions;
  • processing electronic payments (on behalf of merchants or other payment service providers);
  • offering Electronic Money services tailored for businesses (payroll or mass payments), etc.

 

You can choose one of the EMI licenses for your business: for regular or limited activity. This depends on:

 

  • The scale and scope of the company’s activities.
  • Capital availability.
  • Regulatory burden.

 

By choosing an E-money License in Lithuania, businesses can align their regulatory obligations with their operational needs and strategic goals.

 

Regular EMI License

A regular EMI License in Lithuania allows a business to issue Electronic Money and provide a wide range of payment services within the European Economic Area (EEA). It is most suitable for large financial institutions and companies with a stable operational structure and a large client base in the EU.

 

It includes the full range of electronic money and payment services:

 

  • issuing electronic money;
  • executing payment transactions;
  • issuing payment instruments;
  • acquiring payment transactions, etc.

 

The Lithuania EMI License must meet many regulatory requirements:

 

  • capital adequacy (minimum initial capital – €350,000);
  • strong management structure;
  • AML (Anti-Money Laundering) obligations;
  • regular reporting to the Bank of Lithuania on financial and operational indicators;
  • consumer funds protection measures.

 

EMI Limited Activity License

The Lithuania EMI Limited Activity License is designed specifically for small operations or startups. It is for those who do not need the full range of services permitted under a regular EMI license or if the activities will be conducted only within the country.

 

Key features include

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  • limited range of activities (issuing electronic money and providing certain payment services, but with restrictions);
  • lower initial capital requirements (approximately €50,000);
  • operational restrictions on transaction volumes and types of services;
  • compliance with regulatory requirements regarding reporting, consumer funds protection, etc.

 

Difference between an EMI License and a PI License in Lithuania

Electronic Money Institution (EMI) and Payment Institution (PI) licenses are regulated by the Bank of Lithuania and allow institutions to provide various financial services. However, there are several differences between these types of licenses.

 

Criteria EMI License PI License
Scope of Services Issuing electronic money and providing a wide range of payment services (including payment initiation, account information, transfers, issuing payment instruments) Providing payment services without the ability to issue electronic money
Minimum capital requirements €350 000 From €20,000 to €125,000 (depending on the type of payment services)
Market Reach Providing services throughout the European Economic Area (EEA)
Regulatory Requirements Strict management, reporting, and compliance requirements Lenient requirements compared to EMI
Market Coverage Providing services throughout the European Economic Area Similarly, PIs can passport their services in the EEA, but the scope of these services is limited to payment services
Reporting to the Bank of Lithuania Frequent and detailed Regular, but less frequent
Management Requirements Requires a strong management structure with qualified management and directors Requires an adequate management structure, but less stringent requirements
AML Compliance  High standards and comprehensive AML policies Must meet AML requirements
Initial Launch Suitable for companies looking to provide a wide range of financial services, including issuing electronic money Suitable for companies focused solely on payment services
Business Focus For enterprises planning to offer a wide range of financial services For companies focused solely on payment processing and related services

 

Therefore, the choice between an EMI and a PI license will depend on the specific needs and business model of the institution.

 

Benefits of an EMI License in Lithuania

On transparent and quite favorable terms in Lithuania, you can obtain permission to provide a wide range of payment services, more opportunities can only be provided by a banking license.

 

Important! In favor of Lithuania as a jurisdiction for obtaining an EMI license, the following arguments can be distinguished:

 

  • Relatively short delivery time.

The duration of the licensing procedure is from 6 to 12 months and depends on the completeness of the package of documents provided.

 

  • No time limits.

An e-money license is issued in Lithuania for an indefinite period.

 

  • Possibility of license certification in other EU countries.

You do not have to go through the licensing procedure again.

 

  • Use of English in office work.

Documents for the state regulator can be prepared in English. Moreover, the country’s legislation complies with EU law, so it does not require in-depth study.

 

  • Access to the SEPA zone.

Through the generated account in the CENTROlink payment system managed by the Central Bank of Lithuania, it is possible to get direct access to the Single Euro Payments Area.

 

Note: Lithuania joined SEPA back in 2016. SEPA currently has 36 member states. A SEPA account allows you to become a payer or recipient of funds to or from any SEPA country.

 

  • Ability to remotely verify clients as part of the KYC procedure.

Unlike most banks, electronic money institutions with a Lithuanian license are allowed to identify customers using such means as digital signatures, electronic copies of documents, video communication, etc.

 

  • A regulatory sandbox for startups.

Under the control of the Central Bank, companies can test innovative products during real activities. In case of minor violations, the regulator does not impose penalties during the first year of development. However, only a project that meets a number of criteria can access the regulatory sandbox.

 

The Advantage of Obtaining an EMI License in Lithuania With Lawrange

Although obtaining an EMI license in Lithuania provides numerous benefits, and the procedure for processing documents is optimized as much as possible, we are still talking about tasks of a high level of complexity. The state regulator seeks to completely close any loopholes for fraudsters and persons involved in money laundering.

 

Note! Without an experienced assistant, it is difficult to go through the procedure. At the very least, it entails additional time.

 

The support of Lawrange Law Firm allows you to adhere to a strict procedure for obtaining a license and provides a prospect for a businessman to quickly start his direct activities.

 

What do the representatives of Lawrange do?

 

  1. registration of companies under EMI and registration of a bank account to deposit the authorized capital, as well as obtaining a VAT number;
  2. preparation of an application to the state regulator along with a package of supporting documents;
  3. development of an action plan, collection of information, assistance in the preparation of a business plan, advice on risk management, analysis of the compliance of the company’s activities with the requirements of Lithuanian legislation;
  4. filling out all necessary forms and applications;
  5. representation of interests in interaction with the state regulator – the Central Bank of Lithuania, as well as with the Ministry of Finance, audit companies and other providers of services necessary for the company’s work;
  6. facilitating the development of AML and KYC policies;
  7. If the client wishes it, we will accompany the activities of the company after obtaining the license.

 

Conditions for Obtaining an Electronic Money Institution (EMI) License

The licensing requirements for an electronic money issuer relate to the applicant, share capital, founders and shareholders, governing bodies, etc. We are talking about compliance with a fairly large and serious list of conditions, which is natural, since significant financial flows are likely to pass through the institution.

 

Let’s consider the requirements for groups.

 

Applicant

A legal entity registered in Lithuania. It follows that in order to obtain an EMI license, you must first open a company under it in Lithuania. This company and its founders should not be banned by the regulatory authorities of the EU or Lithuania. It is mandatory to have a physical office in Lithuania.

 

Founders (shareholders)

There must be at least one individual among the founders. The minimum age is more than 18 years. Residency in Lithuania is not mandatory. The main requirement is an impeccable business reputation or goodwill (if we are talking about a legal entity). The Central Bank of Lithuania must have financial confidence in shareholders – there are no doubts about the origin of funds.

 

Note: The state regulator obliges the founders to comply with prudential standards, i.e. requirements that ensure the reliability, liquidity, solvency of the institution, as well as the protection of the interests of customers and shareholders.

 

Authorized Capital

The minimum is 350,000 euros (but there is no requirement to obtain a limited license). When depositing the authorized capital, the source of funds should be indicated. The authorized capital in the specified amount should be maintained throughout the entire period of operation of the enterprise.

 

Bank Account

When opening an account, you need to submit to the bank:

 

  • a completed questionnaire on operational risks for the applicant;
  • business plan;
  • a description of measures to protect clients’ funds (the safety of the client’s funds is ensured by means of a separate bank account of the client or by means of an insurance policy);
  • description of the organizational structure, internal control system, risk management, accounting.

 

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Management

Among the managers of Lithuanian citizens must be a CEO and an AML officer. At the same time, they are subject to requirements for qualifications and experience in the relevant field. It is desirable that the head of the company (director) resides in the country during its life cycle.

 

Peculiarities of Lithuanian Legislation

Note! The country’s legislation prescribes requirements for the structure of the management bodies of an electronic money institution and directly for the management of such companies.

 

The following management bodies are created in the institution of electronic money:

 

  • the head of the institution – must have a higher education in the field of jurisprudence, economics, business administration or management and have an impeccable reputation, competence and experience of holding the position of head, deputy head or head of a division of a legal entity for at least two years in the previous eight years;
  • General Meeting of Shareholders;
  • council (board) – consisting of at least two persons with higher education in the field of law, economics, business administration or management, as an option – at least one year of experience in these areas within the last five years;
  • Control Commission.

 

Note 1: Experience means experience as an accountant, financial director, head of legal department, auditor, director of a legal entity.

 

Note 2: The requirements for education and experience, by analogy with those put forward for board members, must be met by the heads of structural units of the EMI institution, including branches in other EU countries.

 

List of Documents for Obtaining a License

The indicative package of documentation to be submitted to the state regulator includes:

 

  1. Application;
  2. Articles of Association of the EMI company;
  3. information about the authorized capital;
  4. information about beneficiaries – persons who have significant shares in the authorized capital;
  5. information on directors – persons who will be responsible for the management of the company (including confirmation of reputation and compliance with legal requirements);
  6. a document confirming the presence of a physical office, for example, a lease agreement for premises;
  7. a business plan and action plan, including a forecast budget for the three financial years ahead – it is important to prove the institution’s ability to function, generate revenue, use internal control policies and risk management systems;
  8. a set of internal policies: a description of measures to protect clients’ funds, control, risk management and accounting, AML, organizational structure (including branches);
  9. auditor’s opinion – a partner audit firm or a certified auditor.

 

Note: The content and form of the documents must comply with the requirements of Directive 2015/2366 on payment services in the internal market (PSD2). The documentation is submitted to the state regulator in Lithuanian or English.

 

Cost and Terms of Obtaining an Emi License in Lithuania

The cost of the package of services provided by Lawrange Law Firm within the framework of obtaining an EMI license in Lithuania includes the following items of expenditure:

 

  • registration of a legal entity in the country under EMI + opening a bank account for depositing the authorized capital;
  • preparation of a set of documentation to be submitted together with the application to the state regulator for obtaining a license;
  • State. license fee.

 

Attention! The provision of a number of services is negotiated and paid separately. We are talking about services such as:

 

  • resolving the issue of renting office space;
  • “Nominee Director” service;
  • hiring local employees.

 

The period for obtaining an EMI license is from 6 to 12 months.

 

Note! Prepared and signed documents from the date of submission are considered by the Central Bank of Lithuania for no more than 3 months. However, in case of any deficiencies (errors, lack of necessary information), the regulator may require adjustments or request additional information. In such cases, the terms of consideration are extended – the countdown should be carried out from the moment of submission of the last document.

 

Licensing Process for an E-money Issuer in Lithuania

Conventionally, there are five stages in the process of obtaining an EMI license.

 

Stage 1. Preparation of documents for company registration.

 

The company’s articles of association, details about beneficial owners and directors, technical documentation for e-wallets, AML policies and certificates, etc., should be prepared.

 

Stage 2. Creation of a legal entity.

 

In addition to registering a company, the issue of a legal address, local phone number, and rental of real estate for an office is resolved.

 

Stage 3. Commencement of work of a legal entity.

 

You should apply for a VAT number and open a bank account, sign an agreement for accounting services.

 

Stage 4. Preparation for licensing.

 

It is necessary to prepare a business plan, a description of the organizational structure, and risk planning.

 

Stage 5. Applying for and obtaining an EMI license.

 

The collected package of documentation is submitted to the Central Bank, if necessary, additional documents and information are sent in response to requests. The result is an e-money issuer license.

 

Tax Aspects of EMI Operations in Lithuania

An Institution License in Lithuania entails compliance with various tax obligations, such as:

 

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1.Corporate Income Tax

Includes:

 

  • standard corporate income tax rate – 15%;
  • reduced rate – 5%;
  • profit tax calculated as the difference between total income and deductible expenses.

 

2. Value Added Tax (VAT)

Calculated at the standard rate of 21%, with an exception for financial services, which are exempt from VAT.

 

3. Withholding Tax

Consists of:

 

  • dividends paid to non-residents – 15% (may be reduced or eliminated under applicable double tax treaties);
  • interest and royalties – 10%.

 

4. Social Security Contributions

  • employer contributions for employee social insurance – approximately 1.77% of the gross salary;
  • employee contributions – 19.5% of the gross salary for social insurance.

 

5. Personal Income Tax

  • standard rate – 20% (for annual income up to €104,277) and 32% (above €104,277);
  • tax on employee stock options.

 

6. Double Taxation Avoidance Agreements

Possible through an extensive network of double taxation avoidance agreements with other countries.

 

7. Transfer Pricing

  • regulatory acts;
  • documentation to support pricing of intra-group transactions.

 

8. Anti-Tax Avoidance Rules

  • General Anti-Avoidance Rule (GAAR) allowing tax authorities to disregard arrangements that do not reflect economic reality and aim to obtain tax benefits.
  • Controlled Foreign Company (CFC) rules that can attribute income from a foreign subsidiary to the Lithuanian parent company.

 

9. Tax Incentives

  • investment incentives for certain sectors or regions;
  • tax benefits for research and development activities.

 

Managing an EMI License in Lithuania involves navigating a complex tax landscape. For EMIs, it is crucial to comply with all tax obligations and leverage double taxation avoidance agreements to optimize the tax position.

 

Consulting with specialists is necessary to ensure compliance and optimize tax planning.

 

Financial Reporting

Companies holding an EMI License in Lithuania must regularly submit financial and other reports to the Bank of Lithuania. These are required to monitor their activities and include the following requirements:

 

  • Quarterly Reporting

Documents reflecting the economic condition and performance of the business, including measures for AML and counter-terrorist financing.

 

  • Annual Reporting

Data on granted loans, deposits, number of employees, and received complaints.

 

  • Additional Submissions

Reports on risks and security with detailed descriptions.

 

The Bank of Lithuania may also request any necessary documents for current regulatory needs to ensure transparency and control over the activities of institutions in the electronic money sector.

 

How to Purchase a Pre-Established Company with an EMI License in Lithuania

Purchasing an existing company with an EMI license in Lithuania involves several stages:

 

1.Conducting Due Diligence

Necessary to understand the company’s financial status, legal standing, and regulatory compliance.

 

  • review financial statements, tax returns, and audit reports;
  • check for any legal issues, contracts, and compliance with local and international laws;
  • ensure the company complies with Bank of Lithuania regulations and AML policies;
  • evaluate the company’s business operations, client base, and existing contracts.

 

2. Negotiating and Executing the Purchase Agreement

 

  • discuss sale terms (price, payment conditions, representations, and warranties) and draft a Sale and Purchase Agreement (SPA);
  • consider using an escrow account to manage the transfer of funds and ensure compliance with conditions;
  • specify any conditions (if any) that must be fulfilled before completing the sale.

 

3. Obtaining Regulatory Approval (Mandatory)

  • Submit an application to approve the new owner with:
    • information about the new owners;
    • business plan and financial forecasts;
    • confirmation of meeting capital requirements;
    • AML policies and procedures.
  • Pass the fit and proper test.

 

4. Transfer of Ownership

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Once regulatory approval is obtained, proceed with the legal transfer of ownership by:

 

  • transferring shares;
  • updating corporate records;
  • publicly announcing the change of ownership.

 

5. Post-Acquisition Compliance

It is important to ensure regulatory compliance after the acquisition by:

 

  • continuing timely reporting of financial and operational indicators;
  • maintaining and updating AML policies and procedures;
  • informing clients about the change of ownership and assuring the continuity of services.

 

Following these steps, you can navigate the process of acquiring an existing company with an EMI license in Lithuania. However, to avoid tax or legal consequences, it is advisable to consult specialists.

 

Conclusion

Lithuania, as an optimal environment for fintech startups, offers favorable EMI licensing conditions. However, this does not mean that the paperwork process is easy and fast. The applicant will have to comply with a number of legal requirements, be ready to contribute a considerable authorized capital, and develop a certain list of internal policies and regulations. Obtaining a license under any conditions involves not only the submission of documents, but also communication with the state regulator represented by the Central Bank of Lithuania. Accordingly, it is necessary to know how to properly answer questions and respond to written requests.

 

For the team of Lawrange experts, support for the registration of multinational companies, including financial institutions, is the main area of specialization. Therefore, our services allow you to optimize the licensing process and achieve results with less effort. By default, each client can count on complete confidentiality.

 

FAQ

Can a non-resident obtain an EMI license in Lithuania?

Yes. But subject to the involvement of local residents in the management bodies of the electronic money institution.

 

Can I get an EMI license online?

Yes. Moreover, if you use the support of Lawrange, our lawyer will be able to act on your behalf under a power of attorney.

 

How to get an EMI license?

First, you need to register a company in Lithuania and open a bank account. Then you need to collect a package of documents and resolve the issue of compliance of the legal entity with the requirements of the state regulator that issues EMI licenses.

 

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