Obtaining banking license in Lithuania

Getting a banking license in Lithuania gives an opportunity to enter the markets of the European Union and create a trade, as Lithuania has set up itself as an appealing goal for opening banks and money related education due to its administrative adaptability and cutting edge advances in the money related administrations segment. This activity opens businesses to the EU Single Advertise, which covers more than 450 million customers, which essentially grows the openings for scaling and pulling in investors.

One of the key viewpoints is that having a banking license in Lithuania permits budgetary education not as it were to work in the residential showcase, but too to give their administrations in all EU nations much appreciation for the passporting of licenses given for by Directive 2013/36/EU. This makes Lithuania a deliberately imperative point for banks centered on growing their nearness in Europe.

Advantages of banking in Lithuania

One of the vital variables that recognizes Lithuania from other European nations is its enrollment in the Eurozone and the European Union, which gives certain guarantees of soundness and uniform rules of operation in the money related division. Lithuania too possesses one of the driving positions in terms of digitalization and the utilization of progressed advances in managing an account and installment frameworks, which makes a favorable environment for imaginative budgetary ventures. This circumstance is particularly alluring to companies that look to execute fintech arrangements and make modern sorts of administrations utilizing cutting edge technologies.

Lithuania was one of the nations to present a specialized legitimate system for fintech companies, permitting them to make cutting edge devices with negligible compliance costs. The Central Bank of Lithuania (Lietuvos Bankas) bolsters the improvement of such endeavors through activities such as test situations for advancement, giving an opportunity to test modern trade models in real-life conditions with negligible hazard. This makes Lithuania a magnet for monetary new companies looking to enhance and rapidly adjust to the needs of the cutting edge market.

It is vital that Lithuania effectively underpins the advancement of green back and economical ventures, which is in line with worldwide patterns in economical improvement financing. After a long time, Lithuania has proceeded to fortify its position as a money related center, adjusting its laws to advanced financial challenges and the requests of worldwide financial specialists.

Types of banking licenses in Lithuania

The government offers two primary sorts of these archives for companies wishing to give budgetary administrations in the nation and inside the EU. These licenses contrast in the scope of allowed exercises, capital necessities and prudential commitments. Let's look at each of the licenses in more detail.

Regular banking license

Gives a full run of openings for banking licenses and empowers them to perform a wide extent of keeping money operations. This permit is appropriate for those organizations that arrange to give conventional keeping money administrations, counting store taking, loaning, securities exchanges and resource administration. Key highlights incorporate the taking after aspects.

Banks that have gotten a full permit in Lithuania have the right to acknowledge stores from people and legitimate substances, give advances, issue credit and charge cards, carry out venture operations and subsidiaries operations.

According to the necessities of Lithuanian enactment and European mandates, the least authorized capital for banks with a full permit is 5 million euros. This guarantees an adequate level of liquidity and soundness of the organization.

Banks must follow strict AML/CTF benchmarks, which incorporate standard exchange observing, client distinguishing proof methods, and guaranteeing all sorts of controls. Yearly reviews and detailing to the Central Bank are too required.

The preferences incorporate the capacity to cover the whole range of money related administrations, work with people and corporate clients, draw in stores and carry out venture operations.

The confinements incorporate tall commitment and compliance prerequisites, the requirement for strict control over operational dangers, obligatory customary observing and compliance with EU orders.

Specialized banking license in Lithuania

It is planning for banking licenses that wish to constrain themselves to a certain run of keeping money operations and do not arrange to give a full extent of administrations. This sort of permit is more available than a standard procuring banking license and is outlined for companies that center on a limited section of the money related advertisement. The key highlights incorporate the taking after factors.

Specialized banks may give credit administrations, contract loaning, corporate managing an account, and restricted store administrations. Be that as it may, they may not lock in in venture, resource administration, or derivatives.

The least sum of starting capital for extraordinary banks is 1 million euros, which essentially decreases the obstructions to passage into the market.

Specialised banks are too controlled by the Lithuanian Law on Credit Institutions, but have loose capital and chance control necessities. The CRD IV Directives are too constrained, but in a streamlined format.

Specialised banks moreover have the right to visa their permit, which empowers them to give administrations all through the EU, but with limitations related to the scope of allowed activities.

Benefits: Lower capital necessities, rearranged announcing guidelines and adaptability in giving particular budgetary services.

Limitations: Failure to offer a full run of conventional managing account administrations, resource administration, required to comply with European and Lithuanian directions.

Legal basis

The handle of procuring a banking license in Lithuania is represented by a strict legitimate system, counting both national and European laws. These laws set the essential rules for the keeping money trade, checking dangers. Underneath are five key laws that direct the permitting and operations of banks in Lithuania.

This is one of the key standardizing acts of the European Union, which controls prudential necessities for credit educate and speculation firms. In the setting of a banking license in Lithuania, this direction applies to all teachers that are required to comply with European guidelines of budgetary soundness and liquidity.

Adjustable aspects:

• Capital necessities for banks.
• Liquidity proportions to guarantee short-term stability.
• Limitations on the utilization of leverage.
• Requirements for standard detailing to national and European supervisory specialists.

This is the primary standardizing act overseeing private lawful relations, counting those related to keeping money operations and legally binding commitments. The Code characterizes the establishments of respectful rights and commitments that influence keeping money activities.

Key aspects:

• Regulation of contracts with clients, counting advance understandings and understandings for the arrangement of money related services.
• Rights and commitments of the parties in exchanges related to keeping money operations.
• Rules concerning obligation collection and requirement of commitments.

This is a record that directs banking activities in Lithuania. It characterizes the necessities for the foundation and authorizing of banks. The law moreover contains arrangements on the assurance of clients' interface and control of procuring banking licenses risks.

Key points:

• The least sum of authorized capital.
• Conditions for getting a banking license in Lithuania, counting corporate administration and compliance requirements.
• Measures to guarantee the solidness of the bank, counting inner control methods

Controls all budgetary education in the nation, counting non-banks. It sets rules on prudential supervision, capital prerequisites and reporting.

Key aspects:

• Issuance of licenses and control over budgetary institutions.
• Capital and liquidity prerequisites comparative to those of banks, but with less prudential commitments for particular monetary institutions.
• Compliance with EU Anti-Money Laundering Directives.

Directs the corporate structure, administration and obligation of shareholders and supervisors of companies, counting banks. This law plays an imperative part in the foundation, administration and licensing of banks in Lithuania, as it characterizes the rules for the arrangement of authorized capital, administration obligation and revelation of data on advantageous owners.

Key points:

• Corporate administration necessities, counting shareholding structures, shareholder rights and administration obligations.
• Rules for the reorganization, merger or liquidation of companies.
• Requirements for revelation of data on extreme recipients, which is vital in the setting of bank licensing.

These five laws make a strong legitimate premise for the licensing and operation of banks in Lithuania. Directive (EU) No 575/2013 sets prudential prerequisites at the EU level, guaranteeing the soundness of the keeping money framework. The Respectful Code of the Republic of Lithuania directs private legitimate relations, and the Law of the Republic of Lithuania on Banks and the Law on Money related Educate give for comprehensive supervision of banking associations. The Law on Companies sets corporate measures vital for the administration of banks and the security of shareholders’ and customers’ rights.

Requirements and conditions

The archive permits the bank to give a full extent of budgetary administrations - stores, credits, etc. The necessities for getting this permit are more rigid, since it expects a higher level of duty to controllers and clients. The primary necessities are displayed below.

To get a normal banking license in Lithuania, a bank must have an authorized capital of at least EUR 5 million. This guarantees money related solidness and the capacity to adapt with potential risks.

Managers and key work force must have demonstrated encounter in the money related segment and must meet the rules of judgment and polished skill. This incorporates proof of proficient aptitudes, involvement in overseeing education and compliance with moral measures.

The sum of the authorized capital is 1 million euros, which makes this sort more available to companies centered on a limit advertise. The directors of specialized banks must too comply with the built up guidelines, but the necessities for involvement and capabilities may be less strict compared to those of customary banks.

Although the chance administration prerequisites for particular banks may be less exacting, they still proceed to execute an successful inner control framework that complies with the prerequisites of European directives.

Specialized banks must comply with anti-money washing and monetary soundness directions, but with a bigger financial impression than normal banks.

Specialised banks are moreover subject to supervision by the Bank of Lithuania, but detailing on prudential prerequisites may be streamlined.

Application procedure

The significant handle for getting a banking license in Lithuania is an organized and multi-stage calculation, in which preparatory engagement with the Bank of Lithuania plays a definitive part. The controller effectively empowers potential candidates to contact the Bank of Lithuania at an early stage of arranging. This encourages a better understanding of the prerequisites and desires, which limits the probability of blunders and delays in the application preparation.

Potential candidates start interaction with the Bank of Lithuania to get full data on legitimate necessities. Key exercises include:

• Familiarization with current regulations.
• Conducting preparatory gatherings and transactions with the controller to talk about the subtle elements of the Scottish process.
• Evaluation of the essential reports that will be drawn up in the controls for getting a license.

Preliminary evaluation of the application permits both parties to set desires and evaluate conceivable dangers some time recently the official accommodation of reports. This generally gives the right to deny a permit due to formal or legitimate infringement.

After the preparatory appraisal, the candidate submits an official application to the Bank of Lithuania. At this arrange, the taking after occurs:

• Checking the completeness and compliance of the data inside 5 working days. If all the data is given in full and does not contain formal blunders, the application is submitted for thought for procuring a banking license in Lithuania.
• If any insufficiencies are recognized, the candidate is given the opportunity to rectify them some time until the primary appraisal method starts.

After the application for a procuring banking license in Lithuania has been acknowledged, a nitty gritty examination of all submitted reports starts. This organize includes:

• Joint confirmation and examination of information by the Bank of Lithuania and the European Central Bank (ECB).
• If any insufficiencies or irregularities are distinguished, the Bank of Lithuania and the ECB incorporate a list of comments and demands that are sent to the candidate for adjustments or arrangement of extra documents.

This arrangement plays a major part in the handling of getting a banking license in Lithuania, as the last choice depends on the quality of the information given.

The last arrangement is your choice to give or deny a procuring banking license. The choice is made in agreement with:

• Law of the Republic of Lithuania on Banks;
• Regulation (EU) No 468/2014 administering the interaction between the ECB and national components.

In case of a positive choice, the candidate is allowed a full procurement of banking license in Lithuania, permitting them to conduct commerce in the nation and other EU nations. In case of refusal, the candidate is given the reasons and can re-apply after dispensing with the demonstrated insufficiencies.

Any questions?

Contact our specialists

Send your application

Taxation in the Lithuanian banking sector

Corporate income tax

The standard national access rate for all companies, banks is 15%. This charge applies to the company's assessable benefits, which incorporate introduction to conventional managing account exercises such as credits and investments.

Changes to the tax collection of huge companies have been presented since 2024. The residential assess rate is anticipated to increase to 16% by 2025.

The government too presents diminished assess rates (5%) for little businesses, but this does not apply to huge banking institutions licensed in Lithuania.

Temporary tax on unexpected income

In 2023 and 2024, the government presented a extraordinary brief godsend charge for banks, the so-called "Solidarity Contribution":

• The winter assess is 50% of net intrigued pay, which is the net normal intrigued salary over four a long time. This implies that any wage essentially higher than past a long time will cause extra taxation.
• The assess rate is 60% of the abundance wage. The charge is at first arranged for two a long time, but will be amplified until 2026.
• The Lithuanian charge framework for the managing an account division is very alluring, but moreover incorporates measures to combat “windfalls”, which requires banks to viably oversee dangers and adjust to modern needs.

Fiscal benefits and incentives

There are a few state and European programs in Lithuania that back money related teaching, counting banks. These programs point to decrease the charge burden, fund improvement and invigorate development. Underneath are the primary monetary motivating forces and back programs accessible to banking in Lithuania.

The point of the program is to invigorate development and inquire about the keeping money world, counting the presentation of modern items and technologies.

Advantages:

• Reduction of pay assess by 300% of all R&D costs. This implies that R&D costs can be recorded three times, which diminishes the charge base.
• Possibility of quickened devaluation on inquiry about and advancement hardware, which permits for lower taxes.

Requirements for participation:

• The venture must incorporate the zone of inquiry about and improvement, which incorporates the improvement of unused managing account advances, fintech arrangements or the usage of maintainable framework security.
• All R&D costs must be reported and meet the prerequisites of the Service of Finance.

How to participate:

• Submit an application to the Service of Fund with a completed extended portrayal and use plan.
• Provide cost and investigate reports at the conclusion of each money related year.

This program empowers banks licensed in Lithuania to contribute in feasible advancement and green innovation ventures that permit for reasonable assess reductions.

Advantages:

• Refund of up to 30% of charges paid on speculations in ventures related to vitality sparing, renewable vitality sources or feasible technologies.
• Exemption from charge on benefits earned from maintainable speculations for the to begin with five years.

Requirements for participation:

• A bank with a license in Lithuania must contribute in ventures that meet improvement qualification criteria, counting vitality productivity innovations, sun oriented and wind vitality or carbon impression diminishment projects.
• Projects must be certified and comply with EU ESG (environment, social and governance) standards.

How to participate:

• The application is submitted to the Service of Environment of Lithuania, showing all the subtle elements of the extent and the asked assess incentives.
• Upon completion of the venture, the bank must give a report on the infringement accomplished and assess the impact of the usage of the arrangements.

This program is focused on small and medium-sized banks in Lithuania that give credit administrations to SMEs (small and medium-sized enterprises).

Advantages:

• A 50% diminishment in salary charge for banks that reach more than 30% of their advance portfolio in little and medium-sized enterprises.
• Access to particular credit lines from the European Venture Bank (EIB) for financing SME projects.

Requirements for participation:

• A bank licensed in Lithuania must show that at least 30% of its advance portfolio is expecting to back SMEs.
• All advances must be given on terms that comply with EIB requirements.

How to participate:

• Submit an application to the Central Bank of Lithuania with nitty gritty data on SME credit items and their terms.
• Provide normal reports on SME lending volumes and compliance with program terms.

This program gives motivations to unused banks authorized in Lithuania and fintech new businesses that as it were advantageous to the market.

Advantages:

• Exemption from salary charge for the to begin with three a long time from the date of getting a banking license.
• Possibility of conceding profit installments for up to five a long time after the to begin with period of profitability.

Requirements for participation:

• The bank must be registered in Lithuania as an unused legitimate entity.
• The authorized capital must comply with administrative documents.

How to participate:

• Submit an application to the Lithuanian Charge Benefit showing all data around the organization, trade proposals and improvement forecasts.
• Provide yearly execution reports and prove of compliance with program requirements.

These programs make the state alluding to monetary teaching, give critical assess motivations and money related bolster subject to compliance with the conditions and inventive improvement.

Risks and opportunities

Banking in Lithuania, as in any other ward, is related with a number of monetary dangers related to advertise instability, trade rate variances, and changes in enactment. In the setting of worldwide financial challenges caused, for case, by geopolitical precariousness or the results of the widespread, banks confront extra dangers in the frame of a diminish in borrowers' dissolvability and an increment in non-performing loans.

Credit dangers remain one of the primary dangers to procuring a banking license in Lithuania. The effect of European financial variances may influence the capacity of people and lawful substances to benefit their commitments to banks, particularly if advance portfolios are concentrated in contract divisions of the economy. For example, insecurity in the development or mining businesses may lead to an increase in corporate credit defaults, which will adversely influence the budgetary execution of banks.

However, in spite of these dangers, the government offers awesome openings for education and speculators, particularly through its get to the EU showcase. Authorized education can give their administrations all through the EU through an instrument for passporting licenses, which permits them to altogether extend their client base without having to get licenses in each person's EU country.

Lithuania is moreover creating its fintech industry, empowering banks to coordinate computerized innovations such as blockchain and manufactured insights, making monetary administrations more adaptable and appealing. With the expanding part of advanced innovations in keeping money, banks that can rapidly adjust to developments will be able to minimize dangers and take advantage of modern advertising openings.

Investment Prospects

In later years, Lithuania has remained one of the most appealing venture goals in Europe, as proven by its steady macroeconomic markers and developing trade movement. The Lithuanian keeping money segment, in spite of the challenges of worldwide expansion and worldwide showcase instability, has illustrated versatility, bolstered by energetic advancement of key businesses such as FinTech, data innovation, and manufacturing.

One of the most noteworthy variables affecting Lithuania's financial allure is its participation in the Eurozone. This guarantees steady money related arrangement and diminishes cash dangers for worldwide investors.

The level of procuring a banking license in Lithuania remains high due to a positive commerce environment, moo authoritative boundaries and back from state education. Lithuania reliably positions among the best European nations in terms of the level of digitalisation of the economy, which makes a strong establishment for the development of both conventional and imaginative businesses. In later years, Lithuania's Net Household Item has proceeded to develop in the midst of expanding sends out, particularly in the high-tech and knowledge-based administrations divisions.

Foreign Direct Investment (FDI)

One of the key components of Lithuania’s financial approach is the dynamic fascination of FDI. The state program for pulling in outside speculation, upheld by different state offices such as Contribute Lithuania, points to make positive conditions for outside companies, counting a disentangled administrative environment and charging incentives.

Lithuania stands out among other nations in the locale due to its comprehensive approach to fortifying outside financial specialists. For case, companies opening banks in Lithuania can tally on charge motivating forces, counting an exception from pay assess at the introductory organizational of operations and a decreased salary charge rate in the long term. This permits unused banks to decrease working costs and accomplish productivity faster.

In expansion, the state underpins imaginative segments of the economy, which makes it appealing to speculators in the field of back and electronic administrations. The creation of development sandboxes, where companies can test modern items and administrations in genuine conditions, essentially quickens the handle of adjustment to the showcase. These measures make a favorable climate for new businesses and fintech companies wishing to enter the European showcase and coordinate their arrangements into the existing money related infrastructure.

The convergence of outside speculation into the money related segment is moreover backed by the dynamic improvement of green fund and feasible advancement ventures, which open up modern openings for banks and budgetary education authorized in Lithuania that are centered on ESG benchmarks. Lithuania advances the improvement of such ventures by advertising, assessing motivations and administrative back.

Successful cases

One case is Revolut, a UK-based fintech mammoth that got a banking license in Lithuania in 2019. This permitted Revolut to grow its administrations over the EU utilizing the permit passporting instrument. Lithuania gave the company a stage to develop and scale its commerce, as well as get assets from European budgetary markets. Revolut was able to coordinate its items with the Lithuanian framework and create unused money related administrations, which permitted it to reinforce its position in the market.

Another fruitful illustration is N26, a German online bank that chose Lithuania as a base for growing its operations in Europe. By procuring a banking license in Lithuania, N26 was able to offer its clients a more extensive extension of administrations, counting stores and credit items, whereas taking advantage of the country’s adaptable administrative environment.

Thus, Lithuania's venture prospects stay more than positive. The combination of a steady economy, an ideal commerce climate and dynamic government back pulls in companies looking for a stage to enter modern markets and wishing to take advantage of financial motivating forces.

Conclusion

Getting a banking license in Lithuania is a complex but imperative preparation for companies wishing to enter the EU showcase and take advantage of its budgetary and speculation openings. The most imperative figure is the arrangement of an intensive commerce arrangement and the arrangement of a least sum of capital, set at EUR 5 million for banks with a full permit. Lithuania, with its straightforward and rearranged authorizing framework, proceeds to pull in worldwide companies, advertising adaptable choices for budgetary education, electronic money (EMI) and payment services (PI) licenses.