Lithuania

Overview

Lithuania has undergone a remarkable transformation in the global fintech landscape over the past decade. Following the United Kingdom's departure from the European Union, Lithuania emerged as the dominant licensing hub for electronic money institutions (EMIs) and payment institutions (PIs) seeking EU regulatory authorisation and passporting rights. With over 250 licensed financial institutions and a Bank of Lithuania renowned for its pragmatic, commercially literate approach to fintech supervision, Vilnius has become one of Europe's most important financial services regulatory centres—a remarkable achievement for a country of under 3 million people.

The Fintech Licensing Advantage

The foundation of Lithuania's fintech appeal is its position within the EU regulatory framework combined with the Bank of Lithuania's deliberate strategy to attract innovative financial services businesses. Key features of this positioning include:

EU Regulatory Passport: An EMI or PI licence issued by the Bank of Lithuania allows the holder to passport its services across all 27 EU member states (and EEA countries) on the basis of home state authorisation. This means a single Lithuanian licence supports operations across the entirety of the European single market, eliminating the need for separate national licences in each country of operation.

Responsive Regulator: The Bank of Lithuania has cultivated a reputation for accessible, commercially informed engagement with licence applicants. Dedicated fintech contact teams, published processing timelines, and a regulatory sandbox programme have made the licensing process more predictable than in many comparable EU jurisdictions.

Competitive Timelines and Costs: EMI licence applications in Lithuania are typically processed within 3–6 months—significantly faster than the UK FCA, German BaFin, or many other EU regulators. Minimum capital requirements are EUR 350,000 for EMIs and EUR 125,000 for PIs, in line with the EU Payment Services Directive (PSD2) minima.

Licence Types

Electronic Money Institution (EMI): Authorised to issue electronic money, provide payment services, and hold client funds. The most common licence type for fintech firms operating digital wallets, multi-currency accounts, prepaid cards, and similar products. Several of Europe's most prominent fintech companies—including Revolut, whose EU entity is regulated by the Bank of Lithuania—operate under Lithuanian EMI licences.

Payment Institution (PI): Authorised to provide payment initiation and account information services, payment processing, and money remittance. Lower minimum capital requirement than EMI; does not permit the issuance of electronic money or holding of client funds beyond what is necessary for payment execution.

Specialised Bank: Lithuania also offers a Specialised Bank licence, which provides a more limited scope of banking activity (excluding deposit-taking in some forms) compared to a full credit institution licence, while permitting a broader range of financial services than an EMI. The Specialised Bank licence has attracted interest from firms that have outgrown their EMI licences and require expanded capabilities without the full complexity of a banking licence.

Credit Institution (Bank) Licence: Full banking authorisation is available from the Bank of Lithuania, though applications are substantively assessed and the process is longer and more capital-intensive than for EMI/PI licences. EUR 5 million minimum capital applies.

Regulatory Sandbox

The Bank of Lithuania operates a regulatory sandbox—the LBChain initiative—which allows fintech firms to test innovative financial products and services in a controlled environment with reduced regulatory obligations during the test period. This provides a structured pathway for early-stage businesses to engage with the regulator before committing to full licensing, and has been used by firms developing blockchain-based payment systems, AI-driven lending products, and open banking applications.

Company Formation

Lithuanian companies are typically established as Uždaroji Akcinė Bendrovė (UAB), equivalent to a private limited company. Requirements:

• Minimum share capital: EUR 2,500 (EUR 25,000 for a public company, AB)
• Minimum one shareholder and one director
• Registered office in Lithuania
• Registration with the Register of Legal Entities (Juridinių Asmenų Registras)

Incorporation is straightforward and can be completed within two to five business days. For regulated financial services entities, the company must be incorporated before the licence application is submitted; the licensing process follows incorporation. A physical presence in Lithuania—comprising real office space, resident management, and substantive staff—is required for regulated entities. The Bank of Lithuania takes substance requirements seriously and will not licence shell structures without genuine operational presence.

Corporate Taxation

Lithuania levies a standard corporate income tax of 15%, one of the lower rates among EU member states, though above the ultra-low rates of some competitor jurisdictions. Small companies (fewer than 10 employees and gross annual income below EUR 300,000) benefit from a reduced rate of 0% for the first year and 5% thereafter under qualifying conditions.

Participation Exemption: Dividends received by a Lithuanian holding company from subsidiaries where it holds at least 10% of shares for a continuous period of 12 months are exempt from corporate income tax, making Lithuania functional as a holding location within EU group structures.

R&D and Innovation: Enhanced deductions for research and development expenditure are available, supporting businesses investing in product and technology development.

Fintech Ecosystem

The Lithuanian fintech ecosystem has developed rapidly around the licensing hub:

• Revolut: EU banking entity licensed in Lithuania; largest fintech employer in Vilnius
• TransferGo: Money transfer platform, licensed and headquartered in Vilnius
• ConnectPay, Kevin., Paysera, Genome, Bankera: Prominent Lithuania-headquartered fintech businesses serving EU and global markets
• Vilnius Fintech Hub and Startup Lithuania: Industry bodies supporting networking, talent development, and advocacy
• Vilnius Tech Park and Go Vilnius: Infrastructure and inward investment support for tech and fintech companies

Traditional Banking

The Lithuanian banking sector is dominated by Scandinavian-owned institutions: SEB Bank, Swedbank, and Luminor (jointly formed from DNB and Nordea's Baltic operations). Regional institution Šiaulių Bankas operates as a domestically owned alternative. These banks provide corporate banking services to fintech and other businesses, though relationships with newly licensed EMIs can require patience and documentation-intensive onboarding.

Practical Considerations

• UAB formation: EUR 500–1,500; 2–5 business days
• EMI licence: EUR 350,000 minimum capital; 3–6 months processing
• PI licence: EUR 125,000 minimum capital; 3–5 months processing
• Specialised Bank licence: EUR 1–5 million capital range; 6–12 months
• Corporate tax: 15% standard (0–5% for qualifying micro-companies)
• EU passporting: Full access across 27 EU member states
• Substance requirement: Genuine office, resident management, local staff required
• Language: Lithuanian (official); English widely used in business and by Bank of Lithuania
• Currency: Euro (Eurozone member since 2015)