Cryptocurrency regulation in the UK
Benefits of this jurisdiction
Obtaining a cryptolicense here is advisory, but all crypto organizations must undergo mandatory registration and pay taxes regularly. However, many organizations choose to get a work permit as there are many benefits.
First, Britain’s cryptocurrency regulation can change at any time. Now there is talk that there is a need to make licensing mandatory and that there is a need for more laws to better protect users from possible fraud or money laundering.
Secondly, obtaining a work permit in this jurisdiction is simple, but it makes it possible to work in many jurisdictions. It allows you to enter new markets and actively develop.
Thirdly, having a license is the primary proof that a crypto organization is ready to work honestly and openly, so it will be much easier for you to attract new customers and investors.
In addition, this jurisdiction has the most favorable taxation rules. The corporate tax rate here is one of the lowest among European countries, so that you can invest your profits in business development.
Thus, obtaining a work permit in this jurisdiction has many advantages; it will enable your business to thrive.
How to get permission to work in this jurisdiction?
Your organization must register with the FCA to operate legally in this jurisdiction. Organizations engaged in exchanging Britain crypto assets for fiat or other crypto assets, maintenance of crypto ATMs, or profit from the storage of crypto assets are subject to registration.
To obtain a work permit, you need to pay a state fee (the amount depends on the authorized capital of the organization), open a bank account, and collect the necessary package of documents.
Next, you need to submit an appropriate application. Crypto regulations have 6 months to consider your application, but if you provide an incomplete package of papers, this period can be extended up to 12 months.
How to open a crypto company in the UK?
Your customers must provide identification documents, and the system must double-check all the data. You cannot discuss people who have previously been involved in fraud.
It would be best if you also chose a unique name. Please select several options and double-check them for uniqueness.
It would help if you opened a physical office. Key personnel such as directors and anti-money laundering specialists should work here. It is worth saying that special attention should be paid to the selection of personnel; all team members should not have a criminal record. Still, they should have experience in relevant positions and specialized education.
You also need to collect the necessary documents and check how your organization meets all the requirements; after that, you can apply for a cryptocurrency license in Britain.
Stages of opening a company with partial responsibility in the UK
- Select the name of the organization;
- Recruit staff and select people who will hold leadership positions (including director, secretary, shareholders, and others);
- Prepare memorandum and articles of association;
- Determination of the scope of activity and creation of accounting;
- Registration of the organization;
- Registration in the tax;
- Registration with the FCA.
Taxation of crypto companies in the UK
- Exchange of tokens;
- Mining;
- Providing goods and services in exchange for tokens.
- Corporate tax – 19%;
- Tax on digital services – 2%;
- VAT – 20%;
- National insurance – depends on the experience of employees.
Income tax
Calculating income tax is difficult. You need to calculate how much profit your company received and subtract the following expenses:- The amount you paid for the asset;
- Commission for including a transaction in the blockchain;
- Advertising;
- Professional expenses for the preparation of an agreement on the acquisition or alienation of tokens;
- Valuation or allocation costs to calculate profit or loss.
Digital Services Tax
An online marketing service for selling goods or services is a digital activity subject to taxation. An exchange whose purpose is to facilitate the sale of cryptocurrencies is taxed.VAT
The exchange of crypto assets is not subject to VAT, which makes trading as simple as possible. Mining is also not subject to these taxes. However, you must pay this tax to purchase goods and services using such assets.UK corporate reporting requirement
All crypto organizations are required to provide regular reports on their activities. Also, large organizations must undergo an annual audit. Government agencies scrutinize the actions of crypto firms to ensure that your organization is not being used for fraud or money laundering. All records must be kept for 6 years.
However, a number of organizations are not subject to audit. Usually, these include small firms with few employees and authorized capital. To learn more about corporate reporting, you can contact our specialists.
Types of business entities in the UK
- Limited Liability Company (LLC);
- Limited Liability Partnership (LLP).
Conclusion
FAQ
Yes, there are strict rules for regulating the crypto industry, mainly focused on combating money laundering and financial terrorism.
Enough rules have been created in this jurisdiction to tax individuals and legal entities engaged in cryptocurrency activities. The amount of taxes depends on many indicators, so you should contact our specialists to determine what amount of taxes your organization will pay.
Yes, but it warns that the use of such assets has a large number of risks.
It cannot be said that today in this country, there is a well-thought-out legal framework for regulating crypto assets, but the first steps in this direction have already been taken. They are aimed at taxing and protecting citizens from money laundering and financial terrorism.