Regulatory Framework of Cyprus's Financial Sector
Cyprus’s financial legislation is based on the full transposition of EU directives into national law. This means that licences issued by Cypriot regulators are recognised in all states — members of the European Economic Area — through notification procedures.
Key regulatory acts:
- Law 87(I)/2017 “On Investment Services and Activities” — transposition of Directive MiFID II (2014/65/EU). Regulates the activities of Cyprus Investment Firms (CIF) under CySEC supervision.
- Directive EMD2 (2009/110/EC) — regulates electronic money issuer activities (EMI). The minimum capital under EMD2 is EUR 350,000.
- Directive PSD2 (2015/2366/EU) — regulates payment institutions (PI). Transposed in Cyprus by the Payment Services Law (2018–2025). Supervision — Central Bank of Cyprus.
- Directive CRD IV (2013/36/EU) and Regulation CRR (EU) 575/2013 — banking licensing, minimum capital EUR 5,000,000.
- MiCA (Regulation (EU) 2023/1114) — from 2024 onwards applies to crypto-asset service providers (CASP), supervised by CySEC.
Cyprus’s status as an EU member ensures that licensed companies have passporting rights: a licence issued by CySEC or CBC allows provision of services throughout the EEA without obtaining additional permissions — a notification procedure in accordance with PSD2 Art. 28 and MiFID II Art. 34–35 is sufficient.
Licence Details: What CIF, EMI and PI Licences in Cyprus Permit
The Cyprus Investment Firm licence is an authorisation issued by CySEC pursuant to Law 87(I)/2017 (transposition of MiFID II). It allows the firm to provide investment and ancillary services in accordance with Annex I of MiFID II.
For companies specialising in issuing electronic money or providing payment services, the licensing authority is the Central Bank of Cyprus (CBC).
CySEC also establishes a mandatory contribution to the Investor Compensation Fund: EUR 2,000 for each investment service and EUR 35,000 for custody services. Annual CySEC regulatory fee — from EUR 5,000 to EUR 10,000 plus a variable component.
CBC considers EMI applications within 12–16 months. Organisational structure requirements are similar to those of CySEC: a board of directors with two executive and two non-executive directors, the majority of whom must be Cyprus residents, the presence of a compliance officer and a certified auditor.
Requirements for Obtaining a CIF Licence (CySEC)
To successfully pass the licensing procedure, the applicant must meet the following requirements.
Stages of Obtaining a Financial Licence in Cyprus
The licensing procedure in Cyprus consists of several sequential stages.
Preliminary assessment and strategy (2–4 weeks).
COREDO analyses the client’s business model, determines the optimal licence type, develops the company structure and prepares the project roadmap. At this stage, a decision is made on the CIF category (Simple/STP/Market Maker) or the choice of EMI/PI licence.
Company registration in Cyprus (2–4 weeks).
Incorporation of a Cypriot company in the Department of the Registrar of Companies, opening of a corporate bank account, depositing of share capital. COREDO supervises the client from selection of the company name to receipt of incorporation documents.
Development of document package (4–8 weeks).
Preparation of a complete package: business plan, AML/CFT policies, programme of operations, internal procedures and regulations, IT documentation, personal questionnaires of directors.
Submission of application to CySEC/CBC.
The regulator confirms receipt of the complete document package. From this moment, the official six-month review period begins under Law 87(I)/2017. In practice, the procedure takes 8–12 months.
Interaction with the regulator (3–6 months).
CySEC or CBC sends clarification requests, conducts interviews with directors, verifies documentation. COREDO coordinates responses and ensures prompt reaction to requests.
Receipt of licence and activation (2–4 weeks).
After acceptance of a positive decision, the company meets the conditions of licence issuance: confirmation of hiring of local employees, completion of technical integration, payment of final fees. The licence is entered in the CySEC register.
Payment Terms
The payment schedule is set in the service agreement.
Advantages of Financial Licensing in Cyprus
Cyprus maintains the status of one of the most attractive jurisdictions in the EU for financial business for several reasons.
Tax regime.
Cyprus corporate tax is 12.5% (an increase to 15% is being discussed under the OECD reform). Dividends paid to non-residents and capital gains from the sale of securities are tax-exempt. Income from IP assets is taxed at an effective rate of 2.5%. Cyprus has over 65 double tax treaties.
Regulatory efficiency.
CySEC is one of the most pragmatic regulators in the EU: compared to BaFin (Germany) or ACPR (France), the licensing procedure in Cyprus is considerably cheaper and faster. The total duration of the procedure is 8–12 months for CIF, 12–16 months for EMI (from the full application).
Passporting throughout the EEA.
The single European passport allows a Cypriot licensed company to provide services in 30 EEA states without additional licences.
Developed infrastructure.
Cyprus has a mature market of legal, accounting and technology services oriented towards the financial sector, which significantly reduces operating costs.
Confidentiality.
Cyprus legislation provides a high level of protection for corporate information while complying with EU requirements.
Our Experts
Financial licensing projects in Cyprus at COREDO are managed by specialists with many years of practical experience. The COREDO team has completed projects in more than twenty jurisdictions.
Frequently Asked Questions
COREDO supervises clients at all stages of obtaining a financial licence in Cyprus: from initial assessment of the business model and selection of licence type to interaction with CySEC and CBC, development of AML/CFT documentation and licence activation.
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