COREDO > Financial Licensing in Germany

Financial Licensing in Germany

Germany is the largest economy in the EU and one of the world’s leading financial centres, with a highly developed regulatory system and strong supervisory institutions. A financial licence in Germany provides access to the EU and EEA markets with the ability to passport services across all European Economic Area countries.

Since 2016, COREDO has been assisting clients with obtaining financial licences in Germany, providing full support — from selecting the appropriate licence to completing the BaFin authorisation process.

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Cost of the service
from 100 000 EUR

Regulatory Framework in Germany

Financial supervision in Germany is carried out by the Federal Financial Supervisory Authority — BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht), based in Bonn and Frankfurt am Main. BaFin was established in 2002 through the merger of three previously independent supervisory bodies — banking, insurance, and securities — and currently exercises integrated supervision over all financial market sectors.

BaFin works in close cooperation with the Deutsche Bundesbank (German Federal Bank), which participates in banking supervision, and with the European Central Bank (ECB) within the framework of the Single Supervisory Mechanism (SSM). For the largest and most systemically important credit institutions, supervision is carried out directly by the ECB.

Key legislative acts defining the licensing regime in Germany:

KWG (Kreditwesengesetz — Banking Act) — the principal law governing banking business and financial services, defining the types of activities requiring authorisation and the conditions for granting it.
ZAG (Zahlungsdiensteaufsichtsgesetz — Payment Services Supervision Act) — implements the PSD2 Directive (2015/2366/EU) and the EMD2 Directive (2009/110/EC) into German law, regulating the activities of payment institutions and electronic money institutions.
WpIG (Wertpapierinstitutsgesetz — Investment Firms Act) — implements the IFD Directive (2019/2034/EU) and establishes requirements for investment firms.
MiCAR (EU Regulation 2023/1114) — regulates the activities of crypto-asset service providers (CASPs) within the EU, including Germany, with a transitional period until 1 July 2026.
GwG (Geldwäschegesetz — Anti-Money Laundering Act) — implements European AML directives and establishes AML/CFT obligations for all financial institutions.

Germany consistently implements all key EU directives in the field of financial services, ensuring full harmonisation of the German licensing regime with pan-European standards.

Types of Financial Licences in Germany

Germany has several main categories of financial licences, each governed by a separate legislative act and imposing specific requirements regarding capital, organisational structure, and business model.

Licence Type	Law	Min. Initial Capital	Key Activities
Electronic Money Institution (EMI)	ZAG (EMD2)	EUR 350,000	Issuance of electronic money, related payment services
Payment Institution (PI) — money transfers	ZAG (PSD2)	EUR 20,000	Money transfers
Payment Institution (PI) — payment initiation	ZAG (PSD2)	EUR 50,000	Payment initiation services (PIS)
Payment Institution (PI) — full range	ZAG (PSD2)	EUR 125,000	All types of payment services
Credit Institution (bank)	KWG (CRD IV)	EUR 5,000,000	Acceptance of deposits, lending, banking operations
Investment Firm (class 2) — without client funds	WpIG (IFD)	EUR 75,000	Investment advice, brokerage, portfolio management
Investment Firm (class 2) — with client funds	WpIG (IFD)	EUR 150,000	Investment services with custody of client funds
Investment Firm — proprietary operations	WpIG (IFD)	EUR 750,000	Proprietary trading, underwriting, OTF
Crypto-Asset Service Provider (CASP)	MiCAR	EUR 50,000–150,000	Crypto exchanges, custodial services, crypto-asset trading
Insurance company	VAG	Varies by type	Insurance, reinsurance

The choice of a specific licence type depends on the company’s business model, planned activities, and volume of operations. A company holding an EMI licence is entitled not only to issue electronic money but also to provide all types of payment services under PSD2, making this licence type the most versatile for fintech companies.

Advantages of Obtaining a Financial Licence in Germany

Germany holds a special position among European financial licensing jurisdictions. Despite high regulatory requirements, obtaining a BaFin licence provides a number of significant advantages.

Access to the largest EU market.

Germany is the biggest economy in the European Union with a population of over 84 million. A licensed financial company gains immediate access to a solvent audience with a high level of digitalisation of financial services.

EEA passporting.

On the basis of a single BaFin licence, a company is entitled to provide financial services across all 30 EEA states through a notification procedure. For EMI and PI, this right is enshrined in Article 28 of the PSD2 Directive and the EMD2 Directive; for investment firms — in Articles 34–35 of MiFID II; for credit institutions — in Articles 17–28 of the CRD IV Directive.

Reputation and trust.

A BaFin licence is recognised as one of the most authoritative in Europe. German financial supervision is known for its high standards, which creates an additional level of trust among clients, partners, and investors. For B2B companies, holding a German licence is often a decisive competitive advantage.

Developed financial infrastructure.

Frankfurt am Main is the financial capital of continental Europe: it is home to the ECB, Deutsche Börse (Frankfurt Stock Exchange), and the headquarters of major banks and insurance companies. This provides access to qualified professionals, correspondent banks, and technology partners.

Legal certainty.

The German legal system is characterised by a high degree of detail and predictability. BaFin publishes detailed guidance documents (Merkblätter) for each licence type, enabling applicants to understand the requirements and expectations of the regulator before submitting an application.

Fintech innovation hub.

Despite its conservative reputation, Germany is actively developing its fintech ecosystem. Berlin and Frankfurt are among the leading fintech hubs in Europe. BaFin demonstrates openness to innovative business models, including open banking, digital assets, and embedded finance.

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Requirements for Applicants

BaFin imposes comprehensive requirements on companies applying for a financial licence. The specific scope of requirements depends on the licence type; however, basic criteria apply to all categories.

Legal entity in Germany.

The applicant must be registered as a legal entity in Germany (the most common forms are GmbH or AG) and have its head office (Hauptverwaltung) in the country.

Initial capital.

The minimum initial capital depends on the licence type (see table above). The capital must be fully paid up at the time of application and maintained at the required level on an ongoing basis.

Management (fit & proper).

In accordance with KWG requirements and BaFin’s Guidelines on the Assessment of Management, each member of the management board (Geschäftsleiter) must be reliable (zuverlässig) and possess professional qualifications (fachliche Eignung). This includes having theoretical knowledge and practical experience in the relevant types of financial activities. At least two managing directors must exercise management on a permanent basis.

Qualifying shareholders.

BaFin assesses the reliability of significant shareholders (holding 10% or more). The ownership structure must be transparent and must not create risks for proper governance of the company.

Governance system.

The company must have a proper business organisation (ordnungsgemäße Geschäftsorganisation), including effective risk management, an internal control system, appropriate segregation of duties, a Business Continuity Plan, and IT security.

AML/CFT compliance.

All financial institutions must comply with the requirements of the GwG (the German AML Act), including customer identification (KYC), transaction monitoring, appointment of an AML officer (Geldwäschebeauftragter), and development of internal policies and procedures.

Professional indemnity insurance (for PIS/AIS).

Payment institutions providing payment initiation services (PIS) or account information services (AIS) must hold professional indemnity insurance in accordance with ZAG requirements.

COREDO Service Costs

COREDO provides a full range of services to support the process of obtaining a financial licence in Germany. The cost depends on the licence type, complexity of the business model, and the volume of documentation required.

Service	Cost
Financial licence in Germany (EMI/PSP)	from EUR 100,000 + VAT

The cost includes legal analysis of the business model, preparation of the complete regulatory documentation package, and support of interaction with BaFin at all stages of the application review. The final cost is determined individually based on the results of a preliminary consultation and depends on the specific licence type, the volume of planned operations, and the specifics of the business model.

For banking, investment, and insurance licences, the cost is calculated individually — contact us for a personalised estimate.

Payment Terms

COREDO’s services are paid in stages, tied to key project milestones. This approach enables the client to control costs and ensures transparency throughout the process. The first payment is made upon signing the contract and covers the preliminary analysis and project structure preparation stage. Subsequent payments are linked to documentation preparation milestones and the submission of the application to BaFin.

All payments are made in EUR. VAT (Mehrwertsteuer) is charged at the standard rate and shown separately. The exact payment schedule and stage breakdown are agreed individually and documented in the service agreement.

Required Documents

Preparing the complete documentation package is one of the most labour-intensive stages of the licensing process in Germany. BaFin imposes detailed requirements on the content and format of each document. The list of documents varies depending on the licence type; however, the core set includes the following items:

Incorporation and corporate documents: articles of association (Gesellschaftsvertrag / Satzung), extract from the commercial register (Handelsregister), information on the ownership structure and ultimate beneficial owners.

Business plan and financial projections: detailed description of the business model, a 3-year development strategy, revenue and expense forecast, budget plan (Geschäftsplan mit Budgetplanung). BaFin assesses the economic viability of the business model and the adequacy of financial resources.

Management documents: CVs with evidence of qualifications, certificate of good conduct (polizeiliches Führungszeugnis), declaration of reliability, confirmation of experience in the financial sector.

Governance and internal control documentation: organisational structure, decision-making procedures, description of the risk management system, Business Continuity Plan (BCP), IT security concept.

AML/KYC documentation: AML/CFT policy (Geldwäscheprävention), customer identification procedures (KYC/CDD), transaction monitoring programme, appointment of an AML officer.

IT documentation: description of IT infrastructure, information security measures, description of compliance with MaRisk and BAIT (Bankaufsichtliche Anforderungen an die IT) requirements. For payment services — description of security measures in accordance with Articles 17 and 18 of ZAG.

Proof of capital: bank statements confirming the availability of the minimum initial capital in the company’s account.

COREDO’s legal team prepares all documents in accordance with BaFin’s current requirements, including formats established by the ZAG-Anzeigenverordnung (ZAGAnzV) and EBA Authorisation Guidelines (EBA/GL/2017/09).

Licensing Procedure

The procedure for licensing financial activities in Germany has a clear structure. BaFin is required to review an application for a payment institution or EMI licence within 3 months from the date of receipt of the complete documentation package. In practice, the overall project duration from the start of preparation to licence issuance ranges from 6 to 18 months depending on the licence type and complexity of the business model.

Preliminary analysis and structuring (1–2 months).

Legal assessment of the business model, determination of the appropriate licence type. Registration of a legal entity in Germany (GmbH or AG), if necessary — opening a bank account and depositing share capital. Organisation of a preliminary meeting with BaFin (Vorgespräch): prior to the official application submission, the applicant typically holds a meeting with BaFin’s designated staff to present the business model and discuss the licensing process.

01

Preparation of the regulatory package (2–4 months).

Development of the complete documentation package in accordance with KWG, ZAG, or WpIG requirements: business plan with financial projections, AML policies, IT concept, description of the risk management and internal control system. Selection and onboarding of management meeting fit & proper criteria.

02

Application submission and interaction with BaFin (3–12 months).

Submission of the written application to BaFin. From the moment the package is recognised as complete, the official three-month review period begins (for PI and EMI). For banking licences, there is no fixed deadline; the process typically takes 9–18 months. BaFin typically sends several rounds of clarification requests (Nachfragen), to which responses must be prepared promptly. COREDO’s team coordinates the interaction and prepares all responses.

03

Licence issuance and launch (1–2 months).

Receipt of BaFin’s official authorisation decision. Registration in the BaFin register (ZAG-Register). Notification to BaFin of the commencement of activities. If required — initiation of the passporting procedure to other EEA states.

04

Our Experts

COREDO has been operating since 2016 and has to date supported financial licensing projects across dozens of EU jurisdictions. We provide a comprehensive approach: from selecting the optimal licensing structure to obtaining BaFin authorisation and ongoing regulatory support.

Pavel Kos

Head of Legal at COREDO. Has been with the company since June 2017, leading the legal team since July 2020. Specialises in financial licensing across EU jurisdictions, including Germany, structuring of regulated companies, and managing regulatory interactions.

Basang Ungunov

Lawyer at COREDO. Has been with the company since June 2022. Specialises in preparing regulatory documentation, legal opinions, and supporting licensing processes in the financial services sector.

Frequently Asked Questions

Which regulator issues financial licences in Germany?

The principal regulator is BaFin (Bundesanstalt für Finanzdienstleistungsaufsicht) — the Federal Financial Supervisory Authority. BaFin issues licences to payment institutions, electronic money institutions, investment firms, credit institutions, and crypto-asset service providers. Banking supervision is carried out by BaFin jointly with the Deutsche Bundesbank and the European Central Bank (ECB) within the framework of the Single Supervisory Mechanism (SSM).

How long does it take to obtain a financial licence in Germany?

The overall project duration depends on the licence type. For payment institutions (PI) and electronic money institutions (EMI) — from 6 to 12 months. BaFin’s official review period is 3 months from the date of receipt of the complete documentation package; however, in practice BaFin sends clarification requests, which extends the overall duration. For banking licences, the process can take from 12 to 18 months or longer.

Is a physical office in Germany required?

Yes. BaFin requires the presence of a Hauptverwaltung (head office) on German territory. Additionally, managing directors must exercise their functions directly from Germany. A company cannot obtain a BaFin licence with only a nominal address — the office must be genuinely operational.

Can a company operate in other EU countries with a German licence?

Yes. All EMIs, PIs, and investment firms licensed by BaFin enjoy passporting rights across 30 EEA states. The passporting procedure is carried out through notification to BaFin, which forwards the information to the regulator of the host country. For banking licences, the passporting right is enshrined in Articles 17–28 of the CRD IV Directive.

What is the minimum capital required for an EMI licence?

The minimum initial capital for an Electronic Money Institution (EMI) is EUR 350,000 in accordance with Directive EMD2 (2009/110/EC, Art. 4), implemented into German law through ZAG. In addition to the initial capital, the EMI must continuously maintain own funds at a level no lower than the established requirements, calculated based on the volume of electronic money issued.

Is a government fee charged for a BaFin licence?

Yes. BaFin charges a fee for reviewing the application (Gebühren). The fee amount depends on the licence type and the complexity of the review process. Additionally, licensed institutions are required to pay annual contributions to fund BaFin’s activities (Umlagefinanzierung). Specific amounts are determined by the BaFin-Gebührenverordnung.

How does a German licence differ from a licence in the Baltic states?

A German BaFin licence imposes higher regulatory requirements compared to Baltic jurisdictions (Lithuania, Estonia, Latvia): a more detailed review process, stricter IT infrastructure requirements, and the mandatory presence of a real office with qualified personnel. At the same time, a German licence provides a significantly higher level of reputational capital and is an advantage for companies targeting corporate clients and institutional investors.

What happened to crypto-asset licensing in Germany after MiCA?

Prior to the entry into force of the MiCAR Regulation (2023/1114), crypto custody and other crypto-asset operations were licensed under KWG (Kryptoverwahrgeschäft). With the application of MiCAR, these activities moved under MiCAR regulation, and BaFin issues authorisation as a crypto-asset service provider (CASP). Existing KWG licensees must transition to the MiCAR regime by 1 July 2026.

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