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Why should Cyprus be at the top of your Forex license list?
Nevertheless,
since then, along with Ireland, it has become one of the models in Europe in
how to face the crisis’ aftermath.
It made
a complete overhaul in its economy that turned it into one of the most
flourishing countries in the European Union.
And it
has established itself as the best Forex jurisdiction in the European Union.
The reasons are simple:
- A solid and fair regulatory environment.
- Good cost-value relationship.
- A terrific tax system with plenty of advantages.
- Passporting rights to the rest of the EU.
- Access to a robust banking system.
- Access to a varied network of double taxation
treaties.
- A straightforward yet stringent and serious process.
This
otherworldly island has a privileged location, which has made it a historical
Mediterranean crossroad and a popular cruise destination.
Ten thousand years of
history, unearthly beaches, 340 days of sunshine per year, and a relaxed local
population are just some of the reasons why so many people love Cyprus, and it
is such a popular relocation destination.
We love Cyprus for all those
reasons, but we have it in our sight for another reason, and we are sure you’ll
have ittoo.
Cyprus is, alongside Malta,
the top EU destination for forex licenses.
The reasons are simple.
Companies all over the world
are facing stricter regulations from regulatory bodies, licensing costs have
skyrocketed, and authorities may act as omnipotent beings that place enormous pressure
on those who want a license. Most of the countries that usually offer fantastic
conditions for investors have been blacklisted, which means these licenses are
not of much use.
This is especially true in
the EU, where many countries are vehemently anti-financial services,
anti-market, and are applying high-tax policies and increasing costs and
requirements for operating a financial business or obtaining a brokerage
license. Brexit has only added another layer of insecurity among investors.
But Cyprus has decided to
swim in another direction.
Its corporate tax rate is
12.5 %, which is one of the lowest in the Union alongside Ireland and Malta.
Moreover, in Cyprus, dividends, securities, capital gains (in some instances)
are wholly tax-free, and there are no withholding taxes.
Moreover, you can obtain the
non-dom regime by only spending 60 days in Cyprus, which will lead you to a 50
% income tax exemption for ten years if your income surpasses €100k and will
receive a defense tax exemption for 17 years. The defense tax includes the
following:
- 17
% tax on personal dividends
- 30
% tax on passive interest
- 2.25
% tax on rental income
Add to that the fact that
Cyprus has simplified the process to obtain a financial license, including the
forex brokerage license, and you’ll understand why the island is a top
financial licensing jurisdiction. You’ll have many of the benefits of an
offshore jurisdiction but will full EU passporting rights in a whitelisted
jurisdiction.
The Cypriot forex license
has a fantastic reputation butwon’t come with the costs and complex procedure
as other big-league licenses, such as the US, Switzerland, or Japan.
If we haven’t convinced you,
let’s walk you through some of the benefits you may obtain for choosing Cyprus
for your forex business.
Why
Cyprus? Five reasons to obtain a forex license in Cyprus
Passporting rights
A forex license in Cyprus
will give you complete access to the EU market. That means a CySEC forex
license allows you to carry your business across the EU without additional
licenses or without establishing any other branches or offices. That will
enable you to save time and money while providing you with simpler tax planning
as all your main operations will be handled from Cyprus, and you don’t have to
establish your business physically in any other EU country.
Multi-goal license
One of the main advantages
of the Cypriot license is that there is one single license for plenty of
different Forex investment purposes. Compare that to Malta, for example, which
has many different licenses, all of them with four levels depending on the
services and complexity you will provide. All this costs money and time. That’s
not the case with Cyprus, which is like The Lord of The Rings: one license to
rule them all.
Thus, even if you’re mainly
interested in Forex brokerage, the license will allow you to handle other
investment instruments across the EU without additional licenses or costs.
There are other licenses for specific services, but one license covers most of
the Forexservices.
Tax planning
Cyprus offers a 12.5 %
corporate tax rate and no dividend and capital gains taxes, nor withholding
taxes, or taxes on profits from securities. No taxes on your foreign-sourced
income.
And on the personal side of
the equation, you can get a 50 % personal income tax credit for ten years if
you are eligible for the non-dom status, which will also grant you a tax
exemption on personal dividend, passive interest, and rental income.
Pro-business government
After the 2013 financial
crisis, Cyprus took a giant step forward as a pro-business jurisdiction. They
created their famous RBI and CBI programs, created and then improved their
non-dom regime, established plenty of tax incentives, strengthened their
banking and financial sectors. All this led Cyprus to be one of the
fastest-growing economies in the EU and is receiving an increasing amount of
FDI every year.
Straightforward process
Obtaining a financial
license is usually a complex process and, in some jurisdictions, it’s even more
complicated for Forex brokers. That’s not the case with Cyprus, as it has a
perfect balance of legal compliance and simplicity to be attractive for all
kinds of brokers. Using the normal track, you’llreceive an answer in around six
months, and using the fast-track, you’ll receive your answer in only two
months.
Forex
license in Cyprus
Competition in the forex
industry is at an all-timehigh, but more investors and entrepreneurs are
looking for forex brokerage licenses.
What is the rationale behind
this? Well, the forex industry is home to a trading volume of more than a
trillion dollars per day and has a solid potential to provide investors
fantastic returns. That’s why many financial investors continue to put their
trust in the Forex market.
But, as you know, starting a
Forex brokerage service isn’t quite easy. As you set up your brokerage, you’ll
face significant decisions that you need to make carefully and with an expert´s
helping hand.
And, in Mundo, we can be a helpinghand
for you.
First, you need to consider
your revenue potential.
That means determining the scope of the expected yearly revenue for your
business. They are usually divided in the following way:
Low: under
$100k
Average: $100-500k
High: Over
$1million
Also, your target market. What are the regions and markets you
wish to put on your bullseye? It’llmainly depend on your client network (if you
have one), what’s your budget, and what are your business goals. You can divide
markets into three main types:
High net worth: For traders on the high revenue potential bracket with well-established
networks. Includes markets such as the UK and Australia.
Emerging markets:This includes markets such as Mexico and Canada, which are somewhat new
to Forex, with rookie investors and cheaper investor acquisition costs.
Risk-takers: These are markets with easily attractable customers that can change from
one brokerage to another with a solid offer.
It is also vital to determine the type of business you intend to
run. Do you want a regular brokerage, a fund manager, or a mix of both? For
example, the financial services license in Cyprus covers all major brokerage
and investment services, but if you wish to be a fund manager, that’s a
different license.
Lastly, you must consider what financial risksyou’re willing to
take. Should you opt for complete STP or use a market maker model?
After considering all this, you can compare regulations and costs in
different jurisdictions considering the initial capital requirement, the
incorporation time, physical requirements, operational expenses, and the
jurisdiction´s reputation.
This will divide jurisdictions intofour main tiers:
- High capital requirement and operating
costs, intensive reporting and set up requirements: USA, Japan, Switzerland.
- Moderate capital requirement and
operating costs, solid yet moderate reporting and set up requirements: Cyprus,
Malta, Australia.
- Low capital requirement and operating
costs, low regulations and reporting: BVI, Belize, Seychelles.
- No capital requirements, no regulation,
no reporting requirements: Saint Vincent, Marshall Islands.
Brokers with less capital or with different preferences can choose to
incorporate their company in an offshore location, which usually has lower
initial capital requirements.
Clearly, incorporating your brokerage business in an offshore location
definitely has its benefits in terms of lower expenses and more lenient
regulatory demands. Nevertheless, you should also expect to face problems with
finding a good bank or a PSP that will accept you. The lack of business
credence can also be reflected in difficulty when attracting certain classes of
traders, as well as potential business partnerships.
After seeing this, you may think that the most credible and reputable
licenses are also the most expensive. But that’s not the case. Cyprus is an
amazingly reliable jurisdiction, with top onshore tax benefits, and a
comprehensive yet flexible regulatory environment.
And, among the second tier of jurisdictions, Cyprus has many competitive
edges over the rest. First, it’s on the EU, meaning it has passporting rights,
as we’ve already explained. That means it has a competitive edge over the UK–that
has just left the EU– and Australia. Also, the process is cheaper and
fasterthan in Malta, which is the other comparable jurisdiction.
That has made Cyprus the mostpopular and recognized jurisdiction for
obtaining a Forex broker license in the European Union.
In recent years Cyprus has become the island of choice for Forex
businesses due to its EU membership, which grants its companies the ability to
offer their services to all member states in the European Economic Zone.
The CySEC (Cyprus Securities and Exchange Commission) is one of the most
acclaimed regulatory bodies in the whole world for Forex regulation. Clearly,
the process isn’t as simple as in most offshore jurisdictions, but you won’t
have any issues with blacklists or with finding bank accounts for your
business.
Combine this with low corporate taxes, a booming financial sector, and a skillful workforce, and you get the perfect place to set your foot in the Forex world.
Costs and
procedures for a forex license in Cyprus
The process to obtain a
forex license in Cyprus is the same as with all financial services licenses.
If you want to know more about
our financial licensing services in Cyprus, check this article.
In this table, you have
everything you need to know on costs and requirements for a Forex license in
Cyprus (costs are approximate and are subject to change):
Costs and requirements for financial
licenses |
Timeframe
|
Type |
Duration |
Additional
Cost |
|
“Fast-track” - Expedited procedure |
3-4 months |
€25,000 |
||
Normal route |
6-10 months |
None |
||
Office
Rent €/m² |
Location |
Min |
Max |
|
Required - Average Rental cost for an
office is €1.789 but varies depending on the city |
||||
Limassol |
12 |
25 |
||
Nicosia |
10 |
20 |
||
Pafos&Larnaca |
8 |
14 |
||
Employee Cost (Key Positions)
€/monthly |
Position |
Min |
Max |
|
5 (+2) employees at a minimum -
depending on services provided |
||||
CEO |
3,500 |
6,000 |
||
COO / General Manager |
2,500 |
5,000 |
||
Non-Executive Director (x2) |
600 |
1,500 |
||
Head of Back Office |
2,500 |
4,000 |
||
Head of Brokerage |
3,000 |
5,000 |
||
AMLCO / Compliance Officer |
2,500 |
4,500 |
||
Capital Requirements |
Investment Services |
Capital |
||
1. Reception and transmission of orders |
€125,000 |
|||
2. Execution of orders on behalf of
clients |
||||
4. Portfolio management |
||||
5. Investment advice |
||||
3. Dealing on own account |
€730,000 |
|||
6. Underwriting of financial instruments
and/or placing of financial instruments on a firm commitment basis |
||||
7. Placing of financial instruments
without a firm commitment basis |
||||
8. Operation of a Multilateral Trading
Facility |
||||
9. Operation of an Organized Trading
Facility |
||||
NOT holding client funds (only
for 1,2,4,5, depending on circumstances) |
€50,000 |
|||
Annual Regulatory Fee |
Annual Levy – Company Registrar
|
€350 |
||
Accumulated increment according to the
product of the turnover of the CIF as follows: |
||||
a)
0% for a turnover up to €500.000 |
||||
b)
0,5% for a turnover between €500.001 and
€1.000.000 |
||||
c)
0,125% for a turnover between €1.000.001
and €5.000.000 |
||||
d)
0,075% for a turnover between €5.000.001
and €10.000.000 |
||||
e) 0,065% for a turnover exceeding
€10.000.001 |
||||
ICF
Contribution |
– €2.000 per investment service, – €35.000 for the safekeeping ancillary
service |
Forex brokerage businesses
in Cyprus must be licensed by the CySEC (Cyprus Securities and Exchange
Commission). This license will allow you to provide all brokerage services and
other financial assistance services all across the EU withoutrepresentatives,
branches, or any additional license. A swift notification process will allow
you to do business in other EU jurisdictions from your Cyprus office. This
includes brokerage services, portfolio managing, market-making, and investment
advice.
Your company must have at
least two executive directors and two non-executive directors. The majority
must be based in Cyprus. Also, at least three (head of back office, compliance
officer, and chief of dealing room) must be locals.
The application procedure is
relatively simple. You must submit an application form to receive the
authorization. The application must also include the following documents:
- Incorporation Documents of
the Company:
- Certificate of registration/incorporation from the
Registrar of Companies.
- Certificate
of shareholders.
- Certificate of the registered office from the
Registrar of Companies.
- Certificate
of good standing.
- Memorandum and Articles of Association.
- Certificate of the applicant’s directors and secretary.
- Capital Evidence – All relevant agreements, contracts,
certificates proving the existence of capital raised.
- Shareholders Documents – In the case of a Legal
Entity, the same documents as point 1 apply, in the case of a Natural Person,
then a certified copy of ID or Passport, a Proof of Residence and a CV are
required. Personal questionnaires dully completed from each Natural Person
and/or UBO (persons that exceed 10% shareholding in the company).
- For each Senior Management / Director:
- Certified copy of ID or Passport.
- Non-bankruptcy
certificate.
- Clean
criminal record.
- Personal
Questionnaire.
- Organizational structure chart of the company.
- Business
Plan.
- Company
Manuals.
- Internal
Operations Manual.
- AML
Manual.
- Certifications of the representative for external
auditors and legal advisers of the company.
- For existing/already established Companies, annual
financial account statements for the last three years.
Who are
we, and what can we do for you?
Along with NTL, in Mundo, we
have more than 25 years aiding investors across the world to protect their assets,
expand their operations, and do business freely.
Today, one of the most solid
and attractive financial businesses is Forex brokerage. But we know that
obtaining a reputable license is costly, tiresome, and complex. Without an
expert to help you, it seems an almost impossible task.
But we can help you. We have
a trustworthy and experienced team of experts in Cyprus that can find a
tailor-made solution for you that can guide you along all steps of the process,
from creating a corporate entity, to help you operate your business after
licensing.
This process takes months,
long meetings, and piles of documents to prepare, without actually knowing if
you’ll receive the license. But our experts can help you make this process
easier for you with full regulatory compliance.
The result? A Forex
brokerage license in the most reputable jurisdiction of the European Union.
Cyprus is the best we can
offer if you want a balance between reputation, regulatory compliance, tax
benefits, costs, and requirements.
If you decide to work with
Mundo, our experts will help you with:
- Incorporating
your corporate structure in Cyprus and registering it with all significant
authorities.
- Preparing
and reviewing the application form and documents to improve your chances of
receiving the license.
- Obtaining
a license for additional services such as fund management license.
- Assistance
with branch and office set up across the EU.
- Receiving
tax-optimized, tailor-made corporate and financial solutions.
In Mundo, we believe Cyprus
is the most complete jurisdiction for your Forex business and the best EU
jurisdiction. It will be your entrance to the rest of the European market and
will offer you terrific tax benefits, won’t give you any headaches with
regulatory issues, and will give your clients the certainty that you are a
legit broker.
Want a Forex license in the
best jurisdiction in the European Union? Inquire now about our Forex licensing services in Cyprus.
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