On the 12th September 2018, The Cyprus Securities and Exchange Commission ("Cysec") announced its decision to recommence the fast track process for applicants wishing to obtain a licence for Cyprus Investment Firm ("CIF") in accordance with Investment Services and Activities and Regulated Markets Law of 2017 (Law 87 (I)/2017).
In accordance with the applicable Announcement issued by Cysec on the 2nd November 2015, the indicative time frame for Cysec to respond to all fast track CIF applications is 8 weeks.
CIF – General Information
CIFs offering 'investment' and ancillary services in or through the Republic of Cyprus, will require a licence in accordance with the relevant Laws and European Directives.
The investment services that are allowed under the relevant Laws are as follows:
- Investment services
- Reception and transmission of orders on behalf of clients
- Execution of orders on behalf of clients
- Dealing on own account
- Portfolio Management
- Investment Advice
- Underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis
- Placing of financial instruments without a firm commitment basis
- Operation of Multilateral Trading Facility
The ancillary (non-core) services are as follows:
- Safekeeping and administration of financial instruments for the account of clients, including custodianship and related services such as cash/collateral management
- Granting of credits or loans to and investor to allow him to carry out a transaction in one or more financial instruments, where the firm granting the credit or loan is involved in the transaction
- Advice to undertakings on capital structure, industrial strategy and related matters and advice and services relating to mergers and the purchase of undertakings
- Foreign exchange services where these are connected with the provision of investment services
- Investment research and financial analysis or other forms of general recommendation relating to transactions in financial instruments
- Services related to underwriting
In accordance with your anticipated business structure the most suitable licence to obtain is a de facto market maker licence (Dealing on Own Account) that of which requires an initial capital of at least seven hundred and thirty thousand euro (€730.000), and should include the following:
- Reception and transmission of orders;
- Execution of Orders on Behalf of Clients;
- Dealing on Own Account;
- Portfolio Management;
- Investment Advice.
- Safeguarding and administration of financial instruments, including custodianship and related services;
- Foreign Exchange services where these are connected to the provision of investment services;
- Investment research and financial analysis or other forms.
Benefits of Operating a CIF in Cyprus
- European reputable licence.
- Corporation tax on net profit is 12,5%. However, gains from the sale of titles, and, in most cases, dividends received are exempt from tax.
- Profits from disposal of securities are tax free.
- There is no withholding tax on dividend, interest and royalties paid to non-residents.
- CIF's can offer investment services, establish representative offices or establish fully operational branches within the EU.
- Experienced and high quality professionals and specialists.
With Brexit looming near and the never ending struggles associated with both offshore regulated and unregulated firms, brokerages are now turning to Cyprus to transfer their operations. Cysec's relaunch of the fast track process will now assist with an express solution for those who are looking for a swift transitional alternative solution for their businesses.
Originally published 13 September 2018
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.