Cyprus Investment Company (CIF)
If you plan to offer any of the following services, and wish to solicit clients residing in the European Union: brokerage services, Forex trading, investment advice, portfolio management, then you should consider establishing a Cyprus Investment Firm (CIF).
Cyprus is the ideal jurisdiction for providing Financial Services to customers residing in EU countries. The reason for this is twofold:
A “CIF” offers a “Single Passport” to providing Investment Services across the EU; by establishing a “CIF” you are able to solicit clients throughout Europe.
A “CIF” offers favorable tax treatment due to the fact that Cyprus has one of the lowest corporate taxation regimes in the EU and has particularly favorable tax provisions pertaining to financial services.
The important aspect about the CIF is the passporting. Passporting – the license granted by CySEC to operate as a CIF, provides the opportunity to the company to offer directly cross-border investment services or establish a branch in another EU or EEA jurisdiction without the need to obtain any additional licenses.
If you are in search for an appropriate and affordable corporate vehicle for entering European markets, or if you simply seek to optimize a group holding structure and reduce your overall tax burden, then the Republic of Cyprus should be your jurisdiction of choice, for Cyprus possesses the following strategic advantages.
The setting up of a Forex company is more complex than the setting up of a usual company as it is then classed as a Cypriot Investment Firm and must comply with the laws regulating such activities as well as the Cyprus Company Law.
Strategic advantages
Strategic location: The Island of Cyprus is situated in the cross-roads of three continents, Europe, Asia and Africa, and is therefore the ideal location to serve as a business hub.
Favorable taxation regime: Currently the Corporate Tax Rate is at 12.5%, one of the lowest rates in the European Union. Moreover, taxation is based on the principle of “self-assessment” and the legal system is based on “Common Law” principles, both of which contribute towards a favorable pro-business environment. The Republic of Cyprus has more than 60 Double Tax Agreements or treaties in place with other sovereign nations, thus effectively eliminating the risk of incurring double taxation.
Dividend income is exempt from corporate income tax.
Zero capital gains tax on the trading of securities.
Investors who are not tax residents of the Island are exempted from taxation on deemed dividends distributions.
Human talent: with more than 70 world-class financial institutions already present on the island, there is no shortage of high-caliber candidates for any corporate position. Cypriots are highly educated and many of them hold university and postgraduate degrees, moreover, they are bilingual, as the English language is well established and widely spoken.
Financial infrastructure: many renowned banks as well as liquidity and technology providers are active in Cyprus, providing direct access to the entire required infrastructure for establishing a brokerage enterprise.
The provision of investment services in Cyprus is governed by the Investment Services and Activities and Regulated Markets Law 144(I)/2007 (the “Law”), which implements the relevant EU Directive on the field of Investment Services. By virtue of the Law, a company seeking to operate as a Cyprus Investment Firm (CIF) must obtain authorization and license by the Cyprus Securities and Exchange Commission (CySec), which is designated as the supervising and regulatory authority for the surveillance and application of the law provisions.
If you plan to offer any of the following services, and wish to solicit clients residing in the European Union:
- Brokerage Services
- Forex Trading
- Investment Advice
- Portfolio Management
Then you should consider establishing a Cyprus Investment Firm (CIF), for Cyprus is the ideal jurisdiction for providing Financial Services to customers residing in EU countries. The reason for this is twofold:
- A CIF offers a “Single Passport” to providing Investment Services across the EU; by establishing a CIF you are able to solicit clients throughout Europe.
- A CIF offers favorable tax treatment due to the fact that Cyprus has one of the lowest corporate taxation regimes in the EU and has particularly favorable tax provisions pertaining to financial services.
Initial capital requirements
These requirements are classified according to the activities to be provided by the applicant CIF. A CIF that provides one or more of the following investment services and holds clients’ money and/or clients’ financial instruments, must have a minimum initial capital of €125,000:
A CIF that provides reception and transmission of orders and/ or investment advice without handling clients’ assets may have an initial capital of €50,000 or €40,000 plus professional indemnity insurance covering all Member States. A CIF that provides one or more of the following investment services and activities shall have a minimum initial capital of €730,000:
Organisation and structure requirements
Memorandum of Association
Management
Board of Directors
Shareholders
Head Office
- Establish adequate policies and procedures sufficient to ensure its compliance with its obligations pursuant to the Law and the relevant directives by maintaining an independence compliance unit.
- Maintain effective organizational and administrative procedures to protect clients from any conflicts of interest.
- Ensure continuity of services and activities.
- Take necessary actions to minimize operational risks by establishing a risk management unit to implement and adopt policies for risk management.
- Have proper Corporate governance in place with well-defined lines of responsibility.
- Have sound and administrative accounting procedures, internal control mechanisms.
- Maintain sufficient records of all services and transactions taken.
- Apply client identification procedures and maintain internal reporting policies in order to prevent any money laundering activities.
- Take adequate steps to safeguard clients’ ownership rights.
Conditions for grating of a license
Minimum issued share capital.
Setting up of a Cypriot company.
Organization adequacy and administrative structure of the company.
Efficiency of the internal control mechanism of the company (to be described in the procedures manual).
The structure and organization of the company should be designed to minimize the risk of conflict of interest between the client and the company or between the clients.
Proper staffing of the company (actual staff employed not required for the license to be issued) as per submitted organizational chart.
Suitability of the shareholders and directors of the company – minimum requirement is that at least one director who is resident in Cyprus to act as Executive director and who passes the fit and proper test.
The company has physical office space in Cyprus.
CYSEC must be satisfied that the company has such internal procedures so as to avoid any potential conflict of interest with its clients.
Further requirements
The Directors must also be approved by the CYSEC. Usually the CYSEC prefers to have on the Board of Directors as Non-Executive Directors people who used to work at Banks or that they have been in Bank Boards. These individuals usually hold the position as nominees, and if it be necessary we can assist you with the appointment of such a person.
The Board of Directors of a CIF shall consist of at least 2 executive Directors and 2 independent non-executive Directors.
The management of a CIF must be undertaken by at least two persons meeting the following requirements:
- Shall be of sufficiently good repute and sufficiently experienced as to ensure the sound and prudent management of the CIF.
- The CIF shall have a General Manager, who shall have detailed knowledge of all of its activities, render his services in full and exclusive employment at the CIF and be a resident of Cyprus.
The General Manager of the CIF may be one of the executive Directors.
The majority of the Directors of the CIF shall be residents of Cyprus.
Employees/key persons of the CIF shall render their services in full and exclusive employment at the CIF so that the following objectives are achieved:
- the CIF shall operate independently from all other businesses of the group, to which it, possibly, belongs;
- the employees/ key persons of the CIF shall be specified and accessible at all times;
- the CIF shall independently offer the necessary substance.
A CIF’s head office must be situated in Cyprus.
How TBA can help you
- Completed application form as provided by the CySEC.
- Information about the directors, managerial staff and shareholders with special participation (for example CVs, completed questionnaires as provided by CySEC etc.).
- Company legal documents (certificate of incorporation, Memorandum and Articles of Association etc.).
- Certificates of the registered office in Cyprus.
- Certificates by the Republic of Cyprus confirming the Directors & Secretary of the company.
- Group structure.
- Organizational structure.
- Clean criminal records and Certificates of Good Standing of the shareholders with special participation, the Board of Directors and employees of the company.
- Company procedures manual for all activities and operations.
- Together with the above document bundle, a three-year business plan, and the internal procedures manual and anti-money-laundering and know-your-client procedures must be filed with the application.
Services may also include:
- Acting as a Compliance Officer with regard to legislative matters, fees will be provided upon request, annually on a retainer basis.
- Audit & Tax filing requirements fees depend on the complexity of transactions and can be provided upon request.
- Internal Audit manual & schedule, fees will be provided upon request.
- Internal Audit Reviews, fees will be provided upon request.
- Provision of non-executive Directors, fees will be provided upon request.
- Provision of Executive Directors, fees will be provided upon request.
- Provision of the required by the relevant law physical office space for Forex Companies.
Our company licensing services
— What we do and do not do
Our company is EXCLUSIVELY engaged in assisting worldwide clients, either individuals or corporate entities, to get duly and properly licensed with local Regulators and Financial Authorities to get respective official licenses to legally carry out their cryptocurrency or financial related business activities.
TBA & Associates Tax Business Advisors does not provide or carry out any sort of Cryptocurrency or Financial services!
Disclaimer: While TBA & Associates strives to make the information on this website as timely and accurate as possible, the information itself is for reference purposes only. You should not substitute the information provided in this article for competent legal advice. Feel free to contact TBA Customer Services for advice on your specific cases.
