Cyprus was one of the most affected countries in the EU by the debt crisis that struck the whole continent.

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 it too.

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 but won’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 Forex services.

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’ll receive 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-time high, 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.

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’ll mainly 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 risks you’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 into four 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 in 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 faster than in Malta, which is the other comparable jurisdiction.

That has made Cyprus the most popular 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.

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):

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 without representatives, 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.

Cyprus is the best jurisdiction if you want a balance between reputation, regulatory compliance, tax benefits, costs, and requirements. This 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.

Disclaimer: The information contained in this article is for informational purposes only and does not constitute financial advice or recommendations. Investing in financial products or cryptocurrencies involves risks, and you should be aware of the potential risks involved before investing. The content on this website is not intended to be a solicitation or offer to buy or sell any financial products or services. The information provided does not take into account your specific investment objectives, financial situation, or needs, and should not be relied upon as a substitute for professional financial advice. You should seek independent advice from a financial advisor or other professionals before making any investment decisions. Please be aware that the legal status of cryptocurrencies and other financial products may vary in different jurisdictions and may be subject to regulation. It is your responsibility to ensure compliance with any relevant laws and regulations governing the sale and marketing of financial products and services in your jurisdiction.