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Cyprus Investment Firm (CIF)
Services Allowed to be Offered by CIF (Cyprus Investment Firm)
Cyprus Investment is reputable, low tax, EU location for setting up an Investment Company and for using the CyprusInvestment Company to passport into the whole of the EU market. In effect, harmonization with the European directives and favorable tax environment make a CIF a key tool for international investor for investment activities within the EU or outside the EU. Confidentiality rules ensure that the Identity of CIF no information about beneficial owners is revealed or made available to the public records.
See below for more information on:
- Types of Services / Activities allowed
- CIF Taxation
- Licence Procedure
- Capital requirements
- CIF Organisation and structure
- CIF‘s providing services outside Cyprus
Cyprus Investment – Core Services:
- Reception and transmission of orders
- Execution of orders on behalf of clients
- Dealing on own account
- Portfolio management
- Investment advice
- Underwriting and/or placing of financial instruments on a firm commitment basis
- Placing of financial instruments without a firm commitment basis
- Operation of Multilateral Trading Facilities
- Safekeeping and administration of financial instruments
- Safe custody services
- Granting credits or loans to an investor for transaction purposes
- Advice on capital structure, industrial strategy and related matters
- Foreign exchange services
- Investments research and financial analysis
- Services related to underwriting
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In most cases, there is no tax (0%) on; profits from the sale of securities; dividends received by a CIF from own investments; payments to its non-resident shareholders or interest or royalties; dividends received by CIF from another Cyprus resident company; dividends received by a CIF from a non-resident company.
CIF profits after allowable expenses arising from investment services are taxable at 12.5%.
CySEC (Cyprus Security and Exchange Commission) is the regulatory authority regarding applications and directives pertaining to CIFs. Process outline is as follows:
- We obtain full understanding of project goals and gather outline client information in order to create an application plan
- Form Cyprus Company
- Collect supporting information and project plans as required for application
- Prepare and submit application
- At final stage of application capital requirement will be required to be blocked
- Licence issued
The time required to obtain a licence will vary, but on average you should plan on about 5-6 months from the date of the submission of the application, however due to our close working relationship with CySec where possible this time can be foreshortened.
Main Documents Required
The application form and standard questionnaires of the applicant company’s shareholders, directors, senior managerial staff and any other managerial staff (as applicable) must be submitted to CySEC accompanied by the following documents:
- Corporate documents (Must be a Cyprus registered company with a specific Memorandum and Articles relating to the licenced activity to be undertaken, or proposed amended draft of Memorandum and Articles of Association to provide that the company operates as an investment company providing the services detailed in its license issued by CySEC
- Business plan
- Group and organization structure
- Internal operations manual
- Internal procedures manual
- Certification from the company’s representative who will support the application on behalf of the company at CySEC
- Certification from the company that it possesses, or shall posses the initial capital requirement
- Evidence proving the source of the initial capital
- Copy of the insurance contract for professional indemnity
- Information on service providers established in third countries
- Information on the central counterparty, clearing and settlement system
- Information of an applicant established in a third country
- Audited financial accounts for the last 3 years and consolidated audited financial accounts of the company’s group of companies – if applicable
- Certificates of non-bankruptcy and criminal record for the following persons: direct shareholders, members of the Board of Directors, senior managerial staff, other managerial staff
- Certification by the lawyers and external auditors of the company
- Market Maker (dealing on own account): 730.000 EURO
- Broker (safeguarding of clients’ funds): 125.000 EURO
- Broker (not safeguarding of clients’ funds): 50.000 EURO
Organisation and Structure:
- CIF Head Office: The head office must be situated in Cyprus and staffed by employees with appropriate qualifications.
- CIF Management: Not less than two people with appropriate experience will manage the CIF.
- CIF Board of Directors: The board of directors of a CIF (the “Board”) shall consist of at least two executive members and two independent non-executive members. The majority of the members of the board of directors of the CIF must be residents of Cyprus and all members must have a good reputation with appropriate experience. A managing director is responsible for the day to day operations and and acts as one of the persons effectively directing the company.
- Internal Organisation:
- Establish independent compliance and risk management departments
- Maintain procedures to protect clients from conflicts of interest
- Ensure continuity of services and activities
- Apply due corporate governance
- Have sound administrative and accounting procedures, internal controls
- Apply “Know Your Client” procedures and adopt internal reporting policies
- Take adequate steps to safeguard clients’ ownership rights
Branch Offices & Providing Services Outside Cyprus:
A Cyprus Investment Company CIF may establish a branch in another Member State or a third country and inform CySEC accordingly. If approved, CySEC notifies the authority of the host Member State accordingly. The branch may be established and commence operations upon receipt of a communication from the competent authority of the host Member State or within two months from the date CySEC has communicated its approval.
A CIF may provide services in other countries provided the services are covered by its license and must inform CySEC about; the country it intends to provide services; Services to be provided, and; agents in the other country. CySEC must reply to the CIF within one month and forward the reply to the competent authority of the host country.
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