A Cyprus Broker Licence From €5,700 – and the Two Directors Who Decide If You Get It

(real client enquiry)

Dear CYAUSE,

We are an insurance brokerage group headquartered outside the European Union, currently distributing insurance products across North and Latin America. We are evaluating Cyprus as the home base for a European entity. The company would not commercialise insurance products within Cyprus itself – the purpose of the Cyprus licence is to passport into other EU member states.

We would be grateful for the following.

1. The steps and realistic timeframes to incorporate an insurance agents / brokers company in Cyprus, and to obtain the licence itself.
2. A full costing. Your fee schedule refers to “disbursements” on both the incorporation and the licence – what exactly do these cover, and does the quoted licence fee absorb them?
3. If our CEO and Vice President become directors of the Cyprus entity and hold their own insurance licences, is it still mandatory to hire another employee who holds a licence? Or would it be sufficient to hire a local representative in a lower-level position?
4. Must the local director work physically at the office location?
5. Regarding the fixed office cost, is there room to negotiate this expense based on our operational scale? If so, what is the minimum estimated amount required to comply with the physical presence (substance) requirement?

Kind regards,

Dear Client,

Thank you for your enquiry. Cyprus is a popular home state for EU passporting, and we act for a number of groups that have set up a local agency here in order to distribute their products and services in other EU countries. Our answers follow in the order you raised them.

1. Who actually grants the licence

Insurance intermediaries in Cyprus are registered and supervised by the Superintendent of Insurance, through the Insurance Companies Control Service of the Ministry of Finance, under the Insurance and Reinsurance Services and Other Related Issues Law of 2016 (Law 38(I)/2016). The register distinguishes between insurance agents, insurance brokers, insurance sub-agents, insurance advisers and tied insurance advisers. Each is a separate category with its own conditions, so the first decision to take – before any fee is incurred – is which category matches your distribution model.

This matters for expectation setting. Neither we nor any other adviser grants the licence. Our role is to prepare the application, present the credentials and manage the correspondence. The decision belongs to the Regulator.

2. Steps and timeframes

Source: CYAUSE engagement experience with the Cyprus Insurance Companies Control Service. Timeframes are indicative and the Regulator’s review period is not within any adviser’s control.

In practice this means company formation within a month, and the licence itself somewhere between three and six months from the start of the process. The review period is the part nobody controls, and it is the reason the range is as wide as it is.

3. Can your CEO and Vice President be the licensed persons?

In principle, yes. The person appointed as a director under the licence is not required to be a Cyprus-qualified person, provided the credentials are recognisable and can be verified by our local regulator. An overseas director who is, for example, an FCA or equivalently qualified person can be accepted for the purposes of issuing the licence.

For overseas qualified individuals, the Regulator typically asks to review:

• the CII Advanced Diploma in Financial Planning learning statement, showing the academic transcript as at the date of application;
• the CII Diploma certificates;
• the university degree diploma;
• or other comparable diplomas.

We would stress the conditionality here, because this is the single point on which a Cyprus insurance application most often stalls. Whether a particular foreign qualification is accepted is a matter for the Superintendent of Insurance to determine on the papers, and it should not be assumed in advance of that review.

If the proposed overseas director is not approved, there are two workable fallbacks. The first is to appoint a Cyprus-qualified person instead. The second is to nominate a different person willing to sit the Cyprus insurance examinations; once that person holds the qualification, it is added to the documents pack for the licence. Course materials and guidance are available from the insurance supervisory body in Cyprus.

So, to your question directly: if your CEO or Vice President holds accredited, recognised credentials that the Superintendent validates, a separate licensed employee should not be required. If they do not, a junior local representative will not close the gap. What the Regulator is testing is licensed capability, not headcount.

4. Must the local director sit in the office?

No. The local director requirement is a statutory and governance one – a natural person who is a Cyprus tax resident, who does not need any insurance credentials – rather than an attendance requirement. Physical presence of the business is a separate question, dealt with next.

5. Office cost and substance

Our serviced office fee is €400 + VAT per month. Depending on the final operational profile, a reduced figure may in some circumstances be possible, but we would not encourage you to build your budget around it, and we would caution against pushing this line much lower in any event.

Below a certain point an office stops being an office and becomes an address, and an address is precisely what a substance challenge is designed to find. The cost of a thin substance position is not the rent you saved; it is the company’s Cyprus tax residency, its banking relationships and, in a regulated sector, potentially the licence itself.

It is worth adding that your intention not to commercialise insurance products within Cyprus does not reduce the licensing or substance requirements. Cyprus would be your home member state. The licence and the real presence sit here; the distribution happens elsewhere, under the passport.

6. Fees

Fees are indicative, exclude VAT and disbursements unless stated, and relate to the circumstances described in this enquiry. Accounting, audit and tax fees depend on volume, complexity and risk.

7. What the disbursements actually are

Disbursements are amounts paid to the local authorities rather than to us. For the company formation they typically range between €450 and €800, depending on what the applicant needs – an expedited process, certificates issued in both Greek and English, and so on.

On the licence side, the quoted fee is set on the basis that it covers the associated disbursements in the ordinary course. We would describe it as quoted on that basis rather than guaranteed as all-inclusive, and anything unusual would be raised with you before it is incurred.

Changes to the articles of association are charged separately because they are tailored by a lawyer and filed with the Registrar for approval. In most cases this can wait until the company has earned some traction – it is a management decision, not a licensing prerequisite.

8. How the passporting itself works

Under the EU Insurance Distribution Directive (Directive (EU) 2016/97), a single registration in the home member state is what generates the EU passport, subject to a notification procedure rather than a second authorisation.

You notify the Cyprus Regulator of the member states you intend to operate in and whether you will do so under freedom of services or freedom of establishment. The Cyprus Regulator passes the notification to the host authority, which then has one month to communicate the general good rules applicable in its market. Under freedom of establishment the intermediary may begin once it has received those rules or, failing that, one month after the home authority made the notification.

That is why the passporting step is measured in weeks while the licence is measured in months. The hard work is the Cyprus authorisation; the passport is an administrative consequence of holding it.

9. Where we would start

Before any filing, we would confirm the licence category that matches your distribution model, and put the proposed directors’ qualifications in front of the Regulator’s criteria. Those two points determine the timeline and most of the cost. We are happy to arrange a call to work through them.

Kind regards,

This article is based on a real client enquiry and has been anonymised. It is provided for general information only and is not investment, tax, legal or audit advice. The fees quoted are indicative, relate to one particular set of facts and do not constitute an offer. Regulatory approvals, including the recognition of foreign qualifications, are a matter for the competent authority and cannot be guaranteed by any adviser. For advice on your own circumstances, please contact us at enquiries@cyprusaccountants.com.cy or on +357 22 336 309.