The Benefits of Setting Up an Electronic Money Institution (EMI) in Cyprus

Cyprus has emerged as a premier destination for establishing Electronic Money Institutions (EMIs), owing it to its favourable regulatory framework, strategic location, and robust financial infrastructure. This article examines the numerous benefits of setting up an EMI in Cyprus, highlighting key aspects such as regulatory advantages, tax incentives, business environment, and strategic positioning within the European Union. Additionally, this article highlights AGPLAW, a leading law firm in Cyprus that specializes in fintech and financial services regulatory support.

AGPLAW offers comprehensive services, including EMI licensing and ongoing legal assistance, ensuring that EMIs receive expert guidance and support throughout their operational journey. With AGPLAW’s expertise, EMIs can navigate the complexities of the regulatory landscape, achieve compliance, and drive long-term success.

Regulatory Framework

European Union Membership

Cyprus is a member of the European Union (EU), which means that an EMI licensed in Cyprus can passport its services across all EU and European Economic Area (EEA) member states. This EU passporting ability is a significant advantage, allowing EMIs to operate seamlessly across multiple jurisdictions without needing additional licenses.

Central Bank of Cyprus (CBC)

The Central Bank of Cyprus (CBC) is the primary regulatory authority overseeing EMIs. The CBC provides a clear and robust regulatory framework that aligns with EU directives, such as the Payment Services Directive 2 (PSD2) and the Electronic Money Directive (EMD). This alignment ensures that Cypriot EMIs adhere to high regulatory standards, enhancing their credibility and trustworthiness.

Streamlined Licensing Process

The licensing process for EMIs in Cyprus is relatively streamlined compared to other EU jurisdictions. The CBC offers detailed guidance and support throughout the application process, which typically involves the submission of a business plan, organizational structure, risk management policies, and proof of capital adequacy. The CBC may only authorize electronic money institutions if they are legal entities incorporated within the Republic, where their headquarters and registered office must be located. Additionally, a portion of their business must involve electronic money services and/or payment services that are not directly related to the issuance of electronic money.

The supportive regulatory environment expedites the establishment of EMIs, reducing bureaucratic hurdles and time-to-market. For expert assistance during the licensing process, AGPLAW provides comprehensive licensing services and regulatory support.

Compliance and Anti-Money Laundering (AML) Measures

Cyprus has stringent AML regulations, ensuring that EMIs operate with high levels of transparency and integrity. Compliance with AML directives not only protect the EMI’s reputation but also fosters trust among clients and partners. The CBC’s rigorous enforcement of AML measures further ensures that Cyprus remains a safe and secure financial hub. AGPLAW offers specialized AML compliance services to help EMIs maintain regulatory standards and mitigate risks.

Tax Incentives

Favorable Corporate Tax Rate

Cyprus offers one of the lowest corporate tax rates in the EU, currently set at 12.5%. This competitive tax rate significantly reduces the overall tax burden on EMIs, enhancing their profitability and enabling them to reinvest in growth and innovation.

Double Taxation Treaties

Cyprus has an extensive network of double taxation treaties (DTTs) with over 60 countries. These treaties prevent the double taxation of income, ensuring that EMIs benefit from reduced withholding taxes on dividends, interest, and royalties. The DTT network enhances Cyprus’ attractiveness as a base for international business operations.

Tax Exemptions and Incentives

In addition to the low corporate tax rate, Cyprus offers various tax exemptions and incentives for EMIs. These include exemptions on dividend income, capital gains, and profits from the disposal of securities. Such incentives make Cyprus a tax-efficient jurisdiction for EMIs, fostering an environment conducive to business growth and financial stability.

VAT Exemptions on Financial Services

Financial services, including those provided by EMIs, are generally exempt from Value Added Tax (VAT) in Cyprus. This exemption reduces the cost of providing financial services and enhances the competitiveness of Cypriot EMIs in the European market.

Business Environment

Strategic Geographical Location

Cyprus’ strategic location at the crossroads of Europe, Asia, and Africa makes it an ideal base for EMIs looking to serve diverse markets. The island’s proximity to major economic hubs facilitates business expansion and fosters international trade and investment opportunities.

High-Quality Financial Infrastructure

Cyprus boasts a sophisticated financial infrastructure, with a well-developed banking system, modern payment networks, and a plethora of financial services providers. This infrastructure supports the efficient operation of EMIs, enabling them to offer innovative and reliable financial products to their clients.

Skilled Workforce

The availability of a highly skilled and multilingual workforce is another key advantage of establishing an EMI in Cyprus. The country’s education system produces a steady stream of graduates with expertise in finance, technology, and business management. This talent pool ensures that EMIs have access to the skills and knowledge necessary to drive innovation and growth. AGPLAW’s talent acquisition and recruitment team can assist EMIs in employing skilled personnel at all levels and positions.

Business-Friendly Legal System

Cyprus has a business-friendly legal system based on English common law, which is widely recognized and respected internationally. The legal framework provides a high degree of certainty and protection for businesses, facilitating smooth and efficient operations for EMIs.

Robust ICT Infrastructure

Cyprus has made significant investments in its Information and Communication Technology (ICT) infrastructure. The country’s advanced telecommunications networks and high-speed internet connectivity support the digital operations of EMIs, enabling them to offer seamless and secure electronic money services to their clients.

Strategic Positioning within the European Union

Access to the European Single Market

As an EU member state, Cyprus offers EMIs unrestricted access to the European Single Market, one of the largest and most lucrative markets in the world. This access allows Cypriot EMIs to offer their services to over 500 million consumers, providing vast opportunities for business growth and expansion.

Harmonized Regulatory Standards

Cyprus adheres to harmonized EU regulatory standards, ensuring that EMIs based in Cyprus comply with the same rules and regulations as their counterparts in other EU member states. This harmonization simplifies cross-border operations and enhances the credibility of Cypriot EMIs in the European market. The issuance and management of electronic money (e-money) are governed by the Electronic Money Laws of 2012 and 2018.

These laws integrate essential EU directives into Cypriot national legislation, establishing a regulated e-money market in the country. They specifically implement Directive 2009/110/EC, which ensures that electronic money institutions adhere to sound business practices and supervisory standards, and the Second Payment Services Directive (PSD2) of 2015, aimed at improving payment services throughout the EU.

EU Funding and Support Programs

EMIs in Cyprus can benefit from various EU funding and support programs aimed at fostering innovation, digital transformation, and business development. These programs provide financial assistance, grants, and resources to help EMIs enhance their services and expand their market reach.

AGPLAW: Your Partner in Setting Up an EMI in Cyprus

AGPLAW is a leading law firm in Cyprus with a dedicated focus on fintech and financial services regulatory matters.

The firm provides comprehensive services to EMIs, including:

Licensing Support

As a law firm, we offer comprehensive support throughout the entire application process. Our services include consulting on organizational structure, preparing initial drafts of business plans, advising on business models and investment services, and assisting with the payment of fees to the CBC. We also prepare and submit the Promoter’s Application File, including necessary forms, questionnaires, and documentation, followed by continuous correspondence and support regarding any inquiries related to the application process, ensuring a smooth and efficient licensing process

Legal and Regulatory Compliance

The firm’s extensive 20-year knowledge of local and EU regulations ensures that EMIs remain compliant with all legal requirements. AGPLAW offers ongoing legal and regulatory support, helping EMIs manage their compliance obligations effectively.

Anti-Money Laundering (AML) Services

AGPLAW provides specialized AML compliance services, helping EMIs develop and implement robust AML policies and procedures. This ensures that EMIs operate within the regulatory framework and maintain the highest standards of transparency and integrity.

Strategic Advisory

The firm offers strategic advisory services, guiding EMIs on business development, market expansion, and regulatory changes. AGPLAW’s insights and expertise help EMIs with respect to the complexities of the financial services industry and achieve sustainable growth.

By partnering with AGPLAW, EMIs can leverage their extensive experience and deep understanding of the Cypriot regulatory environment to establish a successful and compliant operation.

Challenges and Mitigation Strategies

Regulatory Compliance

While Cyprus offers a favorable regulatory environment, EMIs must navigate complex compliance requirements to maintain their licenses. This includes adhering to AML regulations, data protection laws, and financial reporting standards. EMIs can mitigate these challenges by investing in robust compliance systems and seeking professional advice from local experts, such as those at AGPLAW.


The growing popularity of Cyprus as a hub for EMIs has increased competition in the market. To stand out, EMIs must focus on innovation, customer service, and strategic partnerships. Leveraging advanced technology and offering unique value propositions can help EMIs differentiate themselves in a competitive landscape.

Future Outlook

Digital Transformation

The future of EMIs in Cyprus is closely tied to digital transformation. The islands nation, with its robust regulatory framework and strategic positioning, stands at the cusp of a significant evolution in financial services, propelled by cutting-edge advancements in financial technology (fintech), blockchain, and artificial intelligence (AI).

Regulatory Evolution

The regulatory landscape for EMIs is continuously evolving, with new directives and guidelines being introduced to address emerging risks and opportunities. The country’s regulatory framework is designed to foster innovation while maintaining rigorous standards of compliance and security. This balance enables EMIs to operate with confidence, knowing that they can meet regulatory requirements while pursuing innovative business models and service offerings. Cyprus is expected to remain at the forefront of regulatory developments, providing a supportive environment for EMIs to thrive.

Market Expansion

As global demand for electronic money services continues to grow, EMIs in Cyprus are poised to expand their market reach. By capitalizing on Cyprus’ strategic location, favorable regulatory framework, and access to the European Single Market, EMIs can pursue new opportunities and achieve sustainable growth.


Setting up an Electronic Money Institution in Cyprus offers a multitude of benefits, from regulatory advantages and tax incentives to a supportive business environment and strategic positioning within the EU. Fintech innovations are reshaping the way financial services are delivered, offering unprecedented levels of efficiency, security, and customer satisfaction. Cyprus, with its dynamic fintech ecosystem, skilled workforce, and favorable legal system collectively create an ideal ecosystem for Electronic Money Institutions (EMIs) to thrive. Partnering with AGPLAW provides EMIs with expert guidance and support, ensuring they can successfully navigate the complexities of the regulatory environment. AGPLAW’s extensive knowledge and experience in the financial services sector enable EMIs to achieve long-term success by offering tailored legal and regulatory solutions.

This partnership ensures that EMIs are well-equipped to manage compliance challenges, mitigate risks, and capitalize on new opportunities within the dynamic fintech landscape. Cyprus’ robust financial infrastructure, skilled workforce, and favorable legal system create an ideal ecosystem for EMIs to flourish. As the fintech landscape evolves, Cyprus remains a premier destination for EMIs seeking to capitalize on the growing demand for electronic money services and drive innovation in the financial services industry.

Partnering with AGPLAW ensures that EMIs receive expert guidance and support, enabling them to navigate the complexities of the regulatory environment and achieve long-term success, you may contact our team of experts at  You may also visit our webpage: E-Money & Payment Institutions (Cyprus)

The information provided by AGPLAW | A.G. Paphitis & Co. LLC is for general informational purposes only and should not be construed as professional or formal legal advice. You should not act or refrain from acting based on any information provided above without obtaining legal or other professional advice.