EMI and PI licenses in Cyprus: The key to payment business in the EU
An EMI (Electronic Money Institution) or PI (Payment Institution) license is an official authorization issued by the Central Bank of Cyprus, granting the right to legally provide payment services across the EU.
These authorizations are essential for companies dealing with money and payment flows. Without them, a business cannot operate fully and risks facing sanctions.
Examples of services requiring a license:
- Money transfers;
- Currency exchange and acquiring;
- Issuance and maintenance of electronic wallets, client fund safeguarding;
- Crypto exchanges and payment processing providers.
Key differences between EMI and PI:
- An EMI license allows a company to issue electronic money, manage virtual wallets, safeguard client funds, and conduct a wide range of payment operations.
- A PI license focuses primarily on money transfers, acquiring, and general payment services without the issuance of electronic money.
Cyprus positions itself as a fintech hub, and the license provides access to the European market, cooperation with banks, favorable legislation, and a strong appeal for crypto and fintech companies.
Types of activities covered by PI and EMI licenses
The Central Bank of Cyprus, acting as the regulatory authority, defines the specific types of activities permitted under each license.
Both licenses allow a company to engage in a wide range of payment services and financial operations, but their scope differs.
- Types of activities under an Electronic Money Institution (EMI) License:
- Issuance of electronic money and management of client e-wallets;
- Execution of payment operations, including currency exchange and money transfer services;
- Safeguarding client funds in segregated bank accounts in compliance with anti–money laundering measures and customer identification procedures;
- Provision of digital and virtual payment solutions, including integration of crypto assets and tokens;
- Operation with domestic and international clients across the European Union under the passporting mechanism.
- Types of activities under a Payment Institution (PI) License:
- Execution of payments for clients, including direct debits and card payments;
- Transfer of funds between accounts or banks;
- Provision of ancillary banking services such as acquiring and fund transfers;
- Processing of documents and maintaining records for regulatory compliance purposes;
- Servicing international companies and supporting fintech projects within the European jurisdiction.
- Common functions for electronic money and payment institutions:
- Maintaining a robust anti–money laundering, compliance, and monitoring system;
- Preparing and submitting regular reports to the Central Bank;
- Appointment of directors, senior managers, and qualified personnel responsible for regulatory policy and legal compliance;
- Ensuring proper risk management mechanisms, client protection, and transparency of ownership structure.
Regulator and compliance obligations
The Central Bank of Cyprus is responsible for issuing and supervising both EMI and PI licenses.
The regulator’s role goes beyond one-time authorization – it continuously monitors reports, conducts audits, and, when necessary, enforces supervisory measures.
Main requirements for licensed companies:
- Implementation and maintenance of effective AML (Anti–Money Laundering) and KYC (Know Your Customer) programs;
- Regular reporting and submission of annual audited financial statements;
- Storage and protection of client data in accordance with applicable legislation;
- Monitoring of transactions and identification of suspicious activities with mandatory reporting to the regulator/FIU;
- Appointment of compliance officers and establishment of internal policies, procedures, and monitoring systems;
- Readiness for independent audits and external monitoring upon the regulator’s request.
Failure to comply with these requirements may result in significant fines, suspension of operations, license revocation, bank account freezes, and loss of business reputation.
Advantages of obtaining a payment license in Cyprus
Acquiring an EMI or PI license in Cyprus provides a wide range of strategic and financial advantages for companies entering the European financial market.
- EU passporting rights
- Licensed institutions in Cyprus can offer payment services across all EU and EEA countries without the need for additional authorization.
- This enables companies to expand operations and attract international clients with fewer regulatory hurdles.
- Reputable regulator and access to banks
- The Central Bank of Cyprus acts as the regulator, ensuring robust supervision and compliance.
- Licensed firms gain credibility and can establish partnerships with leading banks and financial institutions.
- Business-friendly legal environment
- Cyprus offers a favorable legal and regulatory framework for innovative fintech projects.
- Its well-developed corporate infrastructure ensures efficient company registration, minimal bureaucracy, and access to qualified professionals.
- A clear stance on AML/KYC/compliance helps firms meet EU standards and mitigate risks.
- Attractive tax and financial advantages
- Competitive tax regime, incentives for funds and foreign investors, and double taxation treaties for cross-border transactions.
- Access to funding opportunities and investment incentives.
- Support for crypto operations, virtual tokens, digital wallets, and e-commerce solutions.
- Strategic location and international recognition
- Cyprus serves as a strategic hub between Europe, the Middle East, and Asia.
- Licensing in Cyprus enhances credibility, facilitates client acquisition, fosters supplier partnerships, and supports international business growth.
EMI and PI licenses in Cyprus compared to other jurisdictions
Cyprus has become a preferred destination for companies in the payment and fintech sector, which is unsurprising given the comparison with other leading jurisdictions.
- United Kingdom: Strict FCA regulations
- In the UK, the Financial Conduct Authority (FCA) imposes very strict requirements, and the licensing process can take up to 12 months.
- In contrast, the Central Bank of Cyprus provides a clearer structure and typically faster approval times, around 6–9 months.
- Both jurisdictions provide access to European clients, but Cyprus offers a simpler entry route for foreign companies.
- Lithuania: EU fintech hub
- Lithuania is another popular EU hub for EMI licensing, supported by a strong fintech ecosystem.
- However, the Central Bank of Cyprus offers greater flexibility in matters related to crypto, virtual tokens, and digital wallets, making it more suitable for innovative payment services.
- Licensing costs and required capital in Cyprus are often lower than in Lithuania.
- Switzerland: Prestige and high requirements
- Switzerland provides strong banking prestige and strict AML/KYC rules under FINMA supervision.
- Compared to Switzerland, Cyprus offers a more accessible legal and compliance environment, appealing to smaller companies and startups.
- Both jurisdictions maintain strong regulatory oversight, but Cyprus has the advantage of EU passporting rights.
- Other EU countries: Higher costs and longer timelines
- Many EU jurisdictions require higher capital thresholds, additional documentation, and longer evaluation periods.
- Cyprus strikes a balance, maintaining EU-level trust while offering streamlined procedures.
- This makes Cyprus particularly attractive for international companies, investment funds, and cross-border payment providers.
Requirements for obtaining a payment license in Cyprus
To operate legally in Cyprus, a company must meet strict regulatory and organizational requirements.
- Corporate structure and governance
- Register a local legal entity within the jurisdiction of Cyprus.
- Provide detailed information about directors, shareholders, and beneficial owners.
- Maintain a physical office with qualified staff and appoint a compliance officer.
- Ensure that the business model complies with EU laws, Cypriot regulations, and AML policies.
- Capital and financial obligations
- The minimum capital requirement depends on the license type (EMI or PI).
- Client funds subject to safeguarding must be kept in segregated bank accounts.
- Provide proof of sufficient capital and sustainable financing.
- Submission of audited financial statements and annual reports is mandatory.
- Compliance, AML, and KYC
- Implement robust AML/KYC mechanisms in line with EU standards.
- Establish internal policies for monitoring, reporting, and risk management.
- Appoint compliance officers responsible for ongoing supervision and evaluation.
- Systems must ensure compliance with EU-wide regulations and directives.
- Documentation and application package
- Required documents: business plan, IT and cybersecurity description, shareholder register.
- Corporate governance documentation, including ownership and management structure.
- Compliance manuals, financial forecasts, and AML reports.
- Submission of the license application to the Central Bank of Cyprus as part of the authorization process.
- Operational readiness
- Appointment of experienced directors and specialized personnel.
- Clear internal procedures for transaction processing, fund protection, and reporting.
- Ability to serve both local and international clients, including foreign investors and funds.
Process of obtaining a PI or EMI license in Cyprus
The licensing procedure in Cyprus typically takes 6–9 months, depending on the company’s complexity, the quality of submitted documentation, and the regulator’s processing speed.
Step 1. Preliminary assessment (1–2 months)
- Initial evaluation of the business model, the expected volume of payment activities, and forecasted operations.
- Development of compliance policies, AML/KYC manuals, and risk management frameworks.
- Preparation of ownership documentation and corporate records.
Step 2. Application preparation (2 months)
- Compilation of all required documents: business plan, management structure, and IT/security documentation.
- Appointment of directors, shareholders, and compliance officers.
- Demonstration of minimum capital, safeguarded client funds, and sufficient operational resources.
Step 3. Submission to the Central Bank (1 month)
- Submission of the full application package to the Central Bank of Cyprus.
- Provision of audited reports, AML controls, and corporate compliance policies.
- Ensuring that the company meets EU directives and local regulatory requirements.
Step 4. Review and license issuance (2–4 months)
- The Central Bank reviews the application, verifies all documents, and may request clarifications.
- An independent audit or external compliance testing may be required.
- Upon full compliance, the regulator issues the license, and the entity is added to the official Central Bank register.
Prifinance assists in preparing the full documentation package, developing and implementing AML/KYC policies, conducting operational readiness assessments, and managing direct communication with the regulator, significantly reducing the risk of remarks and speeding up approval timelines.
Without professional support, the process often becomes prolonged and carries a higher risk of rejection, account freezes, and additional inspections.
Taxation of licensed companies in Cyprus
Operating a company with an EMI or PI license in Cyprus takes place within a competitive and transparent tax system.
The country combines EU standards with attractive incentives for foreign investors, funds, and fintech providers.
Corporate Income Tax
- The standard corporate income tax rate is 12.5%, one of the lowest in the EU.
- Tax incentives are available for financing, investment funds, and innovation-driven activities.
- There is no capital gains tax on the sale of securities.
VAT (Value Added Tax)
- The standard VAT rate is 19%.
- Certain payment services, such as money transfers, currency exchange, and remittance transactions, are exempt from VAT.
- Licensed entities must maintain proper accounting records and submit reports to the tax authorities.
Withholding tax and dividends
- Dividends paid to foreign investors are generally exempt from withholding tax, subject to applicable double taxation treaties.
- Cross-border operations benefit from Cyprus’s extensive network of double taxation agreements.
Compliance and reporting obligations
- Annual audited financial statements and reports are required.
- Companies must maintain accurate accounting records in accordance with EU legislation.
- Independent audits ensure that licensed entities comply with AML/KYC and anti–money laundering requirements.
- Internal compliance policies and monitoring systems help mitigate risks and enhance transparency.
Advantages of the Cypriot tax system
- A stable and predictable tax environment for international businesses.
- Support for cryptocurrencies, virtual tokens, digital wallets, and innovative fintech solutions.
- Cooperation with established banks and access to foreign clients across Europe.
Timeline and cost of PI and EMI licenses in Cyprus
The process of obtaining an EMI/PI license takes an average of 6–9 months, though exact timelines depend on the jurisdiction, the completeness and quality of the submitted documents, the complexity of the business model, and the regulator’s efficiency.
Main cost components:
- Government fees and registration charges;
- Legal and consulting services;
- Notarization and document translation;
- Bank commissions for account opening, maintenance, and due diligence;
- Expenses for compliance documentation preparation and independent audits.
The exact cost is calculated individually depending on the scope of services and project specifics.
Prifinance conducts a budget assessment, offers optimal cost structure solutions, and helps avoid unnecessary expenses throughout the licensing process
Expert team
Our team supports clients at every stage, from the initial consultation and document preparation to license acquisition and business launch. This full-cycle approach minimizes the risk of rejection and speeds up time to market.
We combine legal precision with practical expertise, allowing you to focus on growing your company while we handle all the regulatory and procedural details.
Nikolai Timofejev Expert with 15 years of experience in FinTech, payments, and business strategy.
Oleksii Kindratenko Expert in company registration, financial licenses, AML and tax consulting.
Eugeniu Bevziuc International business consultant with experience in company setup, remote work, and multilingual communication.
Take a step toward a fully licensed business with Prifinance
Contact our team to discuss your project and start the licensing process without delays.
