Did the Bulgarian banks put on hold the foreign applications for opening of bank accounts? Read more.
"Trading doesn‘t just reveal your character, it also builds it if you stay in the game long enough." - Yvan Byeajee
Obtaining financial services license in Bulgaria. Forex License. Ultimate EU recognition.
HOW TO OBTAIN FOREX AND FINANCIAL LICENSE IN BULGARIA
Obtain your financial services license from Bulgaria and use it worldwide - backed by EU authority and recognition. Don’t settle for offshore license from a tropical jurisdiction, which will make even the banks reluctant to open you a bank account!
The days are gone when only the multinational companies possessing close to unlimited budgets were able to apply and obtain financial license in respected jurisdiction (i.e. EU, USA, Canada, etc.). Now that the world has changed and with internet access to almost any family on the globe, financial licenses, especially for online trading, are being obtained by more and more ordinary companies who are armed with strong vision and sustainable business model. While obtaining financial license still requires financial and administrative commitment, the process now is much cheaper and simpler, hence the amount of financial licenses issued worldwide has skyrocketed in recent years.
SO WHAT ARE THE QUESTIONS WHICH ONE SHOULD ASK HIMSELF BEFORE APPLYING FOR FINANCIAL LICENSE?
In what location (jurisdiction) should I apply in order to obtain Financial License (ie Forex License)?
There are basically two main options. One could apply in EU or a non-EU country.
The advantages of having Forex license issued by EU country, as is the case with Bulgaria, are enormous. All financial licenses issued in the EU are subject to the MiFID directive. This directive is issued by the European Commission in order to harmonize the financial services through the EU. In fact, the MiFID governed licenses, as the Bulgarian ones, can be used with great ease throughout the EU. For example, if you have a Bulgarian Forex license, but you want to setup another Forex unit in Germany or the UK, the only thing you have to do is to notify the authorities in Germany and the UK respectively. The notification procedure is not simply sending a registered letter to the authorities. You will have to provide the corporate file and the Bulgarian Forex license in order to prove that you have been authorized (licensed) in another EU country. The whole process however is declarative and can not be even compared to obtaining another license. To put it simply, having obtained financial or Forex license in any EU country will grant you the right to settle in all other EU member states as well. The best advantage however is that your Bulgarian financial license will empower you to directly perform your financial activities throughout the whole EU without any formalities whatsoever. Last, but not least is the advantage of the EU jurisdiction offering financial, legal and political stability as well as wide range of financial services (ie banking), which will enable you to streamline your business activities.
If you opt for a license from a non-EU country, as from Belize or Mauritius for example, you will not only be deprived of the option to expand your business within the EU, but most western banks will be more than reluctant to service your enterprise, even to open a simple bank account for your Forex operations.
What is the minimum capital requirement and the associated legal fees for obtaining Forex license?
The minimum capital requirements and the associated costs for setting up the company and obtaining the Forex license are important factors and should be considered carefully.
From the jurisdictions outside of the EU, probably the best choice would be Belize. Its legislation requires relatively small capital, but the ongoing annual costs and even more importantly, the limitations on the allowed operations are enormous.
From the EU countries, Bulgaria and Cyprus are at the top in terms of minimum capital required and associated cost. The lowest capital requirement is still in Bulgaria, being almost twice lower than in Cyprus. Even more importantly, in Bulgaria only 25% of the capital should be deposited before the license is obtained, while in Cyprus one has to deposit 100% of the capital upfront. The setup costs in Bulgaria are again, much lower than they are in Cyprus.
How much taxes will one need paying in the chosen jurisdiction?
Taxation is important, especially when it comes to financial transactions. There are obvious offshore jurisdictions who offer 0% tax rate, however this practice is being targeted by the authorities worldwide. Some countries will apply see-through taxation directly to the shareholders, in case an offshore structure is used. Other countries will ban it altogether by their anti-offshore laws. Using offshore structures will also limit your possibilities to benefit from your country’s agreements on avoidance of double taxation. Offshore companies will be also subject to the Common Reporting Standard reporting, which in some cases can cause additional administration and compliance requirements.
Trading in respected jurisdiction will eliminate all the problems that arise from using offshore units. The tradeoff however is the higher tax rate applied. Fortunately, even in the high-tax EU framework there are opportunities. While most EU countries will apply corporate taxation rate in excess of 30% on the profit, there are two European tax heavens that offer more than attractive taxation. Cyprus applies 12,5% and Bulgaria even lower - 10%. While the difference is not huge, Bulgaria applies its 10% flat rate for both corporate and personal incomes and it has no upper limit, which makes it the absolute favorite in terms of advantageous taxation in the whole EU.
AS BULGARIA IS OBVIOUSLY THE BEST CHOICE TO OBTAIN FOREX LICENSE IN THE EU, WHAT ARE THE AVAILABLE OPTIONS?
There are basically 3 types of licenses that are governed by the Bulgarian national legislation as well as the MiFID directive of the EU. We will go in more detail about each one of them below:
License type I
This license is suitable for financial intermediaries who do not hold money or financial instruments of customers and do not provide services for its own account or Initial Public Offerings (IPO’s). The minimum required capital for this license type is only 100000 BGN (51130 EUR).
License type II (the most common type)
This license is foreseen for financial intermediaries who do not provide services for its own account or Initial Public Offerings (IPO’s), but do hold customer’s money or financial instruments and on top of that provide services of executing orders related to financial instruments (including intermediary services for financial instruments), execution of orders of customers and provide portfolio management. The minimum required capital for this license type is 250000 BGN (127823 EUR).
License type III
The highest level financial type of license is required for the companies who would like to perform trades for its own account and have assess to virtually unrestricted trading rights. The capital required for this license is 1500000 BGN (766938 EUR).
For all license types, only 25% of the capital must be deposited prior to the application. Only when the application is approved, the remaining 25% need to be deposited within 14 days.
HOW CAN WE HELP OBTAINING YOUR FINANCIAL LICENSE IN BULGARIA AND WHY WE BELIEVE WE ARE BETTER THAN THE OTHERS?
We will provide both legal consultations on the best option for each particular situation as well as feasibility evaluation. Unlike most of other “service providers” who operate from outside of Bulgaria and are offering assistance for licenses from virtually all world jurisdictions, we have stuck to our country of expertise – Bulgaria. We know how much time have we invested into understanding even the smallest details of the financial regulations in Bulgaria with our lawyers analysing the particularities of each case we have had and it puzzles us how can an “international adviser”, operating from London, Geneve or Singapore for example, comprehend even the basics of the Bulgarian legal and financial regulations.
We do not employ agents; we don’t pay commissions to someone else to do the job. Our offices are located in 5 minutes walking from all financial institutions in Bulgaria and our lawyers know how to handle the procedure in the best possible way. Our offer to the customer will be definitely not only cheaper than that of the “international agents”, but the client will benefit form first-hand knowledge and much, much faster application process.
Please contact us for any questions you might have so we can move on with your application for financial services license in Bulgaria.