EU vs Offshore Forex Licence

The foreign exchange (forex) market is decentralized and without a central trading floor. However, that does not mean that it is not regulated. Congruent to other financial markets regulation like banking, insurance, and equities, countries are continually revising and tightening forex rules to close any loopholes.

In the sections below, this article will seek to compare between European forex license and Offshore forex licence.

Category     Europe license Offshore license
1. Jurisdiction   Most common jurisdiction to obtain a forex broker license   – Cyprus
– Malta
– Lithuania
– Bulgaria
– Belize
– British Virgin Islands (BVI)
– Mauritius
– Bahamas  
    Forex Regulation    A standard set of rules and regulations apply to all EU member states under the Markets in Financial Instruments Directive (MiFID II)   No standard rules apply to all   Each jurisdiction has its own regulations E.g. USA (CFTC and NFA) Japan (FSC Japan) Australia (ASIC)
  Impact of jurisdiction regulation for a forex brokerage       – A higher standard for regulatory reporting
– More Transparency
– A greater degree of credibility
– Elimination of deposit bonuses
Obtaining a forex license depends on the difference of many factors E.g. minimal capital deposit, strict reporting requirements, the cost to operate, etc.              
2. Tax   Corporate tax rate     >0 % Mostly 0 %  
  Capital gains tax rate   None None
  Withholding tax rate on dividends paid overseas   >15%   None (With exception of Belize – 15%)  
  Withholding tax rate on interest paid overseas     0% 0% (With exception of Belize – 15%)  
  Available tax incentives   Yes No
   Access double tax agreements    Yes No (With exception of Seychelles)  
   Is GST/VAT registration mandatory?   Yes No
3. Time Average time to obtain licence 4 – 6 Months 2.5 – 3 Months
4. Director & Shareholder   Do we need to appoint a resident director or shareholders?       Yes   Yes (Except Seychelles)  
  Is experience required for directors?      Yes No (With exception of Bahamas and Mauritius)  
  Minimum number of directors  2 1 (With exception of Mauritius, BVI, and Seychelles – 2 required)    
   Minimum number of shareholders  2 1 (With exception of Jersey and Bahamas – 2 required)  
  Are individual and corporate shareholders allowed?   Yes Yes
    Is the public register of shareholders and directors required?     Yes No (Except for the Bahamas)  
5. Capital requirement   Minimum amount of cash assets & equivalent?     100%  None (With exception of Mauritius – 10% of liabilities)    
    Minimum amount paid-up capital for the licence           50,000 Euro 30,000 – 200,000 USD
6. Entity/Company Can the company issue derivatives? No No  
  Time taken to set up the company 3-4 weeks 1-2 weeks
  Is office premise required? Administrative Office   No
7. Instrument Traded Is other financial instruments allowed?   No No
8. Financial requirements/
Is annual financial statement required?   Yes Yes (With exception of Bahamas and Belize)  
  Is a statutory independent annual audit required?     Yes   No (With exception of Mauritius and BVI)  
9. Overall   Bulgaria has the lowest corporate tax in the EU and monthly license fees far lower compared to other EU countries. Cyprus has a globally recognized jurisdiction for FX trading in Europe   Malta has the ability to ‘passport’ to all EU member states. Belize has no taxes required to pay regardless of where income is earned. BVI has an established history of financial services regulation and also relatively low corporate taxes. St. Vincent has one of the most confidential jurisdictions for company incorporation.


The process of applying for forex licence is not only tedious and time consuming, failing to fulfil certain requirements will caused the licence to be revoked. Depending on the country you are applying for, there are different set of complications and challenges. In addition, regulatory policies in offshore jurisdictions varies. Hence, it is recommended to contact our team of advisors for guidance in determining the region that best fits your brokerage’s requirements.

As a partner who grows with your business, Desfran provides a suite of business solutions which include new market entry consultancy services, new market requirements like forex licenses, business incorporation and registration, bank account opening, marketing services and regulatory compliance, all of which can all be fulfilled through Desfran’s bespoke solutions.  We continuously stay on top of trends and movements in the financial industry to help your business grow by identifying, maximising your business potential while providing comprehensive customised solutions.

Contact Desfran today.

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