The CIF minimum capital requirement:
what the law says and what CySEC actually asks for.

There is a question worth asking before discussing capital requirements, governance structures, or application timelines: when should a firm applying for a CIF licence produce its business plan?

The answer most applicants give, in practice, is somewhere between engaging a consultant and submitting to CySEC. That is the wrong answer, and it is the source of most of the difficulties that arise during the licensing process.

A business plan produced for a regulator is a compliance document. A business plan produced for a business is a planning tool. The former satisfies a checklist. The latter tells you whether the business is viable, what it will cost to run, how long it will take to reach profitability, and what infrastructure it needs from day one. That is the document CySEC should be receiving, and the firms that submit it are the ones whose applications proceed without significant friction.

With that framing in place, the capital requirement question answers itself.

The figure most people encounter first when researching a Cyprus Investment Firm licence is €75,000. It appears in Law 87(I)/2017, the legislation transposing MiFID II into Cypriot law, as the minimum initial capital requirement for a CIF that provides portfolio management or investment advice without holding client funds or financial instruments. It is accurate. It is also, in practice, rarely the binding constraint.

Here is what the legislation does not tell you, and what most advisers will not tell you either: the capital CySEC will actually require you to hold is not determined by the law. It is determined by your business plan.

How CySEC actually calculates the requirement

When you submit a CIF licence application, you are required to include a detailed business plan covering, at minimum, your first three years of projected operations. CySEC’s authorisation team reviews that plan not merely as a narrative document but as a financial baseline. The projected operating costs for Year 1, covering staff, rent, technology, compliance, professional fees, and all other anticipated expenditure, form the basis of a capital adequacy assessment.

The logic is straightforward: CySEC needs to be satisfied that the firm can sustain itself through its start-up phase without becoming a risk to clients or the market. If your business plan projects €200,000 in Year 1 operating costs, CySEC will require you to demonstrate that you hold €200,000 to cover those costs, plus the €75,000 statutory minimum, a total of €275,000 in initial capital.

The €75,000 floor matters only in the event that your projected operating costs fall below it, which is rarely the case for a firm with any genuine operational substance.

The counterintuitive reality

The first reaction to this is often alarm. Applicants who had budgeted for the legislative minimum find themselves facing a requirement three or four times larger than anticipated. That reaction is understandable but somewhat misplaced.

Consider what the capital adequacy requirement is actually measuring. The €75,000 is not a budget. It is a regulatory floor that must be maintained at all times throughout the life of the licence. It cannot be used to pay salaries, rent, or professional fees. It must sit permanently in the firm’s capital base, intact and available. The practical consequence is that your operating costs for Year 1 must be funded entirely on top of it. If your business plan projects €200,000 in Year 1 operating costs, you need €200,000 to run the business plus €75,000 held permanently as regulatory capital, a total of €275,000 before you open your doors. CySEC, reviewing your business plan, will require you to demonstrate exactly that.

The firms that find this requirement genuinely burdensome are, more often than not, the firms that had not done a rigorous bottom-up cost build before beginning the licensing process. The capital requirement surfaces a planning gap, not a regulatory penalty.

What this means in practice

The implication for anyone seriously considering a CIF licence as an external asset manager is clear: the business plan is not a document you prepare after deciding to proceed. It is the first document you should build, and it should be built with the same discipline you would apply to any investment decision.

A well-constructed business plan, one that is realistic on the revenue side and rigorous on the cost side, does two things simultaneously. It gives you an honest picture of the capital you need to raise before submitting an application. And it gives CySEC a credible, coherent basis on which to assess your firm rather than grounds to ask further questions.

Submitting an underdeveloped business plan does not reduce your capital requirement. It delays your application while CySEC asks for revisions, and it creates an early impression that is difficult to recover from.

A practical note on timing

Because the capital must be deposited in a Cypriot bank account and evidenced by a bank certificate before the application is complete, the capital requirement has a direct bearing on your fundraising and structuring timeline. Bank account opening for newly incorporated regulated entities in Cyprus is not instantaneous. Building in adequate time for both the capital raise and the account opening, before committing to an application submission date, is essential.

The €75,000 figure in the law is the beginning of a conversation with CySEC, not the answer to it. Understanding that distinction early is what separates a smooth licensing process from an expensive and protracted one.