Cyprus Investment Firms (CIF)

In the last few years the Cyprus Regulated Market has grown to the maximum due to the increase of Companies who wish to provide investment and ancillary services. According to the Law 144(I)/2007 the scope of the Law is limited to foreign and local firms that provide, or offer to provide, investment and ancillary services to persons who stay, reside, or are domiciled in Cyprus or where the relevant transaction is concluded within Cyprus or persons that stay, reside, or are domiciled in Cyprus who act on behalf of a third party based outside of Cyprus in providing investment and ancillary services, whether as an employee or in another capacity.

A Cypriot investment Firm (CIF) is a company that is established in Cyprus and authorised by the Cyprus Securities and Exchange Commission (CySEC)[i] to provide one or more investment services to third parties and/or perform one or more investment activities which can be the reception and transmission of orders, execution of orders on behalf of clients, dealing on own account, portfolio management etc.

A CIF is not allowed to provide professional investment services without prior authorisation from CySEC. In order to obtain authorisation, the applicant needs to provide all necessary information to satisfy CySEC and once approved by CySEC the license is valid through all EU member states. A result of that is that the CIF can operate through EU via a branch or directly once approved by CySEC, for the services and activities the CIF is entitled to operate. The register of CySEC is open to the public and it contains the CIF’s name and license number, the registration date, the investment and ancillary services which is authorised to provide and the investment activities which it is authorised to do. A CIF must have a website in order to have its license number and the name of the regulator on the website and all official documents.

The initial capital requirement for granting a license to a CIF depends on the investment services that the CIF offers. There are four different types of CIF (Cypriot Investment Firm) that require different initial capital in order to fulfil the conditions for approval to operate.

(1) A CIF that provides one or more of the following investment services and holds clients’ money or/and client’s financial instruments, must have an initial capital of at least two hundred thousand euro (€200.000)

(2) A CIF that does not hold clients’ money or/and clients’ financial instruments, resulting not to put themselves in debt with their clients, may have an initial capital of at least eighty thousand euro (€80.000) or at least forty thousand euro (€40.000) and professional indemnity insurance covering all member states for at least one million euro (€1.000.000), per claim, and in aggregate at least one million five hundred thousand euro (€1.500.000) per year.

(3) A CIF that is also registered to provide insurance services, may have an initial capital as half as the above and if the CIF is covered by professional indemnity insurance covering all member states then the initial capital requirement is twenty thousand euro (€20.000).

(3) A CIF that is dealing on own account, underwriting of financial instruments and/or placing of financial instruments on a firm commitment basis and/or placing of financial instruments without a firm commitment basis and/or operation of multilateral trading facility shall have an initial capital of at least one million euro (€1.000.000).

The Law prescribes a number of organisational requirements. A CIF must:

  • Establish adequate policies and procedures to comply with its legal obligations, and the appropriate rules governing personal transactions, of its managers, employees, tied agents and other relevant persons.
  • Maintain and operate effective organisational and administrative arrangements to prevent conflicts of interest from adversely affecting clients’ interests.
  • Ensure continuity and regularity in performance of services and activities, by employing appropriate and proportionate systems, resources and procedures.
  • Ensure avoidance of undue additional operational risk when outsourcing functions to third parties.
  • Ensure robust governance arrangements are in place including clearly organised organisational structures with well-defined, transparent and consistent lines of responsibility.
  • Have sound administration and accounting procedures, internal control mechanisms, effective risk-assessment procedures, and effective control mechanisms in place.
  • Keep records of all services and transactions in line with the Cyprus and EU legal requirements.
  • Apply appropriate client identification procedures in line with the Prevention and Suppression of Money Laundering Activities Law and relevant EC directives.
  • Make adequate arrangements to safeguard clients’ ownership rights when holding cash or financial instruments belonging to clients, particularly in the event of insolvency of the CIF, and prevent the use of these clients’ funds and investments for its own account.

[i] Cyprus Securities and Exchanges Commission (CySEC) is the supervisory authority of the investment firms and it has the responsibility to establish, maintain and regularly update a public register of all persons acting on behalf of a CIF or an IF of another member state.

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All terms of the present sale agreement are of essence

The time of exercising the right to terminate a sale contract due to a breach of any of its terms determines the way the innocent party should act in order to terminate the agreement validly and effectively.

The tolerance shown by one of the contracting parties when the other does not fulfil his obligations deriving from the sale contract giving him time to do so, prevents the innocent party from terminating the sale contract immediately without giving reasonable notice to the other party. The intention of the parties to make the time for the  execution of a contractual term of the essence of the agreement is a factor to be examined, as well as the parties’ behaviour when the innocent party tolerates a breach and gives more time to the other to execute his obligations under the sale agreement. The party showing tolerance should not terminate the agreement without giving a prior written notice to the other party requesting him to comply with and fulfil his contractual obligations as provided in the agreement despite the fact that the presence of an expressed term in the agreement that reads ‘’all terms of the present sale agreement are of essence’’.

In a recent judgment, the Supreme Court examined the issue with regard to a house sold under a sale contract, whereby a clause stated the following: “If the purchaser shall be in default as regards the payment of any amount as hereinabove provided then any balance shall become immediately due and payable and the vendor shall have the option either to call upon the  purchaser by notice in writing to pay the whole outstanding balance and any accrued  interest with a time limit to be specified in the said notice or to cancel this agreement forthwith without prejudice to any other of the rights.” Another term in the agreement read the following: ‘’All the terms of the present sale agreement are of essence.’’ Moreover, the sale contract provided for the last payment to be made upon delivery of the house to the purchaser. The delivery took place but the payment was not made by the purchaser. The vendor did not terminate the sale contract at the time and gave the purchaser time to pay.

Two years later after the purchaser took possession of the property, the vendor sent a letter of termination to the purchaser referring to the amount due and of his right to terminate the agreement as provided therein. The issue was referred to the District Court through an action filed by the vendor, claiming that the agreement was lawfully terminated due to the purchaser not paying the purchase price, an order for the sale of the house and delivery of its free and vacant possession, an order that the purchaser had no right to enter the house and the vendor also raised a claim for the recovery of a certain amount due for land taxes and common expenses paid by him on behalf of the purchaser. The District Court did not accept the vendor’s claims except the one for the recovery of the amount paid for land taxes and common expenses.

In view of the outcome, the vendor appealed and the Supreme Court upheld the decision stating among others that the issue depends on whether the parties intended to make the time of the essence of the agreement despite an explicit clause contained therein. In order to identify the parties’ intention, one must look into the terms of the agreement, the nature of the transaction, their intention and generally the circumstances of each case. The time is essential despite the fact that there is an expressed provision in the agreement and when due to the circumstances or the nature of the transaction, it is understood that the intention of the parties was to make the time essential to perform their obligations precisely.

In the said case, the tolerance shown by the vendor was such that gave him no right to terminate the sale contract without giving the purchaser prior reasonable notice. The reason for the notice was not to alter the terms of the agreement but to terminate the tolerance of the vendor and warn the purchaser in order to fulfill his obligations as provided in the terms of the agreement. Consequently, the  termination was declared invalid and the vendor’s claims were dismissed, except the recovery of the taxes and common expenses due.


Sport stars, image rights, fiduciary duties



As the spotlight recently turned to the Spanish Courts and Javier Mascherano as he appeared in court in an attempt to avoid going to prison over a 1.5m EURO tax fraud. (He joins a long list of personalities, including Neymar & Messi who have been in court in the last 2 years to answer tax claims)

Luckily enough the individual in question has the capabilities to pay his fine, and the Spanish prosecutor allows for a fine to be paid instead of imprisonment for sentences imposed that are less than two years in length. But others in the future may not be so lucky. What intrigued me in this case was the lack of liability which has been imposed on his advisors. As is often the case with premium stars, the media spotlight has been on the result rather than an analysis of the events that have led to the result.

Parallel to the main theme of the article which centres on the history of tax cases, I would like to provide some thoughts and comments as to the role their chosen professionals have played, through either negligence or poor advice.

In this particular case, a statement made by the defendant after the hearing has stuck with me

“I’, a sporting professional, I don’t have a great understanding of taxes and law. To deal with what are for me technical and complicated matters, I have to rely on other people.[1]”

Regardless of the fact that all individuals ultimately are responsible for their tax obligations his statement hit the nail on the head. In a world where millions, if not billions of Euros pass from sports starts to the industries perceived experts, surely a duty of extra care is required when advising such clients who are often considered Ultra High Net Worth, and are in the continued public spotlight. I feel at times our industry tax an ad hoc approach to advising sports stars, through the jungle of what are, State, EU and Regulatory rules as to how they are to conduct their financial affairs



Tax issues in sport and in particular tax evasion date back to 1940’s where baseball teams in particular the Cleveland Indians in famous owner Bill Veeck, moved ownership to a “tax-shelter” in order to gain an advantage over all teams in the league. His famous quote “I had always been trust by a basic inconsistency in the way we carried our players on the books[1]” epitomises using tax avoidance practices to gain an edge in sport. The road from the 1940’s to the 1970’s is a consistent one to general tax avoidance it was ripe in all industries.

[1] Pay Dirt: The Business of Professional Team Sports By James P. Quirk, Rodney D. Fort 1997 Princeton University Press

Growth of player income

The movement was much slower for individual agreements for players. Today a large majority of professional football players rely solely on wages. The big star players have become businesses unto themselves, with their image rights adding to and sometimes surpassing wage revenue. The 90s saw the first million-dollar sponsorship agreements for players in football as corporations sought out additional promotional avenues. The difference with player sponsorship is unlike a club, players are defined by a single personality and the actions of an individual so the good comes with the bad. Some of the early big sponsorship deals were cancelled or suspended as players such as Cantona, who kicked a spectator, and Zidane, who head butted Materazzi in a World Cup final were both suspended by sponsors. More recently there are the examples of Umbro dropping John Terry and players like Mario Balotelli, who is often in the news for off-field drama, not being able to match the commercial revenue of fellow players.

“It’s not the salary that’s a problem, it’s just the image rights that needed a little perking.” — David Beckham, 2002, on his ongoing contract negotiations with club Manchester United.

As player sponsorship amounts continued to increase the value of image rights also increased, and the agents for the top players started to negotiate the club having to pay the player for the right to use their image. The agents argued, successfully, that the club and league are no different to other sponsors who pay for a players image rights when they use the player in promotional material, in selling kits, in advertising, etc. Previously playing contracts would contain clauses where players would waive all image rights, but now the agents wanted to separate these concerns for foreign players so that they could take advantage of tax concessions.

There were similar deals on the continent already in place, but in the UK the first group of foreign players to structure their image rights separately from playing deals were Dennis Bergkamp, David Platt and Patrick Viera. The players would negotiate a wage, which would be paid in England with full taxes, but they would separately negotiate a flat fee that the club would pay for image rights, and that would be paid into a separate company that the player would setup and assign his image rights to. For foreign players, the image rights company could be based offshore in a jurisdiction with little to no income tax. Club wages provided enough money for the player to live off, so the image rights company could be used as a fund for the future – to be accessed when the player has left the country and is living elsewhere, or to be used when they are away on holidays. If the money was bought back into the UK they would have to pay additional income tax on the sum as well as the corporate tax.

The image rights payments are open to negotiation because they are an estimate for the upcoming year rather than a payment for trailing services. A player agent would sit down with the club and based on club commercial revenue and the amount that player features in promotional material would negotiate a percentage of that revenue that is due back to the player. The agent would take known revenue for last year, increase it based on some growth factor and then calculate a percentage due to his player for image rights based on how famous they are. The lump sum paid would be a guarantee payment on future image rights deals. Kit deals between clubs and sponsors are done in a similar way, the kit sponsor would estimate the number of shirts they expect to sell, then make a payment to the club as a guarantee based on that figure.

Fast forward to the new millennium and the age of transparency. Sports stars are under the scrutiny to declare their income we have seen a continually amount of cases raised from tax departments with fines running up in the millions. A lawyers role becomes all that more important.

The role of a lawyer and their fiduciary duty to sports players


In what kind of relationships will there be a fiduciary duty present?
Under the laws of the EU a fiduciary relationship will exist in the following situations:

  • A relationship between a trustee and a beneficiary of that trust
  • A relationship between a director and a company
  • A relationship between partners involved in a partnership
  • A relationship between a solicitor and his client
  • A relationship between a principal and his agent

The responsibility of a lawyer

A lawyer takes on a relationship as an individual who is appointed to act on behalf of a professional footballer in negotiating commercial contracts for that player. The commercial contracts can include the players playing contract with their respective clubs and their various sponsorship and promotional contracts with other bodies.

A lawyer unlike an agent who operates in football has an exception in relation to English football and does not need to be an official FIFA licensed agent through the a Football Association.

Typically a footballer will pay an agent either by an agreed fixed fee or by a percentage, usually between 10 and 20% of any money earned by that player. These fees are often significantly reduced when operating with a lawyer.

Do lawyers owe a fiduciary duty to their clients?

Looking at the above relationships which involve a fiduciary duty it would be reasonable to assume that a football agent would have a fiduciary duty to a footballer which he represents as the footballer would have to place all his trust and confidence in an agent when a contract is being negotiated. The agent will have the expertise and experience to negotiate the best terms and it is his job to arrange the best deal for his client.

Accordingly it has been held under the common law for England and Wales and EU law for the rest of Europe that a football agent and thus a lawyer representing footballers have the following fiduciary duties to the client which he represents:

  • The duty not to put himself in a position where his duties to his principal could conflict with his own interests
  • The duty not to gain undisclosed economic benefit from his position as the principal’s agent
  • This second duty is aimed specifically at dishonest practices often associated with football agents such as secret deals, bribes and bungs.

With the above in mind we hope to have shed light on an increasingly lucrative market as well as provoked thoughts that can assist athletes and not just football to examine their options when choosing their representatives.

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cyprus trademark registration

Are you a new startup?

Are you a new startup? This is the right time to trademark your company’s name or logo!

Without a doubt, any business which established a strong brand have led themselves to success. Take for example, Apple Inc. and their well-known logo, which is recognisable by most people all over the world. It is pivotal for the brand and more importantly for its Intellectual Property Rights to be protected, in order to ensure that consumers do not confuse the brand with somebody else’s brand. Protection for the brand and for the Intellectual Property of the brand can be achieved by registering for example the company’s trademark or trademarks internationally.

A trademark is any unique word, symbol or name used to identify and distinguish the goods of one seller from the goods of another. The main aim of trademarks is to protect the trademarked goods and/or services from use and/or misuse by competitors. A trademark further protects to prevent any confusion or manipulation of consumers. In this way consumers are allowed to link distinct attributes and characteristics with a particular brand or company.

Attention must be paid to the word or phrase that you want to trademark. A word or phrase that is commonly used or is already connected with another good or service cannot be trademarked. As a result, the first test to be followed when you want to trademark your goods or services is the ‘test of uniqueness’. What can be considered as unique is the combination of the symbol with your company’s name and their relationship.

If you value your intellectual property rights as you should, you should trademark your goods or services if you have not already done so. A company with a high turnover and fame, simply adds value to the company itself when its Intellectual Property is properly protected.

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What is a Trust

A Trust is a legal mechanism for separating the ownership of an asset into two parts: the “legal” ownership, or title to the asset and the “beneficial” ownership. Trusts are incredibly useful and flexible engines that people ignite for all sorts of different purposes.

The trust is established by an individual “the Settlor” and the Settlor appointed is either a person or a legal entity to hold legal ownership of assets in the Trust for the benefit of the Beneficiaries, hereby “the Trustee”. The Beneficiaries are any of the person(s) , legal entity(ies), charities who have the beneficial right to enjoy the assets in the Trust when the Trustee determines to make a distribution in their favour as discretionary Beneficiaries. Or the person(s) , legal entity(ies), charities  who have the beneficial right to enjoy the assets in the Trust: the defined  interest Beneficiaries.

The trust is created by a Deed or Declaration in a written document, executed under seal between the Settlor and the Trustee.  In law the Trustees are the owners of the trust property, although they may not deal with it as absolute owners but rather in accordance with the provisions of the law. This legal separation between the legal and beneficial ownership is the actual reason why someone wants to form a Trust: the considerable flexibility in tax mitigation and financial planning, succession planning and asset protection planning.

In Cyprus, the Trusts are governed by the Cyprus International Trusts Law 1992 which complements the Trustees Law Chapter 193 of 1995 which it’s based on the English Trustees Act of 1925. In Cyprus anyone of right age and provident about his future can create a Cyprus International Trust. According to the Law, the Settlor must not be resident in Cyprus during the year preceding the creation of the Trust, the Trustee or one of the Trustees in the case of more than one must be resident in Cyprus for the whole life of the Cyprus International Trust, the Beneficiary or Beneficiaries must not be resident in Cyprus and the trust property must not include any immovable property in Cyprus.

A Trust can be either a Discretionary Trust (the trustees have the discretion about how to use the trust’s income and about how to distribute the trust’s capital), a Fixed Trust (preventing the trustees from using their full power in the way assets are distributed to the Beneficiaries as in that case the Trustees will have to follow the terms of the trust), a Purpose Trust (set up in order to advance a specific purpose has no beneficiaries as it is usually set up for a charitable purpose) or an Accumulation & Maintenance Trust (set up in those cases whereby assets are needed to be held on behalf of someone until a certain future event will take place, such as a child reaching adulthood or person getting married.

Where the trust is created by a will, then the particular requirements in relation to wills have to be observed. The trust must satisfy the three certainties: certainty of intention, subject-matter and objects. Therefore the Settlor must manifest an intention to create a trust, the trust fund must be specified with reasonable certainty and the beneficiaries under the trust must be significant.


Cyprus International Trusts are not taxed in Cyprus. The taxation of trusts are fairly complicated:

  • Income: All income whether trading or otherwise of an International Trust is not taxable in Cyprus
  • Dividends: Dividends interest or other income received by a Trust from a Cyprus company are also non-taxable nor subject to withholding tax.
  • Capital gains: Gains on the disposal of the assets of an International Trust are not subject to capital gains tax in Cyprus.

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