Cyprus Gambling License
The Strategic Imperative: Obtaining a Cyprus Gambling License for European Market Access
The Republic of Cyprus has cemented its status as a premier European jurisdiction for the licensing and regulation of betting and gaming operations. Governed by the National Betting Authority (NBA), the Cypriot license is often sought for its robust regulatory framework, competitive taxation structure, and its function as a strategic gateway to the European Union (EU) market. Obtaining a Cyprus Gambling License signifies a commitment to high standards of operational integrity, stringent anti-money laundering (AML) protocols, and effective player protection, ensuring credibility within the global gaming sector. This comprehensive expert guide details the legal landscape, specific license classifications, financial prerequisites, and the stringent compliance obligations required to secure and maintain authorization from the NBA.
The Regulatory Bedrock: The National Betting Authority
The regulatory authority overseeing all betting activities in Cyprus is the National Betting Authority (NBA), established under the Betting Law of 2019 (L. 37(I)/2019), which repealed and replaced prior legislation. The NBA is an independent body responsible for issuing, suspending, and revoking licenses, as well as enforcing compliance with the law and relevant directives.
The NBA’s primary mandate is multi-faceted:
To safeguard public interest and ensure fair play.
To prevent criminal activity, particularly money laundering and terrorist financing (AML/CTF).
To protect vulnerable persons through strict Responsible Gaming measures.
To ensure the tax revenue generated from betting operations is collected efficiently.
The Cyprus gaming regulatory framework is highly centralized, with the NBA maintaining absolute discretionary power over the entire licensing and supervision lifecycle. Applicants must demonstrate an unequivocal understanding of, and adherence to, the Cyprus Betting Law of 2019 and all subsequent NBA directives.
Cyprus License Classifications: Class A and Class B
The NBA grants licenses based on the nature of the betting services offered. It is crucial for applicants seeking a Cyprus Gambling License to correctly identify the required classification, as prerequisites and financial obligations differ significantly.
Class A License
The Class A license authorizes the provision of betting services in physical establishments. This includes traditional sports betting operations within brick-and-mortar shops.
Scope: Betting limited to sporting events (including racing and virtual sports offered within the physical premises).
Location: Operation is restricted to the specific, approved betting premises within the Republic of Cyprus.
Key Requirement: Class A premises are subject to mandatory physical inspections by the NBA before authorization is granted and during ongoing operations.
Class B License
The Class B License Cyprus is the authorization required for remote electronic betting services, encompassing online sports betting conducted via the Internet, mobile apps, or other electronic means. This is the primary license sought by international operators for their Cyprus Remote Gambling operations.
Scope: Betting limited exclusively to sporting events (including racing and virtual sports).
Crucial Exclusion: The Class B License explicitly prohibits the operation of virtual casino games, poker rooms, or games of chance. Online casino gaming remains strictly prohibited under the current iteration of the Cyprus Betting Law.
Service Delivery: Operations must be conducted using a .com domain (or similar international TLD) and must be hosted on certified servers located within the European Union (EU), often requiring an additional mirror server in Cyprus for data storage and compliance verification.
Defining Exclusions and Prohibitions
It is essential to understand that the NBA enforces strict prohibitions, a major point of differentiation from jurisdictions like Malta or Gibraltar:
Online Casino Games: Forbidden.
Exchange Betting (Betting Exchanges): Forbidden.
Random Number Generator (RNG) Casino Games: Forbidden.
Application Prerequisites: Corporate and Management Integrity
The NBA’s assessment is holistic, focusing equally on the financial stability of the entity and the integrity of the people running it. This commitment to the Fit and Proper (F&P) assessment is a cornerstone of the Cyprus Gaming Regulatory Framework.
Corporate Establishment and Shareholding Structure
Legal Entity: The applicant must be a legal entity established in the Republic of Cyprus (typically a Limited Liability Company – Ltd) or a company incorporated in the EU/EEA with a legally registered branch in Cyprus.
Share Capital: While not a fixed high minimum, the company must demonstrate sufficient paid-up share capital to meet the Bank Guarantee requirement and projected operational expenses.
Ownership Transparency: The NBA requires complete transparency regarding the Beneficial Owners (UBOs) and all shareholders holding 10% or more. Complex ownership structures involving multiple trusts or offshore entities are subject to intense scrutiny and must be fully justified.
Management and Key Personnel
The integrity of all individuals in governance roles is critical. F&P criteria include:
No Criminal Record: Clean criminal records for all directors, shareholders, and key officers.
Financial Soundness: Evidence of financial stability and no history of insolvency or bankruptcy.
Professional Competence: Directors must collectively possess the necessary experience and skills to operate a regulated betting entity.
Local Presence: The applicant must have at least one Cypriot resident on the Board of Directors, or an EU resident Director with sufficient physical presence in Cyprus. This ensures the NBA has direct local oversight and accountability.
The F&P Documentation and Interview Procedure
The F&P process extends beyond standard due diligence (CDD). The NBA requires specific documentation demonstrating suitability:
Detailed Personal Questionnaire: A comprehensive form detailing professional history, financial status, related business interests, and source of wealth (SoW).
Proof of Competence: Submission of diplomas, professional certifications, and a detailed CV highlighting experience relevant to technology, finance, and regulatory compliance.
Non-Encumbrance Declarations: Statutory declarations confirming that the individual is not bankrupt, has never been disqualified from acting as a director, and has no pending criminal proceedings.
The F&P Interview: For key managerial roles (CEO, CFO, AMLCO), the NBA reserves the right to call individuals for an in-person or remote interview. The interview aims to assess the applicant’s commitment to regulatory compliance and their operational knowledge of the Cyprus Betting Law of 2019 and associated directives.
Financial Mandates: Bank Guarantees, Fees, and Taxation
Financial compliance involves initial licensing fees, a mandatory financial guarantee, and the ongoing tax structure based on Gross Gaming Revenue (GGR).
Mandatory Bank Guarantee
The most significant financial prerequisite for a Cyprus Gambling License is the compulsory Bank Guarantee. This guarantee acts as a financial safeguard for the NBA and players, covering potential liabilities, fines, or outstanding player winnings.
Requirement: The applicant must lodge a bank guarantee from an approved EU/EEA bank for a sum dependent on the license duration.
One-Year License: €200,000
Two-Year License: €300,000
Licensing Fees
The non-refundable application fee is separate from the bank guarantee and is based on the license duration requested:
| License Type (Class B) | Duration | Fee Payable to NBA |
| Initial / Renewal | One (1) Year | €45,000 |
| Initial / Renewal | Two (2) Years | €70,000 |
Gross Gaming Revenue (GGR) Taxation
Cyprus employs a competitive and straightforward taxation model for licensed betting operators. The tax is levied on the Gross Revenue (also known as GGR Tax Cyprus), which is defined as the total amount of stakes received minus the total amount of winnings paid out to players.
GGR Tax Rate: 10% on the GGR derived from betting activities in the Republic of Cyprus.
NBA Contribution: An additional 1% is levied on the GGR and allocated to the NBA for administrative costs and Responsible Gaming initiatives.
Total Tax Burden: 11% on GGR.
This straightforward 10% GGR tax is a major Cyprus gambling license advantage, offering financial predictability compared to jurisdictions with complex tiered tax models.
Technical and Operational Compliance: Systems Integrity
The operational framework must demonstrate technical robustness, ensuring the integrity of the betting process, the security of player data, and compliance with AML/KYC requirements.
Mandatory Server Hosting and Data Mirroring
The NBA maintains strict control over the localization of betting data to ensure regulatory access and oversight.
Primary Server Location: The company must establish its primary operational servers within the European Union (EU).
Data Mirroring: A certified disaster recovery server or a secure data mirror must be physically located within the Republic of Cyprus. This is non-negotiable and allows the NBA real-time access to transaction records, player data, and accounting logs for audit purposes.
Certification: The hardware and software used must be certified by an independent auditor or testing house approved by the NBA (e.g., GLI, eCOGRA).
Technical Standards and Integrity Protocols
All platforms, betting systems, and underlying software must be demonstrably fair, secure, and compliant.
Betting System Integrity: The system must accurately record all bets, outcomes, and payouts, with full audit trails.
Time Synchronization: Critical for sports betting integrity, all systems must be synchronized to a certified time server to prevent the acceptance of bets after an event has commenced (late betting prevention).
Information Security: The platform must comply with internationally recognized standards (e.g., ISO 27001) for data encryption, network security, and access control. Robust firewall and intrusion detection systems are mandatory to protect the Cyprus online betting infrastructure.
Payment Processing and KYC Integration
The payment infrastructure must be fully integrated with the company’s anti-money laundering and Know Your Customer (KYC) compliance systems.
Payment Gateways: The use of approved EU payment institutions (PSPs) or banks is required.
KYC Integration: The payment process must be halted if a player fails to meet the required KYC verification threshold, directly linking financial transactions to regulatory compliance.
AML/CTF Compliance: The Cornerstone of the Cyprus License
The NBA, in cooperation with the Cypriot financial regulator and the Unit for Combating Money Laundering (MOKAS), enforces the EU’s 5th and 6th Anti-Money Laundering Directives (5AMLD/6AMLD). Compliance is rigorous and non-negotiable.
The AML Compliance Framework
AML Officer Appointment: The VASP must appoint a dedicated, local AML Officer (AMLCO) who is certified and approved by the NBA and MOKAS. The AMLCO must have sufficient independence, resources, and authority to implement the AML Programme effectively.
Risk Assessment: The operator must develop and maintain a comprehensive, documented Risk Assessment that identifies and mitigates risks related to geographical exposure, payment methods, types of bets (e.g., high-stakes), and customer profiles.
Ongoing Monitoring: The system must facilitate continuous transaction monitoring to detect patterns of suspicious activity, such as structuring deposits/withdrawals, rapid movement between accounts, or activity inconsistent with the player’s profile.
Customer Due Diligence (CDD) and Enhanced Due Diligence (EDD)
| Due Diligence Type | Requirements and Triggers |
| Standard CDD (Know Your Customer) | Mandatory verification of identity (ID/Passport) and residential address (utility bill). Verification must occur before the player reaches a specific threshold (e.g., cumulative deposits/withdrawals of €2,000). |
| Enhanced Due Diligence (EDD) | Triggered by high-risk factors: transactions exceeding thresholds (e.g., single transaction >€2,000), dealing with Politically Exposed Persons (PEPs), or transactions involving high-risk jurisdictions. |
The most critical requirement under EDD is the verification of the Source of Funds (SoF) for high-value transactions, which must be documented and auditable to MOKAS standards.
Suspicious Transaction Reporting (STR)
Any suspicious activity must be reported immediately to MOKAS. The operator must also ensure that the player is not informed (tipping off), which is a serious criminal offense. Training all relevant staff on the identification and reporting of suspicious activity is a mandatory, annual requirement enforced by the NBA.
The Functional Independence of the AMLCO
The NBA and MOKAS place immense importance on the functional independence of the AMLCO. This means:
No Commercial Conflicts: The AMLCO cannot simultaneously hold a position that involves commercial revenue generation (e.g., Head of Marketing or Sales). Their focus must be purely on compliance.
Training Mandate: The AMLCO is responsible for organizing and documenting mandatory annual AML/CTF training for all relevant employees, including customer support and finance teams.
MOKAS Liaison: The AMLCO serves as the official liaison with the Cypriot Financial Intelligence Unit (MOKAS) for the submission of all STRs. This role demands continuous professional development to stay current with evolving global AML typologies and local MOKAS guidance.
Licensing Process: A Strategic Implementation Checklist
The process of obtaining a Cyprus Betting License is phased, demanding careful planning and the simultaneous satisfaction of corporate, financial, and technical requirements.
Preparation and Corporate Establishment
Establish the Cypriot Limited Liability Company (Ltd) or local branch.
Appoint the Board of Directors, ensuring at least one local or EU-resident director with physical presence.
Draft the comprehensive Business Plan, Financial Projections, and Responsible Gaming Policy Cyprus.
Identify and secure banking relationships within the EU for operational and player funds.
Submission and Financial Compliance
Submit the formal application dossier to the NBA (including F&P documentation for all key individuals and UBOs).
Lodge the mandatory Bank Guarantee (€200,000 or €300,000) with an approved bank.
Pay the non-refundable application fee.
Submit the detailed organizational chart and internal control manual.
Technical Audit and Final Approval
Engage an approved independent testing laboratory (GLI/eCOGRA) to audit the gaming platform, the betting system, and the Random Number Generator (RNG) (where applicable for specific betting products).
Secure the data mirror server physically located within Cyprus and demonstrate real-time data flow to the NBA.
NBA Site Inspection: For Class A, a physical inspection of the premises; for Class B, a technical remote inspection of the servers, data center, and security protocols.
Final NBA issuance of the Cyprus Gambling License.
Post-Licensing Obligations: Reporting and Audits
Maintaining the license requires continuous vigilance and adherence to strict reporting and auditing cycles. Failure to comply can result in administrative fines or, ultimately, license revocation.
Mandatory Financial and Operational Reporting
GGR Reports: Monthly detailed reports of Gross Gaming Revenue (GGR), stakes, and winnings, submitted directly to the NBA for tax calculation.
Annual Audited Accounts: Submission of annual audited financial statements to the NBA and the Registrar of Companies, certified by a Cypriot approved auditor.
Compliance Audit: Operators must undertake regular, independent Compliance Audits (often bi-annual or annual) covering AML/KYC procedures, IT security, and technical system integrity.
Key Personnel and Shareholding Changes
Any material changes must be pre-approved by the NBA:
Directors/Managers: Any change in the Board of Directors or replacement of the AMLCO requires a new F&P assessment by the NBA before the change can take effect.
Shareholders: Any acquisition or disposal of shares exceeding 10% requires the prior consent of the NBA. Failure to seek prior approval is considered a serious breach of the Cyprus Gaming Regulatory Framework.
Taxation Framework and Corporate Advantages
Beyond the 10% GGR tax, Cyprus offers significant corporate tax advantages, making it an attractive operational hub.
Corporate Income Tax
CIT Rate: Cyprus has one of the lowest Corporate Income Tax rates in the EU at 12.5%. This is applied to the net profit of the Cypriot entity after the deduction of operating expenses (salaries, rent, technology costs, marketing, etc.) and the mandatory 11% GGR/Contribution levy.
International Tax Agreements: Cyprus benefits from an extensive network of Double Tax Treaties (DTTs) with over 65 countries, significantly reducing withholding taxes on dividends, interest, and royalties paid to or received from other jurisdictions. This DTT network enhances the tax efficiency of the parent company holding the Cyprus Gambling License*.
Deductions and Taxable Base
The GGR tax base is straightforward: Stakes received minus winnings paid. However, operators must maintain rigorous accounting separation between these components.
Deductible Expenses: All standard and reasonable operating expenses are deductible from the corporate taxable base, provided they are fully documented and relate directly to the licensed betting operation.
VAT and International Services
The application of Value Added Tax (VAT) in the Cypriot gaming sector requires careful structuring, especially for Cyprus Remote Gambling operators servicing international customers.
VAT Exemption (Betting): The core service of accepting bets and paying winnings is generally treated as an activity exempt from VAT.
VAT on Related Services: Services provided by the Cypriot company to an international parent or sister company (e.g., provision of marketing services, IT support, or intellectual property licensing) are subject to VAT rules. These intercompany transactions must be conducted at arm’s length (transfer pricing rules) and accurately accounted for, often leveraging the EU’s reverse-charge mechanism for B2B services.
Request more information
Marketing and Advertising Regulations
The NBA imposes strict rules on the advertising and marketing of betting services, primarily aimed at protecting minors and vulnerable groups.
Targeting Restrictions: Advertising must not target minors or individuals under the age of 18. This includes placement restrictions near schools or in media predominantly consumed by minors.
Misleading Claims: Advertisements must be truthful, non-misleading, and must not create the impression that betting is a guaranteed source of income.
Responsible Gaming Mandates: All marketing materials must prominently display the NBA’s official logo and include a clear, visible warning message about the risks of addiction and provide contact details for support organizations. The NBA provides specific guidelines on the size, font, and placement of these warnings.
Cybersecurity and Data Protection (GDPR Compliance)
Operating a Cyprus Remote Gambling platform within the EU necessitates absolute adherence to the General Data Protection Regulation (GDPR) and the NBA’s technical security standards.
GDPR Compliance
As an EU member state, all licensed operators must fully comply with the GDPR.
Data Minimisation: Collecting only the data strictly necessary for KYC/AML and operational purposes.
Player Rights: Ensuring full compliance with the right to be forgotten, data portability, and prompt handling of Data Subject Access Requests (DSARs).
Data Protection Officer (DPO): Mandatory appointment of a dedicated DPO if the company’s core activities involve large-scale, systematic monitoring of data subjects (i.e., player transaction tracking).
IT Systems Security Mandates
The NBA technical guidelines mandate security controls beyond simple network protection.
Penetration Testing (Annual): Independent, third-party penetration testing is required annually, covering all public-facing services, the betting engine, and critical infrastructure.
Disaster Recovery: The Business Continuity Plan (BCP) must be fully documented and regularly tested to ensure RTOs (Recovery Time Objectives) and RPOs (Recovery Point Objectives) meet the NBA’s strict operational uptime expectations.
NBA Requirements for Data Security Protocols
The NBA expects the use of advanced, industry-standard cryptographic practices to protect both player funds and confidential data.
Hardware Security Modules (HSMs): While not explicitly mandated for all functions, the NBA strongly encourages and audits the use of FIPS 140-2 compliant HSMs for the secure storage of cryptographic keys, certificates, and authentication secrets. HSMs are the preferred method for protecting root keys used for digital signing and data encryption, offering the highest level of physical and logical security.
Encryption Standards: All data in transit (player communication, payment data) must use TLS 1.2 or higher. Data at rest (databases, logs) containing personal information must be protected using AES-256 encryption.
Change Management: A formalized, auditable Change Management Protocol must be in place to ensure all modifications to the betting platform or security systems are reviewed, tested, and approved before deployment, preventing unauthorized access or accidental exposure.
Enforcement and Sanctions: NBA's Discretionary Power
The NBA has extensive powers of inspection, investigation, and enforcement, backed by the Betting Law of 2019.
Administrative Sanctions and Fines
The NBA can impose severe administrative fines for non-compliance. Common breaches leading to fines include:
Failure to submit GGR reports or annual accounts on time.
Breach of advertising restrictions (targeting minors).
Minor breaches of AML/KYC record-keeping.
Fines can reach six-figure sums depending on the severity and duration of the breach.
Suspension and Revocation
License suspension is typically used when a serious, but remediable, breach has occurred (e.g., a temporary failure of the data mirroring system or a lapse in the bank guarantee). Revocation is the ultimate sanction, reserved for:
Systemic failures in AML/CTF compliance (e.g., facilitation of money laundering).
Failure to meet the financial or F&P requirements continuously.
Illegal offering of prohibited games (e.g., secretly launching an online casino).
The NBA’s enforcement history demonstrates a zero-tolerance approach to breaches affecting player protection, financial integrity, or AML compliance.
Appeal Procedures and Enforcement Transparency
Licensees have defined rights to appeal adverse decisions made by the NBA.
Right of Appeal: Decisions relating to the rejection of an application, suspension, or revocation of a license can be appealed through the Cyprus Administrative Court. This judicial review process focuses on whether the NBA acted legally, rationally, and followed due process.
Public Record: The NBA maintains a degree of transparency by publicly disclosing significant administrative fines and sanctions, naming the sanctioned entity and detailing the nature of the breach. This public disclosure acts as a significant deterrent, emphasizing the NBA’s commitment to maintaining the integrity of the Cyprus Gaming Regulatory Framework*.
Specific Operational and Technical Requirements for Class B Remote
The Cyprus Remote Gambling (Class B) segment is the most complex, requiring integration of the physical requirements of the island nation with the high-volume demands of international betting. This section provides the necessary detail for achieving and maintaining technical compliance.
The Critical Role of the Control System
The Cyprus Control System is the mandatory infrastructure that ensures the NBA’s effective supervision over all remote betting transactions. It is more than just a data mirror; it is an integrated regulatory hub.
Real-Time Data Feed: The operational betting system must provide a live, real-time data feed of all stakes, odds offered, bets placed, accepted, and settled, along with player identification (anonymized for privacy, but auditable for compliance).
Integrity Verification: The control system must be capable of generating digital hashes for transaction logs to prevent retrospective tampering. The NBA reserves the right to audit the integrity of the data provided by the Control System at any moment.
RNG and Non-Betting Games Policy Clarification
While online casino games are forbidden, the line blurs in modern sports betting interfaces (e.g., virtual sports or mini-games).
Virtual Sports: If the virtual sports offering is purely a betting product (i.e., fixed odds on a virtual outcome), it falls under Class B. However, the underlying RNG used to determine the outcome of the virtual event must still be certified by an approved testing house (e.g., eCOGRA or GLI).
Prohibited Games of Chance: Any feature that resembles an independent casino-style slot or table game (even if integrated into the betting platform) is prohibited. Operators must carefully strip out any RNG-driven side-games commonly found on international betting platforms.
Responsible Gaming Implementation
The NBA requires advanced implementation of responsible gaming tools that go beyond simple self-exclusion.
Mandatory Limits: The system must enforce mandatory tools for players to set:
Deposit Limits (daily, weekly, monthly).
Loss Limits (over a defined period).
Session Time Limits (duration of play).
Self-Exclusion Register: Operators must be fully integrated into the NBA National Self-Exclusion Register. A player who self-excludes on one licensed site must automatically be blocked from all other licensed Cyprus sites. This cross-operator communication system is a key technical challenge.
Technical Checklist for System Submission
| Technical Component | NBA Requirement |
| Betting Platform Software | Certification by approved testing house (e.g., GLI, iTech Labs). |
| Data Mirror/Control System | Physical location in Cyprus; real-time feed; hash integrity verification. |
| RNG (where applicable) | Tested and certified for fairness and predictability. |
| Security (ISO 27001) | Documented Information Security Management System (ISMS). |
| Payment Gateway | Integration must pass audit verifying separation of player and operational funds. |
Capital Allocation and Insurance
Securing the Cyprus Gambling License is a capital-intensive exercise requiring careful financial structuring to meet both initial guarantees and continuous operational liquidity.
The Structure of the Bank Guarantee
The bank guarantee (€200,000 or €300,000) is not a license fee; it is collateral held by the NBA.
Use of Guarantee: The NBA can draw upon this guarantee only to satisfy outstanding player winnings, pay administrative fines, or cover NBA operational costs if the licensee defaults.
Renewal: The operator must ensure the guarantee remains valid and is renewed before expiration. A lapse in the validity of the bank guarantee is grounds for immediate license suspension.
Professional Indemnity and Risk Coverage
While the law focuses on the bank guarantee for player liabilities, best practice for the Cyprus Remote Gambling sector mandates additional insurance.
Cyber Insurance: Protection against data breaches, system downtime, and ransom attacks, which are critical operational risks.
Director and Officer (D&O) Insurance: Essential to protect management from personal liability arising from regulatory action (e.g., fines imposed due to AML/CTF lapses). These policies demonstrate prudent financial risk management beyond the mandatory requirements.
The Human Element: AMLCO, Local Presence, and Regulatory Culture
The success of a Cyprus Betting License application often hinges on the quality and engagement of the key personnel.
The AMLCO’s Operational Independence
The AML Officer (AMLCO) must be a highly qualified individual approved by the NBA and MOKAS. Their role is advisory and supervisory, not commercial.
Independent Reporting: The AMLCO must report directly to the highest level of management (the Board) and must have the explicit authority to halt suspicious transactions and request further EDD without needing prior approval from the commercial or marketing departments. Any perceived compromise of the AMLCO’s independence will be viewed negatively by the NBA.
Significance of Local Substance
Cyprus is highly focused on preventing “shell company” operations. The presence of local directors and the local server mirror are key elements of substance.
Management & Control: The NBA must be satisfied that the operational decisions and Management and Control of the betting activities are genuinely exercised from the Republic of Cyprus. This means regular Board meetings, strategic decision-making, and critical administrative functions should be verifiably conducted on the island. Failure to demonstrate genuine substance can lead to challenges from both the NBA and the Cypriot Tax Authority.
Comparison with Closest Competitors
While avoiding jurisdictional leakage, it is expert practice to understand why an operator chooses Cyprus Gambling License over its closest European competitors (e.g., Malta Gaming Authority – MGA, Gibraltar).
Malta (MGA): Offers a wider product scope (including online casino/RNG games) but has a higher corporate tax rate (often 35% without complex structures) and a more intensive initial licensing process with higher capital requirements.
Cyprus (NBA): Its unique competitive advantages are the low GGR tax (10%) and the simple, straightforward license classification (focused solely on sports betting). Cyprus is the preferred jurisdiction for operators who exclusively offer sports betting and value tax efficiency and stability.
Strategic Tax Structuring and DTT Network Utilization
The full financial advantage of the Cyprus Gambling License is realized when the operational entity is leveraged with the country’s extensive Double Tax Treaty (DTT) network.
Intellectual Property (IP) and Royalty Structure
If the betting software and platform IP are held by a non-Cypriot entity (e.g., in a jurisdiction with high R&D allowances), the Cypriot operating company (OpCo) pays royalties for the license use.
Tax Efficiency: These royalty payments are a tax-deductible expense for the Cypriot OpCo (reducing the 12.5% CIT base). Furthermore, due to DTTs, the outgoing royalty payments may face zero or very low withholding tax.
Transfer Pricing: The NBA and the Tax Authority strictly require that these royalty payments adhere to the internationally recognized arm’s length principle to prevent base erosion.
Dividend Distribution
Profits distributed by the Cypriot licensed OpCo to its non-resident shareholder are typically exempt from withholding tax in Cyprus, provided the receiving entity is not a Cypriot resident. This makes Cyprus highly efficient for profit repatriation.
Final Assessment: Strategic Alignment
Obtaining a Cyprus Gambling License is a strategic alignment with a robust, transparent, and tax-efficient European regulatory environment. The strict focus on sports betting (Class B), combined with rigorous AML and technical mandates, positions Cypriot licensees as credible and highly compliant operators. The NBA ensures that only well-capitalized entities committed to ethical, secure operations can enter and thrive in this regulated market.
FAQ
It's a license issued by the National Betting Authority (NBA) of Cyprus that allows operators to legally provide betting services within Cyprus and utilize Cyprus as a tax-efficient base for iGaming holding companies within the EU.
The NBA issues licenses only for fixed-odds betting and Betting Exchanges. Crucially: The NBA does not license online casinos, RNG games, slots, or poker for the domestic Cyprus market.
The main appeal is its financial and tax structure. Cyprus offers the lowest corporate tax rate in the EU (12.5%) and the powerful Notional Interest Deduction (NID) tool, making it an ideal jurisdiction for holding companies and managing Intellectual Property (IP) for global operations.
There are two main classes for operators:
Class A: For operating land-based (physical) betting shops.
Class B: For operating online betting (sports, betting exchanges).
You must provide:
Share Capital: (Requirements vary, but must be sufficient for the business plan).
Bank Guarantee: A mandatory, non-interest-bearing deposit of €550,000, held in an approved Cypriot bank. This acts as security against fines or failure to meet player obligations.
Annual License Fee: €30,000 (for a one-year license).
This is a mandatory certification required for all providers of core software, platforms, odds feeds, and other critical technological services to Class A and Class B operators. It guarantees the technical integrity of the market.
Critically important are:
AML/KYC: Strict adherence to EU Anti-Money Laundering (AML) and Know Your Customer (KYC) directives. Requires the appointment of a local AML Officer.
CMS Integration: Mandatory full integration of the operator's platform with the NBA's Central Monitoring System (CMS) for real-time transaction control.
Segregation of Player Funds: Mandatory separation of player funds from company operational funds in dedicated trust accounts in EU banks.
The Notional Interest Deduction (NID) allows companies to deduct a deemed interest expense on new equity (capital injected into the company). This tool can effectively reduce the 12.5% corporate tax rate to as low as 2.5% or less, making Cyprus extremely beneficial for IP and holding structures.
To qualify for tax benefits, the company must prove it is genuinely managed and controlled from Cyprus. This includes:
Holding the majority of Board of Directors meetings in Cyprus.
Having a majority of local resident directors.
Maintaining a functional physical office and sufficient local staff.
What penalty is imposed for violating NBA rules? Penalties range from administrative fines (for minor infringements) to the confiscation of a portion or all of the €550,000 Bank Guarantee and immediate license revocation for critical violations (e.g., related to AML or fraud).
Operational servers and player databases for Class B licensees must be physically located within the European Union (EU) or the European Economic Area (EEA) to ensure compliance with GDPR and NBA requirements.
Licensees are required to undergo an annual statutory audit by a Cypriot auditor, which confirms financial performance and adherence to all regulatory measures.
The application process, including the due diligence of key personnel and the technical audit, usually takes 3 to 6 months.