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When considering entry into the German market of finances, the first question that always arises for new companies is banking regulations in Germany: Is a BaFin license needed for the scope of services? In German jurisdiction, BaFin is the regulator of sector of finances that applies a range of EU directives and administrative provisions to ensure the proper functioning of the sector. To stay compliant with applicable laws, companies entering the German/EU market should define whether they need to obtain a license to run their business.
The BaFin is Germany’s financial regulative authority. By now, the lion’s share of activities in the financial field requires prior licensing from this regulator. Small players do, sometimes, provide services for which they would get licensed – without acquiring such a permit. Implementing this practice is considered an infringement of German law and we strongly advise not to bypass the law. The best option to bypass any legal problems with the regulator is determining the eligibility under the licensing condition prior to starting operations in Germany. It should be also noted that a BaFin license is often bona fide for just certain offers listed in the company’s application.
Along with banks and PSP, cryptocurrency and crowdfunding businesses might also need to be licensed. This is subject to their business structure and the Payment Services Supervision Act (ZAG). The recent provisions of German law promulgated that virtual currency is now classified as a financial tool, or precisely as monetary units. If you are dealing with such assets professionally, then you require a license. This also refers to establishing a FinTech business in Germany.
If an FSP continues to run unpermitted business, the company is usually informed by a letter from the regulator. The delivery of services without the appropriate authorization can entail serious consequences and penalties for the companies concerned and the individuals acting:
The prices for applying for a license differ, depending on the certain services or operations for which a license is acquired.
Generally, the fee charged for a license in line with Section 32 (1) of the KWG varies between 2,000 and 17,000 euros for services with finances. Acquiring a license for banking transactions costs 5,000 – 20,000 euros.
If authorization is only issued for the delivery of
the BaFin fee is 2,600 euros. If an application is extensive, the fee may also be higher. In terms of expenses for licensing, there also should be taken into account the number of the lawyer’s fees, and other related payments.
Please contact us to get more information.
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The international company Eternity Law International provides professional services in the field of international consulting, auditing services, legal and tax services.