In the recent days the Cypriot government agreed with the Eurogroup and IMF on a financial stability plan to secure the Cyprus banking sector. These measures will have no direct effect on the services they provide to the clients, nor will it change the country’s favorable holding regime. The proposed Corporate Income Tax rate increase from 10% to 12.5% will not affect the majority of the clients as this is relevant for trading and specific financing activities. Goal of the measures taken by the Cyprus government is to secure the country’s banks. Apart from Laiki and Bank of Cyprus, other banks remain unaffected for now.
Key measures taken by the Cyprus government:
1. All banking deposits up to EUR 100,000 are guaranteed (including those at Laiki Bank).
2. Laiki Bank’s good assets will be transferred to Bank of Cyprus (deposits of less than EUR 100,000 and all good assets). Large deposits (over EUR 100,000) and the bad assets will be kept by Laiki until the bank ceases its activities (estimated 5 years).
3. The Bank of Cyprus will impose a levy on deposits (estimated 30%) of more than EUR 100,000 Cyprus will continue as Member of the European Union and the Euro. It will keep offering some of the best solutions for investing into and out of Central and Eastern European countries, Russia, the Ukraine, India and South Africa. In addition, Cyprus's natural resources (e.g., gas and oil) have been presented to the business world and will offer an opportunity in the medium and longer term for further development and diversification of Cyprus' economy.
If you have any questions, please contact the office of "Vasyukov Ostapyuk and partners" for consultations.