Support Measures Announced by the Cyprus Government in Response to COVID-19

Further to our recent newsletter on the government measures taken in relation to COVID-19, the House of Representatives approved on 27 March 2020 the following relief measures to support businesses from the economic impacts of Coronavirus pandemic.  

 

VAT

Suspension of VAT payments that become due for the tax periods ending 29 February 2020, 31 March 2020 and 30 April 2020 without imposition of penalties and interest. Settlement of due VAT should be made no later than 10th of November 2020.

The above measures do not apply for VAT registered persons who are engaged with economic activities such as electricity, telecommunications, pharmacies, internet service providers, retail of food and beverages i.e. supermarkets, amongst others.

Obligation for submission of VAT returns within the usual deadlines has not been affected. The next submission is scheduled for 10 April 2020. Respectively, the penalty of late submission of VAT declaration has not been waived and will continue to apply as well as continue to constitute a penal offence.     

Reduction on VAT rates as it was initially announced by the Ministry of Finance has not been approved by the House of Representatives.

 

TAX

 

National Healthcare System (GESY)

The increase in contributions has been suspended for a period of three months. The suspension applies from 1 April 2020 to 30 June 2020. The suspension period for employers who have maintained contributions at the initial rates for the month of March will be from 1 March 2020 to 31 May 2020. 

Rates are formed as follows:

 Contribution rates01/04/2020 - 30/06/2020

 01/03/2020   - 31/03/2020

 01/04/2020   - 30/06/2020

 01/07/2020   - onwards

 Employees (Public and Private Sector)

 2.65%

 1.70%

 2.65%

 Employers (including the State as an employer)

 2.90%

 1.85%

 2.90%

 Self-employed

 4.00%

 2.55%

 4.00%

 Pensioners

 2.65%

 1.70%

 2.65%

 Government officials

 2.65%

 1.70%

 2.65%

 Persons responsible for the payments of

 remuneration to Government officials 

 2.90%

 1.85%

 2.90%

 Income Earners (e.g. dividend, interest, rent)

 2.65%

 1.70%

 2.65%

 State 

 4.70%

 1.65%

 4.70%

 

Other liquidity Measures:

In close collaboration with the Central Bank of Cyprus, the Ministry of Finance announced new measures to protect companies and entrepreneurs from declaring bankruptcy by enhancing their liquidity and keeping them afloat. First approved piece of legislation provides for the suspension of capital instalments and interests on granted loans owed to banks or credit institutions for 9 months, until 31 December 2020. Through a written request from affected parties, the obligation to submit financial accounts to these institutions in 2019 is also suspended.

Second approved piece of legislation, which is expected to start early April 2020, relates to the grant of government guarantees of up to €2,000,000,000 euros as a stimulus plan with the aim of (i) granting new low-interest loans of up to €1,750,000,000 for periods between 3-6 years to businesses and self-employed persons; and (ii) subsidising the partial interest rate to natural persons, self-employed persons and enterprises amounting to € 250,000,000. These economic measures aim to support the viability of businesses in the market and assist in their recovery following the COVID-19 crisis.


 

The authors of the article are Anastasia Sarkisian and Artemis Patsalidou.

Anastasia is a legal consultant at Royal Pine & Associates. She is qualified lawyer with experience in the corporate field and admitted member at the Cyprus Bar Association.

Artemis is a financial services officer at Royal Pine & Associates. She is a talented and dedicated accounting professional with 6 years experience in the field.

 

 

* This publication has been prepared as a general guide and for information purposes only. It does not purport to be comprehensive or to render legal advice. 

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