Supporting the Economy During Covid-19: New Economic Measures from Cyprus Government

published on 3 July 2020 | reading time approx. 5 minutes

Following our previous announcement regarding Covid-19 measures we detail below further announcements by the Cypriot government to support the economy.  

Scheme for Providing Government Guarantees to the European Investment Bank for granting loans to Cypriot small and medium companies and enterprises of medium capitalization.

Who can benefit: Cypriot companies of up to 3,000 employees who are registered and operate in Cyprus.

• The rates of interest are lower compared to those that would be charged by banking institutions.
• The interest for loans contracted under the Scheme may obtain subsidy by the “Government Interest Subsidy Scheme”.
• Long duration of loan (up to 12 years).
• Choice between fixed and fluctuating interest.
• Even more favourable interest with an additional reduction (0.50 percentage unit lower) for companies meeting the criteria for “Jobs for Youth.”

Liquidity amounting to 800m euros for funding of SMCs through the Cyprus Entrepreneurship Fund (CEF).

Who can benefit: Small and medium companies of a max. number of 250 employees.

• Amount: Up to 1.5 m euros
• The rates of interest are lower compared to the interests that would be charged by banking Institutions. 
• The interest charged for loans contracted under this Scheme may enjoy subsidy by the “Government Interest Subsidy Scheme.”
• Long duration of loan (up to 12 years).

Interest Subsidy Scheme for new business loans

Who can benefit: All problem-free enterprises (on the basis of the definition by the European Commission) at 31. December 2019, which are facing difficulties due to the pandemic. It has to do with very small, small, medium and large enterprises as well as the self-employed.

 
Purpose of loan: Liquidity for purposes of cash flow and investment.

Loan period: For business loans contracted or to be contracted as of 1. March 2020 until 31. December 2020.
Amount: No limit to the amount of the loan to be obtained, however the amount of the loan the interest to which will be subsidized, may not exceed:

• Twice the cost of the annual payroll of the beneficiary for 2019 or for the most recently available year. In the case of companies incorporated on the 1st of January 2019, the max. amount of the loan should not exceed the calculated annual payroll cost for the first two years in operation or
• 25 per cent of the total turnover of the beneficiary in 2019.
  Interest rates: The maximum rate of interest on the total amount of the loan may not exceed 4.25 percent. The max. interest subsidy shall be four years as follows: 
• In the first two years the interest will be subsidized up to 3.5 percentage units (350 basis units).
• in the third until the fourth year the interest will be subsidized by 2 percentage units for SMCs (200 basis units) and 1.5 percentage units (150 basis units) for large companies.

Interest Subsidy Scheme for new housing loans

Support households in raising loans for owner occupancy. The subsidization of interest for a specified period of time and the fixed maximum amount of the loan may provide the suitably necessary and targeted solution under the prevailing circumstances.

Loan period: For housing loans contracted or to be contracted as of 1. March 2020 until 31. December 2020.

 
Amount: Loan may not exceed 300.000 euros

Interest rates:

• The max. interest for the whole amount of the loan shall not exceed 2.30 per cent.
• The max. interest subsidy shall be four years and the interest shall be subsidized by up to 1.5 percentage points (150 basis units).

Note: The new housing loans may not be used to cover the repayment of existing housing loans, whether serviced or non-serviced.

Subsidization of very small and small enterprises and self-employed

Cover rents or other liabilities and running expenses.

 
Who can benefit: Very small and small enterprises and self-employed which occupy personnel of up to 50 people, who had been entered and approved in the Special Schemes of the Ministry of Labour, Welfare and Social Securities implemented in the context of the emergency measures for combating the Covid19 pandemic in the period 13 April – 12 May 2020. Provided that for all beneficiaries apply the relevant conditions concerning non-dismissal of personnel.

Amount of Subsidy/lump sum grant:

• Self-employed and very small enterprises that had fully or partially suspended their activities and were entered in the Special Schemes of the Ministry of Labour, Welfare and Social Security in the period 13 April - 12 May 2020, employing up to one person - 1250 euros.
• Self-employed and small enterprises that had fully or partially suspended their activities and were entered in the Special Schemes of the Ministry of Labour, Welfare and Social Security in the period 13 April -12 May 2020, employing 2-5 people - 3000 euros.
• Self-employed and very small enterprises that had fully or partially suspended their activities and were entered in the Special Schemes of the Ministry of Labour, Welfare and Social Security in the period 13 April -12 May 2020, employing 6-9 people - 4000 euros.
• Self-employed and small enterprises that had fully or partially suspended their activities and were entered in the Special Schemes of the Ministry of Labour, Welfare and Social Security in the period 13 April -12 May 2020, employing 10-50 people - 6000 euros.

Reduction of the VAT rates from 9 percent to 5 percent in the sectors of tourist accommodation and catering.

• Accommodation in hotels, tourist accommodation, and similar areas, including holiday accommodation.
• Restaurant and catering services. Restaurant and catering services are the services that consist of the delivery of prepared or non-prepared food or beverages or both, for human consumption, accompanied by adequate support services that make it possible to consume them immediately.
• Transfer of passengers and their accompanying luggage inside the Republic by urban, intercity and rural taxis as regulated by the current legislation on Traffic Regulation and by tourist, excursion and intercity buses.

This has been enacted by Parliament and it is effective from 1/7/2020 until 9/01/2021.

Extension of deadline for the submission of income tax statements by salaried persons.

Both the submission of the tax statement and the payment of the taxation due are extended until the end of October 2020.

Deletion of encumbrances

That may have been imposed due to the not timely submission of tax statements for the period ending 10/04/2020 and 10/05/2020.

Extension of deadlines for the submission of documentation concerning the ESTIA Scheme and possibility of submitting new application.

• A new one month extension of the deadline for presenting the necessary documentation by interested persons who had submitted an application by 31.December2009 to join the Estia Scheme. The new deadline is set until 31st July 2020 instead of 30th June 2020, and
• Possibility of debtors who had not submitted an application to join the Estia Scheme until 31. December2019 to do so if they wish. The new applicants should complete and submit their application envisaged in the Scheme to the banking and other credit institutions as of 1st June 2020 until 15 June 2020.

For more details and information please visit the official website: https://www.pio.gov.cy/coronavirus/en/index.html 

https://www.pio.gov.cy/coronavirus/en/press/28052020_5.pdf

 
***The current situation regarding Covid-19 in Cyprus is subject to change. All the above amendments can be altered at any time by the Government and some proposals require Parliament ratification.