On the 14th of April 2011, the Cyprus Parliament unanimously passed the Bank Levy Legislation. The law establishes an Independent Financial Stability Fund for financial institutions.
Provided that the totalamount of the levy does not exceed 20% of the total taxable profits of the financial Institution, as these are assessed by the Director of Inland Revenue, the law provides for a 0.095% levy on commercial and cooperative bank deposits.
The Cyprus Parliament also approved an amendment to the draft law deleting the provision that the levy be a temporary one of two years and making it permanent.
Another amendment to the draft bill provides that the Governor of the Central Bank of Cyprus and the Authority for the Supervision and Development of Cooperative Societies have the power to impose a fine up to EUR€100.000 to any financial institution that is deemed to have passed the levy onto customers.
The legislation provides that the bank levy will be imposed on the total amount of deposits (local and cross-border) on 31 December each year. The law defines deposits as ‘an amount of money, expressed in any currency, paid or received on terms under which such amount will be repaid with or without interest, or at a premium, either on demand, or at a fixed date, or under conditions agreed between the payer and the recipient of the amount, but where these terms are not related to the supply of goods, or property, services or to the issuing of shares or debentures’.
However the term deposit excludes interbank deposits between banks operating in Cyprus and deposits from foreign financial institutions.
The Cyprus Parliament also narrowly approved an amendment to the draft law deleting the provision that the levy be a temporary one of two years and making it permanent. Another amendment to the draft bill foresees a 100,000 euro fine on any bank deemed to have passed the tax onto customers.
The above should be used as a source of general information only. It is not intended to give a definitive statement of the law and is subject to the disclaimer.
