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Zero tax on deposits of up to €20k

19/03/2013 11:00
Deposits of up to €20 thousand are exempted from the haircut, according to the new bill forwarded to the Parliament by the government a few minutes ago.

According to the new bill, for deposits from €0 to €20 thousand, the tax will be nil.

For deposits of €20 thousand to € 100 thousand, the tax will amount to 6.75%, while for those over €100 thousand it will be of 9.9%.

The tax on savings will be calculated on the outstanding balance of deposits in the books of the banks in Cyprus at the closing of their operation on March 15.

Against the tax, each depositor will be granted in the future stocks of the bank of the Republic and the valuation price is determined on the basis of the EU rules for state aids.

The value of the share that will be paid to depositors will be of the same value as the acquisition price by the Republic.

The shares that will be allocated to depositors will be convertible into bonds, the performance of which is guaranteed by the anticipated gas revenues provided that deposits will be kept in the bank of the Republic for two years.

The law does not trigger the compensation of depositors under the Deposit Protection Scheme of the banking activities law, the Cooperative Societies Act, the investors’/clients’ compensation process under the Establishment and Operation of compensation fund of investors / clients / banks / Regulations 2004 to 2007 and the investors’ / clients’ compensation process by virtue of the establishment and operation of the compensation fund of investors / clients of the CIF regulations of 2004 and 2005.

The bill will be put before the House Finance Committee in a while.