Special Bank Levy enforced in Cyprus

The House of Representatives, Cyprus’ Parliament, passed on 14/4/11 the Bank Levy Bill into Law. The main effect of the new legislation is the establishment of 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. Amongst other provisions, the new Law confers to the Governor of the Central Bank of Cyprus and the Authority for the Supervision and Development of Cooperative Societies 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. Deposits caught under the law exclude interbank deposits between banks operating in Cyprus and deposits from foreign financial institutions.

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