Small savers spared in Cyprus deal
28 March 2013
Posted by: SAIT Technical
By Irish Independent
expats with savings under £85,000 have been spared from being taxed by
the Cypriot government in a last-minute EU deal. Any of the 60,000
expats who live in Cyprus will be subject to the compulsory once-off
levy once they break the threshold.
British expats with savings under £85,000 have been spared from being taxed by the Cypriot government in a last-minute EU deal.
But it means that any of the island's 60,000 British expats who break
the threshold will be subjected to the compulsory one-off levy.
was saved from a banking system collapse and bankruptcy in the early
hours of Monday morning when eurozone ministers agreed a draft rescue
package of £10 billion euro (£8.5 billion).
The UK Government has previously said it will only compensate British armed forces personnel left out of pocket.
the plan, Cyprus's second-largest bank, Laiki, will be restructured and
holders of bank deposits of more than 100,000 euro (£85,000) will have
to take losses, said Jeroen Dijsselbloem, who chaired the meeting of the
17-nation eurozone's finance ministers in Brussels.
expats on the island had faced an anxious wait throughout the bailout
negations this week after the Cypriot government pulled out of plans to
tax every bank account in the country. Banks have been closed for more
than a week with customers now only able to withdraw 100 euro (£85) a
The European Central Bank had threatened to cut off emergency
assistance to the country's banks by Tuesday if no agreement was
reached. Without a bailout deal, the country would have faced the
prospect of bankruptcy, which could have forced it to become the first
country to abandon the euro. The fact that this was avoided came as a
relief to global stock markets, with the FTSE 100 Index up by 0.5% at
Alpari markets analyst Craig Erlam said: "The only
other alternative was to default on its debt and exit the eurozone,
which despite sounding like a great idea to many, would have probably
resulted in the collapse of the country's banking sector, leaving it in
an even worse recession than it is going to find itself in."
as there is still a levy on all deposits above 100,000 euro, analysts
have questioned whether the country will be able to prevent a run on the
banks. Unlike the previous rescues for Greece, Portugal, Ireland, and
Spanish banks, the proposed Cypriot bailout is the first one that dips
into people's bank accounts to finance a bailout. Under the original
agreement, which was rejected by the Cypriot parliament, the government
proposed a one-time tax of 6.75% on all bank deposits under 100,000 euro
and 9.9% over that amount.