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Economy and Banking Sector of Cyprus

Mediterranean Sea
Population  (2017)
854 802  (+0.01%)
EU Status
member since 2004
EUR (Euro)
Nominal GDP (2016)
17.9 bln EUR  (+0.02%)
Credit Ratings (as of Sep 2016)
Consolidated Banking Assets (2016)
67 347.62 mln EUR  (-7.97%)
Deposit Guarantee
100 000 EUR
Number of Banks

Cyprus (Republic of Cyprus) is an island country in the Mediterranean Sea, a member of the European Union since 2004. Republic of Cyprus is de facto partitioned into the area under effective control of the Republic and self-declared Turkish Republic of Northern Cyprus.

Cyprus is a free-market, high-income, service-based economy positioning itself as a bridge between the East and the West: Cyprus has educated English-speaking population, and offers moderate local costs, good airline connections, and telecommunications.

In 2012-2013 Cyprus underwent a financial crisis, largely resulted from Cypriot banks business model of attracting offshore money, large exposure to Greek government bonds, amid of big domestic real estate bubble. However by 2016, Cyprus benefited from an economic adjustment programme, during which it managed to emerge from recession, stabilise its financial sector, and consolidate its public finances while still remaining many challenges.

List of Banks in Cyprus

National Currency

Euro (EUR)

Cyprus joined the Euro Area on 1 January 2008. The preceding national currency, Cyprus pound (CYP), was replaced by Euro.


Nominal GDP (2016)Nominal GDP per Capita (2016)Real GDP Growth (2016)
17.9 bln EUR  (+0.02%)21 000 EUR  (+0.02%)2.8 %  (2015: 1.7 %)

According to Eurostat, nominal GDP of Cyprus in 2016 was 17.9 bln EUR.

Cyprus underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.3% over the past 10 years (2006 - 2016). In 2016 real GDP growth was 2.8% which was above the Euro Area average (1.8%) and above the European Union average (1.9%). Real GDP growth in 2017 - 2022 are IMF's estimates.

Real GDP Growth in Cyprus. Chart 1. Real GDP Growth in Cyprus. Source: Eurostat, International Monetary Fund.

In 2016, nominal GDP per capita in Cyprus was 21 000 EUR.

Cyprus has a below-average level of wealth in terms of per-capita GDP at purchasing power parity (PPP); this economic welfare indicator has, on average, fell behind that of the European Union by -5.4% over the past 10 years (2006 - 2016). GDP per capita at PPP in 2017 - 2022 are IMF's estimates.

GDP Per Capita at Purchasing Power Parity in  Cyprus; European Union = 100. Chart 2. GDP Per Capita at Purchasing Power Parity in Cyprus; European Union = 100.

Inflation Rate

CPI, MoM (Jun 2017)CPI, YoY (Jun 2017)CPI, Year Average (2016)
0.3 %  (May 2017: 0.1 %)0.9 % (unchanged)-1.2 %  (2015: -1.6 %)

According to Eurostat, inflation rate in Cyprus in 2016 expressed as annual percentages of average consumer prices was -1.2% which was below the Euro Area average (0.2%) and below the European Union average (0.3%). Inflation rates in 2017 - 2022 are IMF's estimates.

Inflation Rate in Cyprus. Chart 3. Inflation Rate in Cyprus. Source: Eurostat, International Monetary Fund.

Unemployment Rate

Unemployment Rate (2016)
13.1 %  (2015: 15.1 %)

Government Bond Yield

Government Bond Yield (Jun 2017)
2.84 %  (May 2017: 3.03 %)
According to Eurostat, government bond yield in Cyprus in Jun 2017 was 2.84%, compared to 3.03% in May 2017.
Government bond yield of Cyprus. Chart 4. Government bond yield of Cyprus. Source: Eurostat.

Credit Ratings (as of Sep 2016)

Fitch Moody's
B- (highly speculative), outlook negative B1 (highly speculative), outlook stable

Withholding Tax

Withholding taxes are imposed at source of income and are often applied to dividends, interest, royalties, rent and similar payments. The rates of withholding tax are often reduced by double taxation agreements.

Withholding Tax Rates in Cyprus: 0.0 - 0.0%

Withholding tax rates applied on payments of interest and dividends in Cyprus are shown in Table 1.

Dividends Interest
Natural person, resident 0.0 %0.0 %
Natural person, non-resident 0.0 %0.0 %
Table 1. Withholding tax rates in Cyprus.

Double Taxation Agreements

Double Taxation Agreement (DTA) is an agreement between two or more countries for the avoidance of double taxation.

DTAs of Cyprus: 51 Signed Agreements

Cyprus signed DTAs which already came info force with the following jurisdictions (for agreements which came into force after 01 January 2013 the date of coming into force is given in brackets):

 Czech Republic
 Finland (Apr 2013)
 Moldova, Republic of
 Portugal (Aug 2013)
 Russian Federation
 San Marino
 South Africa
 Spain (May 2014)
 Syrian Arab Republic
 United Kingdom
 United States

There are also several agreements between Cyprus and other jurisdictions which were signed but haven't yet come into force (for agreements signed after after 01 January 2013 of signing the agreement is given in brackets):

 Guernsey (Jul 2014)
 Lithuania (Jun 2013)
 United Arab Emirates

Information Exchange

There are 3 ways for jusrisdictions to exchange information on tax matters:

  • spontaneously;
  • on request;
  • automatically.

Spontaneous exchange of information is provision of information that is forseeably relevant to another party without a request being previously sent.

Tax Information Exchange Agreements (TIEAs) enable exchange of information on request relating to a specific tax investigation, either criminal or civil.

Automatic information exchange allows jurisdictions to exchange information automatically, without having a specific tax investigation.

Automatic Exchange: Starts in September 2017

Cyprus signed the automatic information exchange agreement on 29 October 2014 and committed to start the automatic information exchange in September 2017.

Further Information


Foreign Account Tax Compliance Act (FATCA) which became law in the United States in March 2010, focuses on reporting made by foreign financial institutions about financial accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest. The FATCA-reporting is facilitated by Intergovernmental Agreements (IGAs).

FATCA Status in Cyprus
IGA in effect since 02 December 2014, Model 1

Cyprus has FATCA agreement with the U.S. in effect since 02 December 2014 (Intergovernmental Agreement Model 1). Financial institutions operating in Cyprus are required to identify U.S. taxpayers by January 1, 2017 and to report the information for 2017 and the subsequent years. The agreement is reciprocal: Cyprian financial accounts hold in U.S. financial institutions will be reported to Cyprian authorities.

Further Information

Financial Market Development

Financial Market Development
3.2 (max 7.0), 120th out of 138 countries
Banks' Soundness
2.9 (max 7.0), 133rd out of 138 countries

According to World Economic Forum's Global Competitiveness Report 2016-2017, financial market development in Cyprus is scored 3.2 out of maximum 7.0 and ranked 120th out of 138 analysed economies. Soundness of banks is scored 2.9 bringing Cyprus into the 133rd place, trustworthiness and confidence of financial market is scored 3.5 (114th place).

Financial Market Development in Cyprus. Chart 5. Financial Market Development in Cyprus. Source: WEF.

Deposit Guarantee Scheme

Maximum Protected Amount
100 000 EUR

Deposit Guarantee Schemes compensate certain deposits held by depositors of a bank that becomes unable to meet its obligations.

From a depositor's point of view it is important to know:

  • if the depositor is eligible within the terms of the deposit guarantee scheme;
  • if the depositor's bank is a participant in the deposit guarantee scheme;
  • if the depositor's type of deposit is covered by the deposit guarantee scheme.

All these details about deposit guarantee scheme in Cyprus are summarised in Table 2.

Scheme Participantsall credit institutions operating in Cyprus (including branches of foreign banks), branches of Cyprian banks abroad
Maximum Protected Amount100 000 EUR
Paid In CurrencyEUR

Table 2. Deposit guarantee scheme in Cyprus.

Further Information

Country Ceiling for Deposits

Moody's country ceilings for deposits specify the highest rating that can be assigned to local- or foreign- currency denominated deposit obligations of a bank or other deposit taking institution domiciled within that country.

Local Currency (Euro) Foreign Currency
Baa1 (lower medium grade) Baa1 (lower medium grade)

Local currency (Euro) deposit ceiling for Cyprus is set to Baa1 (lower medium grade), foreign currency deposit ceiling is Baa1 (lower medium grade).

Deposit Rates

Average Deposit Rate (May 2017, EUR)
1.37 % (unchanged)
In May 2017, an agreed annualised deposit rate in local currency (Euro) of new contracts with agreed maturity up to 1 year between credit institutions and households was 1.37% which was above the Euro Area average (0.40%).
Deposit Rates in Cyprus. Chart 6. Deposit Rates in Cyprus. Source: ECB.

Banking Sector Structure

Number of Banks
Consolidated Assets (2016)
67 347.62 mln EUR  (-7.97%)
Recent Changes (2016)
new banks: 0, closed banks: 1

Currently there are 45 credit institutions operating in Cyprus.

In 2016 consolidated banking assets in Cyprus were 67 347.62 mln EUR. The consolidated banking assets' evolution is shown at Chart 7 below.

Consolidated banking assets in Cyprus. Chart 7. Consolidated banking assets in Cyprus.

Recent structural changes (2013 - 2016) of the banking sector of Cyprus are summarised in Table 3.

Number of Opened Banks0110
Number of Closed Banks264521

Table 3. Recent structural changes in the banking sector of Cyprus.

The list of the most recently opened banks in Cyprus is provided in Table 4.

NameStart Date
 EFG Bank (Luxembourg) S.A. (new)May 2015
 Ancoria Bank Limited (new)December 2014

Table 4. The most recently opened banks in Cyprus.

All the credit institutions operating in Cyprus can be classified into several categories. Table 5 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks23
Central banks1
Cooperative credit societies4
Cooperative savings societies4

Table 5. Number of banks by category in Cyprus.

There are 23 branches of foreign banks from 10 different countries in Cyprus. Table 6 shows the number of branches grouped by the country of origin.

Country of OriginNumber of Branches
 Russian Federation2

Table 6. Number of branches of foreign banks in Cyprus grouped by country of origin.