Economy and Banking Sector of Cyprus

Location Mediterranean Sea
Population (2016)848 319 ↑ (0.00%)
EU Status member since 2004
National Currency EUR (Euro) since 1 January 2008
    Nominal GDP (2015)17.4 bln EUR ↓ (-0.01%)
    Nominal GDP per Capita (2015)20 600 EUR no change(unchanged)
    Real GDP Growth (2015)1.6 % ↑ (2014: -1.5 %)
Inflation Rate 
    CPI, MoM (Sep 2016)-0.4 % ↓ (Aug 2016: 0.4 %)
    CPI, YoY (Sep 2016)-0.4 % ↑ (Aug 2016: -0.6 %)
    CPI, Year Average (2015)-1.6 % ↓ (2014: -0.3 %)
Unemployment Rate (2015)15.1 % ↓ (2014: 16.1 %)
Government Bond Yield (Sep 2016)3.62 % ↓ (Aug 2016: 3.84 %)
Credit Ratings (as of Sep 2016)
    FitchB- highly speculative, outlook negative
    Moody'sB1 highly speculative, outlook stable
    S&PBB- non-investment grade speculative
Withholding Tax 0.0 - 0.0%
Double Taxation Agreements 51 signed agreements
Information Exchange 
    Automatic Exchange starts in September 2017
FATCA IGA in effect since 02 December 2014, Model 1
Banking Sector
Financial Market Development 3.2 (max 7.0) rank: 120th out of 138 countries
    Banks' Soundness 2.9 (max 7.0) rank: 133rd out of 138 countries
Deposit Guarantee Scheme 
    Maximum Protected Amount 100 000 EUR
Country Ceiling for Deposits 
    Local Currency (Euro)Baa1 lower medium grade
    Foreign CurrencyBaa1 lower medium grade
Deposit Rates (Aug 2016, EUR)1.52 % ↑ (Jul 2016: 1.51 %)
Banking Sector Structure 
    Number of Banks64
    Recent Changes (2015) new banks: 1, closed banks: 2
    Consolidated Assets (2015) 73 193.23 mln EUR ↓ (-3.20%)
Major Banks
 Bank of Cyprus Public Company Ltd  Hellenic Bank
 Cyprus Popular Bank Public Co Ltd  USB Bank Plc
 List of Banks in Cyprus

Cyprian Economy

National Currency

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



According to Eurostat, nominal GDP of Cyprus in 2015 was 17.4 bln EUR.

Cyprus underperforms the European Union in terms of real GDP growth with the average annual differential coming to -0.9% over the past 10 years (2005 - 2015). In 2015 real GDP growth was 1.6% which was equal to the Euro Area average (1.6%) and below the European Union average (1.9%). Real GDP growth in 2016 - 2021 are IMF's estimates.

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

In 2015, nominal GDP per capita in Cyprus was 20 600 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 -13.5% over the past 10 years (2005 - 2015). GDP per capita at PPP in 2016 - 2021 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

According to Eurostat, inflation rate in Cyprus in 2015 expressed as annual percentages of average consumer prices was -1.6% which was below the Euro Area average (0.0%) and below the European Union average (0.0%). Inflation rates in 2016 - 2021 are IMF's estimates.

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

Taxation in Cyprus

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

Dividends Interest
Natural person, resident 0.00.0
Natural person, non-resident 0.00.0
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.

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.

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.

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

Further Information:
Automatic Exchange of Information on Financial Accounts
Countries Which Will Not Automatically Exchange Account 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).

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:
FATCA and European countries


Cyprian Banking Sector

Financial Market Development

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 4. Financial Market Development in Cyprus. Source: WEF.

Deposit Guarantee Scheme

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:
Deposit Guarantee Schemes in Europe


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


Deposit Rates

In Aug 2016, 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 1.52% which was above the Euro Area average (0.53%).

Deposit Rates in Cyprus.
Chart 5. Deposit Rates in Cyprus. Source: ECB.


Banking Sector Structure

Currently there are 64 credit institutions operating in Cyprus.

Recent structural changes (2013 - 2015) of the banking sector of Cyprus are summarised in Table 3.

Number of Opened Banks011
Number of Closed Banks26452

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

All the credit institutions operating in Cyprus can be classified into several categories. Table 4 summarises the number of banks in each category.

CategoryNumber of Banks
Branches of foreign banks24
Central banks1
Cooperative credit societies14
Cooperative savings societies11
Savings banks1

Table 4. Number of banks by category in Cyprus.

The list of the most recently opened banks in Cyprus is provided in Table 5.

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

Table 5. The most recently opened banks in Cyprus.

There are 24 branches of foreign banks from 11 different countries in Cyprus. Table 6 shows 10 countries having the biggest number of branches in Cyprus.

Country of OriginNumber of Branches
 Russian Federation2
 United Kingdom1

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


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