Cyprus has been in the spotlight recently due to the negotiations with what has become known as the troika (the International Monetary Fund, the European Central Bank and the European Commission) regarding terms of financial aid. It is not the first time that a member of the Eurozone has sought to negotiate with the troika for financial aid. Ireland, Greece and Spain all came before Cyprus but the therapy was very different in the case of Cyprus.
The problem on each occasion related to the size of public debt and the size of the banking sector in relation to the country’s gross domestic product. In other countries, a “bail-out” procedure was followed whereas in the case of Cyprus, a “bail-in” procedure was imposed. In other words, in the former instances funds were provided from the troika to the government and banks without the depositors’ participation whereas in the case of Cyprus the depositors participated.
Media coverage of the Cyprus banking crisis focused on certain facets that raised concern regarding the future of the jurisdiction for business. This included the bail-in itself, the amount of funds deposited by international depositors in Cypriot banks (especially Russian depositors) and the size of the package vis-à-vis the size of the Cypriot economy.
The purpose of this article is to look objectively at the changes that are to be introduced to Cyprus following the fi nal agreement between Cyprus and the troika and consider specifi cally whether these changes are likely to aff ect corporate structuring involving Cyprus and banking in and outside Cyprus using a Cyprus corporate vehicle.
Please see full article below for more information.
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Topics: Bailout, Banking Crisis, Business Taxes, Capital Gains, Dividends, Double Taxation, EU, Troika, Withholding Tax
Published In: Business Organization Updates, Civil Procedure Updates, Finance & Banking Updates, International Trade Updates, Tax Updates
DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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