The new support measures package for local businesses announced by the Cyprus Government.
The new additional support package for businesses was announced last week by the Cyprus Ministry of Finance. The new measures are designed to directly support the Small-Medium size Enterprises but also larger Hotel and Tourism organisations, with cash flow injections under the support and supervision of European institutions. Read below the new business support measures.
Pan-European Guarantee Fund.
Cyprus Government is a member of the fund granting guarantees to Financial Institutions that finance Small Medium Enterprises. The beneficiaries are SMB and larger scale corporations that employ up to 3000 people, and are in need of cash flow to make it after the post pandemic economic challenges. An amount of €300 – €400 is expected to be available for Cyprus businesses.
Loans to Cyprus SMB’s.
This is an ongoing government agreement with the European Investment Bank (EIB) that has been in place since 2014, with the aim of boosting the Cypriot economy and more specifically SMB’s.
The Plan had a great impact until now and has been positively evaluated by both the European Investment Bank (EIB) and an independent consulting firm. The government guarantee is given to the ΕΙΒ, and not to the companies or banking institutions participating in the plan. Agreements are signed between the EIB and the banking institutions participating in the plan.
Beneficiaries.
Cypriot companies with up to 3,000 employees, registered and operating in Cyprus.
Some Advantages.
- Interest rates are lower compared to the interest rates that bank institutions would charge without the EIB.
- Interest rates on loans arising from this plan may be subsidised by the “Government Interest Rate Funding Plan”
- Long loan duration (up to 12 years)
- Choice for fixed or floating interest rate
- Even more favourable interest rate with additional reduction for companies that meet the “Jobs for Youth” criteria.
Cash flow funding of SMB’s via the Cyprus Business Fund.
The Cyprus Business Fund aims to ease SMB’s finance by providing loans on favorable terms by the Banking Institutions. The management and supervision is executed under the European Investment Bank without the Cyprus government involvement. Co-financing and risk sharing (50% -50%) is applied between the Government and the Banking Institutions participating in the Plan.
Beneficiaries.
Small Medium Businesses with a maximum number of 250 employees.
Terms:
- Interest rates are lower compared to the usual rates that bank institutions would charge. Indicatively, the interest rates for the program that are already in force, vary depending on the risk of the loan (low risk 2.55% – 3.85% and high risk 3.375% – 4.5%).
- Interest rates on loans concluded under this plan may be subsidized by the Government Interest Rate Subsidy Plan.
- Long loan duration (up to 12 years)
Subsidy of interest rate for future businesses loans.
Liquidity to businesses, including self-employed individuals, who are experiencing liquidity issues by subsidizing interest rates on new business loans. The subsidised interest rate applies for a specified period of time as well as a fixed maximum loan amount. The authority on top of this measure will be the General Accounting / Ministry of Finance.
Beneficiaries.
All non-problematic companies (based on the definition of the European Commission) on 31/12/2019, which are facing difficulties due to the pandemic. It concerns very small businesses, small, medium, large and self-employed.
Sponsorship plan for Very Small, Small Businesses and Independent Employees.
Sponsorship to cover rent expenses, or other debts and operating expenses.
Beneficiaries.
Small businesses and self-employed people employing up to 50 staff members, who were included and approved in the Special Support Plans of the Ministry of Labor and Social Insurance Department that are implemented in the context of emergency measures to deal with COVID19 pandemic during April 13 – May 12, 2020.
The relevant conditions apply for the non-dismissal of staff as included in the Special Support Plans of the Ministry of Labor, and Social Insurance for dealing with the effects of the COVID19 pandemic.
Subsidy/ lump sum and Beneficiaries:
Self-employed individuals and very small businesses that were under full or partial suspension of their work and were included in the Special Support Plans of the Ministry of Labor, Welfare and Social Insurance, in the period April 13 – May 12, 2020, and employ up to 1 person.
€ 1250
Self-employed individuals and very small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, the period April 13 – May 12, 2020, and employ 2 – 5 staff.
€ 3000
Self-employed individuals and very small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, from April 13 to May 12, 2020, and employ 6 – 9 staff.
€ 4000
Self-employed individuals and small businesses that were under full or partial suspension of their work and were included in the Special Plans of the Ministry of Labor, Welfare and Social Insurance, from April 13 to May 12, 2020, and employ 10 – 50 staff.
€ 6000
Incentives for airlines with the aim of strengthening the air connectivity of Cyprus and supporting the tourism sector.
The aim of the Plan is to restore the tourist flow and stimulate the passenger traffic in order to mitigate the effects of the crisis in the tourism sector. The Plan provides additional support to all airlines for a period of seven months by granting routes to Cyprus, and will cover aircraft occupancy from 40% -70%.
Advertising support program with travel agents to attract tourism and promote Cyprus as a safe tourist destination, amounting to € 10m.
The program will start to be implemented from June 1 with the aim of increasing the tourist flow to Cyprus both during the summer and winter months.
Reduction of the VAT rate from 9% to 5% for the period 1/7/2020 to 10/01/2021 in the areas of Tourist accommodation and Catering services.
The reduction is expected to benefit areas that have been hit hardest by the Covid 19 pandemic, particularly in the areas of catering, hotels and tourist accommodation. With the reduction of VAT in the areas of catering, hotels and tourist accommodation, the retail sales prices are expected to decrease for the benefit of both consumers and businesses due to the stimulation of consumer demand.
Extension of the submission of tax returns.
Extension of the submission of tax returns by employed individuals. Both the submission of the tax return and the payment of the tax due is extended until the end of October 2020.
Deletion of charges that may have been imposed due to the delayed submission of tax returns for the period that ended on 10/04/2020 and 10/05/2020.
ESTIA plan deadline extension.
Extension of deadlines for supporting documentation submission for the Housing Plan (ESTIA) and possibility of submitting a new application if required due to the lock down movement restrictions.
Please feel free to contact our tax team in case you need clarifications for your business.
