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Cypriot Lending And Deposit Rates: Trends In Line With Eurozone Benchmarks

Alignment With Eurozone Lending

The Central Bank of Cyprus (CBC) recently reported that the average interest rate on new household loans in Cyprus is nearly aligned with the eurozone median. In its June 2025 bulletin, the CBC highlighted that lending rates on outstanding loan balances now show marginal differences—down to 0.09 percent for households and 0.44 percent for non‐financial corporations.

Market Dynamics Behind Business Loans

For business loans, the weighted average interest rate is also closely tracked, with a margin of just 0.24 percent compared to the eurozone standard. The CBC noted that, although this margin exhibits greater volatility—likely a consequence of the smaller market spread—the rates remain relatively competitive when viewed in a broad comparative context.

Deposit Rates And The Liquidity Factor

In a distinct contrast to lending rates, deposit interest rates in Cyprus are positioned at the lowest level within the eurozone. This anomaly is attributed to the exceptionally high liquidity maintained by Cypriot banks, with the Liquidity Coverage Ratio (LCR) reaching 333 percent in December 2024. Such figures considerably outpace the eurozone median of 184 percent and the average of 163 percent, underscoring a highly liquid banking sector in Cyprus.

Implications And Strategic Considerations

The CBC’s analysis suggests that the median, as opposed to the mean, is a more reliable benchmark, given its reduced sensitivity to outliers. This approach is particularly relevant for markets with a smaller size and scope, such as Cyprus. The convergence of lending rates toward eurozone standards, combined with the anomalously low deposit rates, offers a nuanced insight into the nation’s competitive positioning and strategic challenges in the broader European financial landscape.

EU E-Commerce VAT Systems Generate €257.9 Million Revenue for Cyprus in 2024

Robust Revenue Growth Through Streamlined VAT Collection

Cyprus has demonstrated a significant fiscal boost in 2024 with €257.9 million generated from the European Union’s e-commerce VAT systems, according to Tax Commissioner Sotiris Markides. This impressive performance underscores the effectiveness of the One Stop Shop (OSS) and Import One Stop Shop (IOSS) frameworks in simplifying cross-border tax compliance.

Simplified Procedures for EU and Non-EU Businesses

The OSS system allows Cyprus-registered businesses to streamline VAT declaration and payment on sales to consumers in other EU countries. Companies simply register on the local OSS platform, apply the consumer’s VAT rate, aggregate their submissions quarterly or monthly, and remit a single consolidated payment. Subsequently, Cyprus allocates the appropriate share to each respective EU country. This efficient process extends to non-EU sellers as well, who can have their intra-EU distance sales managed under the Union Scheme.

Breakdown of VAT Revenue Streams

Last year’s declarations under the various schemes illustrate the system’s broad reach: €217.9 million was collected via the Union Scheme, €36.9 million through the Non-Union Scheme, and €3.1 million via the Import Scheme. While the Union Scheme caters to both EU and non-EU sellers engaging in distance sales, the Non-Union Scheme specifically accommodates non-EU firms delivering services to EU consumers. Furthermore, the Import Scheme targets goods valued at less than €150 that are imported from outside the EU.

Implications and Broader Impact

Implemented in July 2021 as an evolution from the more limited MOSS system, these reforms have not only consolidated tax collection through an expansive OSS but also integrated the IOSS for low-value imports. By designating certain online marketplaces as “deemed suppliers,” the new framework ensures that VAT collection is both efficient and equitable. Across the EU, these mechanisms have generated over €33 billion in VAT revenues in 2024, reflecting a successful effort to simplify tax compliance, reduce administrative burdens, and promote fair taxation across the bloc.

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