Cyprus Approves Retroactive Seafarer Tax Exemption From 2010

Cyprus has approved legislation that exempts nonresident seafarers from contributions to the social cohesion fund, with retroactive effect from January 1, 2010. Lawmakers passed the amendment with 23 votes in favor and 19 against.

Legislative Reform Aimed At Leveling The Maritime Playing Field

The amendment applies to foreign seafarers working for Cypriot companies, including those in inland navigation who contribute to social insurance. Under previous rules, employers paid a 2% levy on wages to the social cohesion fund. The fund supports social benefits and vulnerable groups. The exemption restores a provision that existed under earlier merchant shipping legislation.

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Policy Rationale And Economic Implications

Lawmakers supporting the bill said the change is not expected to reduce state revenue. They said the measure could encourage shipping companies to retain operations and headquarters in Cyprus. Supporters added that increased business activity could offset losses through higher contributions to the social insurance system.

Political Debate and Controversial Perspectives

Fotini Tsiridou, MP of Disy, and Efthimios Diplaros, MP of Disy, introduced the bill alongside Panikos Leonidou, MP of Diko, and Alekos Tryfonides, MP of Dipa. Giorgos Koukoumas, MP of Akel, said the exemption could reduce fund revenue by €600,000 to €800,000 per year. He added that the measure may shift public resources toward private companies. Concerns were also raised about potential constitutional issues and compliance with EU state aid rules. Officials from the Deputy Ministry of Shipping and the state aid control authority expressed reservations.

Balancing Competitiveness With Social Accountability

Andreas Themistokleous, independent MP, said companies had been overcharged under the previous system and required regulatory correction. Fotini Tsiridou, MP of Disy, said the amendment removes unequal treatment of nonresident seafarers.

Lawmakers said the change is part of a broader review of maritime-related policies, as Cyprus seeks to maintain its position as a shipping hub. Ongoing discussions focus on balancing business incentives with funding obligations linked to the social cohesion system.

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Cyprus Banks Urged To Focus On Long-Term Resilience As Profits Remain Strong

by THEFUTURE.TEAM

June 26, 2026

The Cypriot banking sector remains in a strong position, supported by solid capital buffers and overall financial stability, according to speakers at the annual general meeting of the Association of Cyprus Banks. At the same time, government officials and regulators stressed that maintaining this position will require continued discipline and long-term planning.

A Strong Sector, But Not A Complacent One

Finance Minister Makis Keravnos used the meeting to highlight concerns over draft laws recently passed by parliament, which, according to the Ministry of Finance, the Central Bank and the Legal Service, may contain constitutional, legal and institutional issues. Those concerns, he noted, led to presidential referrals and remittals to the Supreme Court.

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Keravnos also said the European Central Bank had been consulted on proposed measures concerning the suspension of foreclosures and the restructuring of loans and guarantees, adding that the ECB had expressed its own concerns.

Profitability Should Reflect Real Economy Lending

While acknowledging that the banking sector remains highly profitable, Keravnos said earnings are expected to reach around €1 billion in 2025, lower than in 2024 as interest-rate conditions gradually normalize.

He said he would prefer bank profitability to rely more on lending to businesses operating in productive sectors and less on the widening of European Central Bank interest-rate spreads.

According to the minister, Cyprus’ return to investment-grade status after 11 years has strengthened the country’s appeal to foreign investors, technology companies and startups. He said this should encourage banks to offer financing that better supports businesses while improving the diversification of their loan portfolios.

The Central Bank’s Warning: Strength Today Is Not A Guarantee Tomorrow

Central Bank Governor Christodoulos Patsalides also warned against complacency, saying the sector’s current strength should not be taken for granted.

“The Cypriot banking sector is strong today. But strength that truly matters is not exhausted by a capital ratio, a profit line or a favorable cycle,” he said.

Patsalides added that lasting resilience depends on institutions remaining strong as conditions change, risks become more complex, and competition evolves. In his view, that requires sufficient capital buffers, adaptable infrastructure and management teams prepared for changing market conditions.

Long-Term Resilience Over Short-Term Gains

Patsalides also stressed that banks should focus on long-term resilience rather than short-term performance. Decisions on dividend policy, capital allocation and the use of resources, he said, should take into account continued investment in technology, operational resilience, human capital and long-term adaptability.

He added that banks able to remain competitive over time will be those that invest early in strengthening their capacity to adapt and respond to future challenges.

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