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Cyprus Current Account Deficit Widens To €1.3 Billion In Q1

Cyprus recorded a wider current account deficit in the first quarter of 2026, even as the European Union as a whole posted a stronger external balance, according to figures released by Eurostat on Friday.

Cyprus Deficit Reaches €1.3 Billion

Eurostat said Cyprus registered a current account deficit of €1.3 billion in the first quarter of 2026, compared with €0.8 billion in the fourth quarter of 2025 and €1.0 billion in the same period a year earlier.

The latest figures continue a volatile trend over the past year. After narrowing to €0.4 billion in the second quarter of 2025 and just €0.1 billion in the third quarter, the deficit widened again during the final quarter of the year before increasing further at the start of 2026.

EU External Surplus Strengthens

Across the EU, the seasonally adjusted current account surplus increased to €113.4 billion, equivalent to 2.4% of GDP, from €99.2 billion, or 2.1% of GDP, in the previous quarter. That also marked an improvement from the €104.9 billion surplus, or 2.3% of GDP, recorded in the first quarter of 2025.

According to Eurostat, stronger balances in services and primary income more than offset a weaker surplus in trade in goods.

Mixed Signals Across Key Accounts

Goods surplus declined to €66.7 billion from €89.0 billion in the fourth quarter of 2025, while the services surplus rose to €52.1 billion from €43.9 billion.

Primary income recorded the sharpest improvement, shifting from a €4.3 billion deficit in the previous quarter to a €25.3 billion surplus in the first quarter of 2026.

Not all components were strengthened. The secondary income deficit widened to €30.7 billion from €29.4 billion, while the capital account deficit increased to €3.8 billion from €3.2 billion.

Largest Surpluses And Deficits With Trading Partners

The EU recorded its largest current account surpluses with the United Kingdom (€72.8 billion) and Switzerland (€38.7 billion) during the first quarter. Additional surpluses were generated with Brazil (€11.1 billion), Canada (€10.1 billion), Hong Kong (€6.9 billion), Russia (€3.5 billion), and Japan (€3.2 billion).

China remained the bloc’s largest source of deficit at €66.3 billion, followed by the United States (€15.8 billion), offshore financial centres (€1.5 billion) and India (€1.1 billion).

Investment Flows Remain Active

Investment activity also remained robust during the quarter. Direct investment assets increased by €27.1 billion, while liabilities rose by €30.4 billion, resulting in net direct investment inflows of €3.3 billion.

Portfolio investment generated net inflows of €128.8 billion, whereas other investment recorded net outflows of €123.1 billion.

Member State Performance Varies Widely

Based on available non-seasonally adjusted data, 16 EU member states recorded current account surpluses in the first quarter of 2026, while 10 posted deficits. Figures for France were unavailable.

Germany recorded the largest surplus at €61.8 billion, followed by the Netherlands (€26.3 billion), Ireland (€17.4 billion), Denmark (€9.2 billion), Spain (€8.9 billion), Sweden (€8.8 billion) and Austria (€7.3 billion).

Among countries with current account deficits, Greece posted the largest shortfall at €6.6 billion, ahead of Romania (€5.3 billion), Croatia (€3.4 billion), Bulgaria (€2.4 billion) and Cyprus (€1.3 billion).

Cyprus Company Registration: Two To Four Days, Unless Security Checks Intervene

Cyprus aims to register companies within two to four working days when applicants submit complete documentation. However, regulatory approvals, sanctions checks, foreign ownership and national security considerations can extend the process or prevent registration.

Energy, Commerce and Industry Minister Michael Damianou outlined the timeframe in a written response to MP Efrem Christou, who asked about company formation procedures and the checks required before approval.

Fast Registration Depends On Complete Documentation

Damianou said authorities seek to process complete applications within two to four working days, regardless of a company’s structural complexity. The timeframe also depends on whether applicants pay an additional fee for expedited processing.

According to the official incorporation requirements, the standard registration fee is €165, rising to €235 for companies without share capital. Expedited processing costs an additional €100.

Applicants must submit an approved company name, a memorandum and articles of association, and forms HE1, HE2 and HE3. Public companies must also provide form HE5.

Regulated Businesses Require Additional Approval

Companies operating in certain sectors must obtain prior clearance from the relevant authorities or professional bodies. These include medical and dental businesses, law firms, insurance and reinsurance companies, and firms supervised by the Cyprus Securities and Exchange Commission.

The Central Bank of Cyprus must also approve company names associated with payment institutions, electronic money and foreign exchange services. Additional restrictions apply to educational institutions using terms such as “university” or “college”, casino operators, broadcasters and wine producers.

Non-profit organisations seeking to register without “Limited” or “Ltd” in their names also require ministerial authorisation.

Sanctions And Foreign Ownership Trigger Extra Checks

Applications involving shareholders, directors or company secretaries subject to EU, UN or US sanctions receive additional scrutiny. Registration can proceed only if the competent sanctions authority does not prohibit it. Damianou noted that US sanctions are considered indirectly but have not been incorporated into Cyprus legislation in the same way as EU and UN restrictions.

Applications involving Turkish interests are also subject to additional review. Under procedures introduced around 20 years ago, the registrar must consult national security services before proceeding with registrations involving Turkish interests or businesses that could threaten the Republic’s security.

Damianou distinguished these cases from applications submitted by Turkish Cypriots, saying there is “no substantial difference” in how their registration documents are examined. Applications may nevertheless be refused if classified information raises concerns about national interests or national security.

Public Servants Face Separate Restrictions

Under Article 65 of the public service law, government employees cannot act as directors, company secretaries or shareholders in private or public companies without prior special permission from the finance minister.

Proposed Law Would Expand Registrar’s Powers

The government is also seeking to strengthen the Registrar of Companies’ authority to address potential security risks. An amendment to the companies law, submitted to Parliament on September 17, would allow the registrar to reject applications, refuse company filings or remove existing businesses from the register on grounds including national security, public order, public interest and the protection of state sovereignty.

The proposal, approved by the Council of Ministers on August 6, remains before the House commerce committee. It would allow authorities to withhold detailed justifications where disclosure could reveal sensitive information, while informing affected companies of the general grounds for decisions.

The bill follows parliamentary discussions about companies controlled by non-EU nationals, particularly those with Turkish ultimate beneficial owners, and possible implications for property ownership through foreign-controlled businesses. Further details are available in the proposed amendment and earlier parliamentary reporting.

Balancing Investment And Oversight

Cyprus is seeking to maintain an efficient company registration process while strengthening checks on ownership, sanctions compliance and potential security risks.

The two-to-four-day target supports the country’s appeal to entrepreneurs and international investors, but the actual timeline depends on the nature of the business, the documentation submitted and any additional regulatory or security reviews required.

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