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EDek Proposes Bold Tax Reforms for Corporate and Individual Relief

Strategic Overhaul of Cyprus Tax Policy

The organization EDek has formally presented its comprehensive proposals for overhauling Cyprus’s tax legislation, outlining a series of measures aimed at easing the burden on companies and individual taxpayers. In a detailed letter addressed to both the President of the Republic and the Parliament, EDek emphasized that unless their proposals are integrated into forthcoming bills, they will move to submit amendments.

Reshaping Corporate Tax Relief

Central to EDek’s strategy is the adjustment of tax rates for corporate entities. The proposals include reducing the corporate tax rate and the special defense levy for small businesses, while reinstating property tax on real estate assets valued above €3 million. Additionally, EDek advocates for enhanced tax credits for individuals and the doubling of tax deductions available to lower-income groups. Despite the increase in the corporate tax rate from 12.5% to 15%, a significant reduction in the defense levy on corporate dividends—from 17% to 5%—serves to balance the overall tax landscape, disproportionately benefiting larger companies.

Encouraging Differential Relief for Small Enterprises

EDek calls for the introduction of a tiered taxation system that provides more substantial relief for small and micro-enterprises. They propose adjusting the defense levy and reducing the corporate tax rate to 10% for these businesses, suggesting that any shortfall in public revenue could be compensated by an increase in the levy for larger corporations. This approach is designed to create a more equitable fiscal environment where the tax benefits are aligned with company size and capacity.

Enhancing Incentives for Property Owners

The reform agenda also recognizes the financial pressures facing property owners. EDek recommends maintaining the current 3% defense levy on rental incomes but proposes converting this amount into tax credits or deductions for individuals in the lower and middle income brackets. This measure, they argue, would alleviate the tax burden on those most affected by rising costs, given that property owners predominantly fall within these income groups.

Streamlining Tax Credits for Individuals

For individual taxpayers, EDek’s proposals focus on simplifying and expanding tax credits. They recommend doubling the deductions available for families earning up to €45,000 and extending eligibility thresholds from €80,000 to €100,000 for incomes between €45,000 and €100,000. Furthermore, EDek advocates eliminating bureaucratic hurdles—such as the mandatory certification for the repayment of housing loans—arguing that such requirements impede both the speed and efficiency of tax filing and review processes.

Revisiting Property Taxation

In addition to reforms affecting companies and individuals, EDek pushes for the reintroduction of the property tax on assets exceeding €3 million, a measure supported by research from the University of Cyprus. This tax would exclude properties held as business inventories or those generating operational income, ensuring that the levy targets high-value assets. EDek also supports the proposal by other political factions to eliminate the stamp duty, while cautioning that any revenue shortfall must be offset by adjustments in other tax areas.

Conclusion

EDek’s proposals signal a robust and balanced approach to tax reform in Cyprus, seeking to promote fiscal fairness by tailoring relief measures to both corporate scale and individual income levels. As these proposals are debated in the corridors of power, their ultimate impact on the nation’s economic structure will be closely monitored by both policymakers and the business community.

ECB Launches Geopolitical Stress Tests For 110 Eurozone Banks

The European Central Bank is preparing a new round of geopolitical stress tests aimed at assessing potential risks to major financial institutions across the euro area. Up to 110 systemic banks, including institutions in Greece and the Bank of Cyprus, will take part in the exercise, which examines how geopolitical events could affect financial stability.

Timeline And Testing Process

Banks are expected to submit initial data on March 16, 2026. Supervisors will review the information in April, while the final results are scheduled to be published in July 2026. The process forms part of the ECB’s broader supervisory work to evaluate financial system resilience under different risk scenarios.

Geopolitical Shock As The Primary Concern

The stress tests place particular emphasis on geopolitical risks. These may include armed conflicts, economic sanctions, cyberattacks and energy supply disruptions. Such events can affect banks through changes in market conditions, borrower solvency and sector exposure. Lending portfolios linked to regions or industries affected by geopolitical developments may face higher risk levels.

Reverse Stress Testing: A Tailored Approach

Unlike traditional stress tests that apply the same scenario to all institutions, the reverse stress test requires each bank to define a scenario that could significantly affect its capital position. Banks must identify a geopolitical shock that could reduce their Common Equity Tier 1 (CET1) ratio by at least 300 basis points. Institutions are also expected to assess potential effects on liquidity, funding conditions and broader economic indicators such as GDP and unemployment.

Customized Risk Assessments And Supervisor Collaboration

This methodology allows banks to submit risk assessments based on their own exposures and operational structures. The approach is intended to help supervisors understand how geopolitical events could affect institutions differently and to support discussions between banks and regulators on risk management and contingency planning.

Differentiated Vulnerabilities Across Countries

A joint report by the ECB and the European Systemic Risk Board indicates that countries respond differently to geopolitical shocks. The Russian invasion of Ukraine led to higher energy prices and inflation across Europe, prompting central banks to raise interest rates. Belgium, Italy, the Netherlands, Greece and Austria experienced increases in borrowing costs and lower investor confidence. Germany, France and Portugal recorded more moderate changes, while Spain, Malta, Latvia and Finland showed intermediate levels of exposure.

Conclusion

The geopolitical stress tests will not immediately lead to additional capital requirements for banks. Their results will feed into the Supervisory Review and Evaluation Process (SREP). ECB supervisors may use the findings when assessing capital adequacy, risk management practices and operational resilience at individual institutions.

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