Government Reconsiders Tax on High-Value Real Estate in Wake of Fiscal Reform

by THEFUTURE.TEAM

December 10, 2025

Evaluating Tax Measures for Properties Exceeding €3 Million

In a signal move following the recent tax reform, the Ministry of Finance is set to reassess the prospect of levying a tax on real estate assets valued over €3 million. Finance Minister Makis Keravnos announced during a session before the Finance Committee that this potential measure will be carefully studied once the ongoing fiscal reforms have been fully implemented.

Context and Historical Precedents

The discussion was prompted by a legislative proposal submitted by the political party AKEL, which advocated for a 0.1% levy on properties exceeding the specified threshold, a suggestion also backed by the Centre for Economic Research. Although this tax measure was part of earlier proposals, it was not adopted by the government, notably as a similar tax had been abolished a few years ago. Moving forward, authorities will reexamine the feasibility of administration by local governments.

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Corporate Tax Adjustments and Policy Timing

Alongside the real estate tax, questions arose pertaining to a graduated fee on companies—another strategy endorsed by the Centre for Economic Research during the design phase of the tax reform. However, the government determined that in the midst of sweeping tax changes affecting businesses, the imposition of an additional corporate fee might complicate rather than clarify taxation policy.

Challenges in Pension Funds and Cryptocurrency Regulation

Addressing another facet of fiscal policy, Minister Keravnos commented on the investment activities of pension funds. He noted that the European Commission has observed that exempting these funds from taxation amounts to a form of state aid, a matter that may prompt further explanations to the EC. Regarding tax adjustments for cryptocurrency transactions, the minister emphasized that elevating the rate from 8% to 15% is less about the tax rate itself and more about the challenges involved in accurately tracking these assets. He also highlighted that an upcoming regulatory framework from the European Commission is expected to be adopted by Cyprus.

This evolving fiscal landscape underscores the government’s careful balancing act between stimulating business confidence and ensuring equitable taxation practices in a rapidly changing economic environment.

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ECB Launches Geopolitical Stress Tests For 110 Eurozone Banks

by THEFUTURE.TEAM

March 9, 2026

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.

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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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