Tax Reform Sparks Fiscal Relief And Economic Growth

by THEFUTURE.TEAM

February 13, 2026

Tax Reform Delivers Immediate Benefits

The recently implemented Tax Reform is already making a significant impact on the everyday lives of citizens, families, and businesses, as the reduction in the tax burden and the increase in net disposable income become evident. Approximately 200,000 taxpayers benefited from higher net earnings with the January wage disbursement, and projections indicate that by 2026, 30,000 individuals will be fully exempt from income tax. These figures underscore the reform’s success in returning more income to the public, supporting the middle class, and reinforcing social cohesion through a modern and equitable tax framework.

Enhanced Support For Families And Employees

According to Mr. Sotiris Markidis, a senior official in the Tax Department, a family with four children and an annual income of €130,000 can expect an increase in available income of roughly €7,000 per year. Similarly, a single-parent household with three children earning €70,000 annually is projected to gain more than €4,000. A pivotal aspect of the reform is the rise of the tax-free income threshold to €22,000, which means an even larger share of employees will be fully exempt from income tax. This feature sets the policy apart within the European Union. Cyprus, which already had one of the highest tax-free thresholds in Europe, has now raised it even further.

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A Boost For Small And Family Businesses

The reform also offers sizeable advantages for the real economy. Measures such as the elimination of the deemed dividend distribution and a significant reduction in the Extraordinary Defense Contribution are anticipated to benefit over 30,000 small family businesses by enhancing liquidity and competitiveness. In addition, new tax incentives focused on innovation, green investments, and modern business practices are molding a stable and attractive fiscal environment that promotes sustainable growth.

A Foundation For A Fairer And More Competitive Economy

Implemented after two decades of governance, the Tax Reform establishes solid foundations for a more just society and a competitive economy, with policies that yield immediate and substantial benefits for everyday citizens.

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ECB Raises Deposit Facility Rate For First Time In Nearly Two Years

by THEFUTURE.TEAM

June 15, 2026

Economic Shift: ECB Reverses Years Of Declining Rates

The European Central Bank (ECB) confirmed its first interest rate increase in nearly two years, raising the deposit facility rate in response to inflationary pressures and geopolitical uncertainty. Marking a shift in monetary policy, the move follows a period of rate cuts aimed at supporting economic activity and easing financing conditions.

Reevaluation Of Bank Liquidity Strategies

Although the immediate impact will be felt by only part of the borrowing market, the decision carries broader implications for banks. During the period of lower rates, banks maintained significant amounts of excess liquidity with the ECB as returns on these funds declined alongside deposit rates. With the deposit facility rate increasing by 0.25 percentage points to 2.25% from 2.00%, returns on surplus liquidity are expected to improve.

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Higher interest rates, however, could also increase borrowing costs and influence lending conditions across the banking sector.

Transitioning Investment Approaches And Market Dynamics

Banks had already begun diversifying the use of excess liquidity through investments in bonds and by expanding lending activities.

Successive reductions in the deposit facility rate from 3.00% at the end of 2024 through four consecutive cuts in early 2025 reflected a more accommodative policy stance as inflation pressures moderated.

Sectoral Impact And Future Outlook

Data from the ECB’s 2025 monetary policy report show that liquidity in the Cypriot banking system declined from €19.2 billion at the end of 2024 to €18.6 billion by the close of 2025. Despite the reduction, liquidity levels remained elevated. Outstanding loans increased from €27.6 billion to €31.7 billion, while deposits recorded a slight decline. Customer deposits continued to account for the vast majority of funding. By the fourth quarter of 2025, they represented 95% of total liabilities, highlighting their importance as the banking sector’s primary source of financing.

Changes in ECB rates are expected to influence how banks manage liquidity and allocate capital as monetary conditions evolve.

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