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Covid-19

Description and volume of the aid packages made available to employees, small businesses, large corporations

The government of Cyprus has put the following measures into place in order to support businesses and vulnerable groups who are being affected by the coronavirus pandemic:

Economic Support Package

On Friday, 28th March 2020 the Cyprus House of Representatives, with all political parties bar one supporting the governments proposals, approved and passed into law the following economic support measures.

Strengthening the Protection of Workers and Vulnerable Population Groups.

  1. Special Scheme for Total Suspension of Business Operations

Businesses falling within the economic activities that are subject to compulsory suspension of operations on the basis of Decisions of the Council of Ministers and Orders of the Minister of Health may submit an application by email to the web page: www.coronavirus.misi.gov.cy , so that they can obtain unemployment benefit for up to 90% of their employees. The said unemployment benefit shall be for up to 60% of the “assured” income of each employee (NB: the maximum assured income is set at Euro 4572 by the Cyprus Social (National) Insurance Laws) The calculation of the level of assured income is made with reference to employees income as declared for the purposes of national insurance and is subject to usual preconditions for obtaining unemployment benefit as contained in the Social Insurance Laws.

The above provisions apply to all employees of a business that has totally suspended its operations. This is taken to mean those businesses such as hotels, leisure venues and private sector schools that have been ordered by the government to close.

Employees of those businesses that are expressly excluded from benefits under the scheme are General Managers, Director – Shareholders and high-ranking employees and such persons who carry out administrative functions that are indispensable for the operation of the business – whatever this may mean.

If the Business employs up to 9 people then the condition set out in paragraph (2) above shall apply to Director – Shareholders etc only and the unemployment benefit shall be payable to the all the remaining employees.

  1. Special Scheme for the Partial Suspension of Business Operations

The businesses that have not completely suspended their operations on the basis of Decisions of the Council of Ministers and Orders of the Minister of Health but have suffered a loss of turnover in excess of 25% as a result of the pandemic may take part in the scheme for partial suspension of operations by submitting an application by email to the web page: www.coronavirus.misi.gov.cy.

The unemployment benefit for businesses that employ up to 50 people may amount to 75% of employees and 60% of employees for businesses employing in excess of 50 people. The said unemployment benefit shall be 60% of the assured income of each employee based upon the salary of each employee as declared for the purposes of national insurance and subject to preconditions for obtaining unemployment benefit as contained in the Social Insurance Laws.

The total number of persons who are expected to benefit from the above schemes for total and partial suspension of business operations are estimated at 220.000 private sector employees equating to around 70% of the private sector workforce.

The current duration for both schemes is for the period 16th March to 12th April 2020. This may however be extended.

All businesses taking part in the above schemes are not permitted to declare their employees redundant or to dismiss them for other than economic reasons for a period of six months after the cessation of the support scheme.

  1. Self Employed Persons

Approximately 40.000 self-employed persons can benefit from a special economic support scheme for the suspension of business operations which has been launched for the period between 16th March 2020 and 12th April 2020 and involves the payment of unemployment benefit equating to 55% of the employee’s assured income as described above but subject to an upper limit of Euro 800 per month and subject to the same preconditions for unemployment benefit as contained in the Social Insurance Laws for employees. Self-employed persons who are active in the sectors which have not been affected by the present situation (i.e. essential retail outlets) are excluded.

General Conditions / Preconditions for Taking Part in the Schemes

             The above benefits are subject to certain conditions / preconditions and processes.

             These are as follows:

(a)   In relation to the scheme for partial cessation of activities the employers must make up the full salaries of employees and pay their social insurance contributions in full. The state shall pay only the percentages stated above. Payments of the unemployment benefits for March are expected by the second week of April.

(b)   Businesses are obliged to state the identity of their employees that will be working normally and those for whom they are applying for assistance. The schemes accept and allow for the fact that even where the activities of a business are suspended a certain number of employees will need to work in order to plan for the remobilization of the business and of those of its employees who will be temporarily laid off.

(c)    Businesses will have to submit an electronic application for inclusion in the schemes. This has to be submitted by a person who binds the business. The reduction in turnover for the corresponding period (March / April) last year (2019) will be on the basis of a self-assessment taking into account the factors pertaining to the market sector in which the business operates.

(d)   It is a basic pre-requisite of inclusion within the schemes that no employee shall have been dismissed (for any financial – non disciplinary) reason since 1st March 2020 and that no employee shall be dismissed for a period of six months from the provision of the unemployment benefit.

(e)   Certain businesses are excluded from the schemes. These are licensed banking institutions and public sector organizations (government and semi-government organizations). 

(f)    Employees who fall under the parental care scheme described below are also excluded.

 

  1. Special Parental Leave for Parents of Children Under 15 years of Age.

 

In view of the closure of schools and nurseries parents who need to stay home in order to care for children under 15 years of age are permitted to stay at home. It is anticipated that 50.000 people will be on special parental leave.

Those on Special parental leave will be paid their salary in full up to the sum of Euro 2.500 as follows:

 

(i)              For the first Euro 1.000 pcm:                  60%

(ii)            For the next Euro 1.000 pcm:                 40%

 

  1. Sickness Benefits

Sickness benefits will also continue to be paid to those entitled as was the case before the state of emergency.

  1. Postponement of Payments and Obligations

In addition to schemes relating to employees as described above a number of measures aimed at improving the cashflow of businesses have been announced. These are the following:

(i)              Extension for payment of social insurance contributions for two months in respect of payments for March and April 2020.

(ii)            Postponement of contribution to the national health scheme which was due on 31.3.2020 for three months.

(iii)           A three month postponement for payment of VAT for the periods ending February, March and April 2020. Businesses will be permitted to pay gradually until 10th November 2020. Businesses that do not encounter cashflow problems such as chemists, supermarkets and public utilities are excluded from this relaxation.

(iv)           Postponement from paying the Euro 350 annual corporate fee for all Cyprus companies to 31.12.2020.

(v)            Postponement in submission of Companies 2019 annual returns to the Registrar of Companies to 28.1.2021.

(vi)           Credits of Euro 11m to promote tourism into Cyprus from June 2020 to March 2021.

(vii)          Government Guarantees of Euro 2.5 bn. to licensed banking institutions for increasing liquidity in the economy. The scheme for this involves Euro 1.750 bn in low interest loans to businesses and the subsidizing of interest payments for physical persons, self-employed and businesses to the amount of Euro 250m. All businesses availing themselves of the above-mentioned credit facilities are prohibited from declaring employees redundant or dismissing employees for other than disciplinary reasons within 2020.

(viii)         Postponement of all payments of loans and interest to licensed banking institutions to 31.12.2020, available for all customers who are fully up to date with their loan payments.

(ix)           Universal reduction in the price of electricity by 10% for a period of two months.

(x)             Special payment of Euro 750 to all Cypriot students studying abroad who cannot or will not return to Cyprus for the Easter vacations. 

 

Special Measures Aimed at Alleviating the Effects of the Coronavirus Pandemic on Business and Income

In addition to the above the government has proposed and parliament passed the following measures which are aimed at alleviating contractual and economic hardship caused by the coronavirus pandemic.

(i)              Extensions of time for the performance of all public and private sector projects will be granted in accordance with the circumstances of each project without the imposition of liquidated damages.

(ii)            Postponement of payments of loans and interest to banks for those who experiencing difficulties in paying due to the effects of the coronavirus pandemic provided that the debtor did not have loan payments outstanding for more than 30 days. It is anticipated that this postponement will last until the end of the year.

(iii)           Postponement of legal actions against creditors by credit organizations (banks and housing loans organizations).

(iv)           Postponement of submissions of financial statements by credit organizations (banks and housing loans organizations).

(v)            Postponement of repossessions for a period of three months.

(vi)           Expedition of the process of examination of application for citizenship by investment.