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Financial Support Program

CYPRUS COVID-19 FINANANCIAL SUPPORT PROGRAM

Karlos Zangoulos, Managing Partner

 

The Cyprus Government and Parliament have approved and adopted the following measures to support businesses and employees during the Covid-19 outbreak.

For more details in relation to the below special Schemes as well as for the relevant applications you can visit the dedicated website of the Ministry of Labour, Welfare and Social Insurance at www.coronavirus.mlsi.gov.com

Special Scheme for Full Suspension of Operations

Businesses that have ceased operations as a result of the restrictions imposed by the Government decrees and have as a result suffered a decline in their turnover of 80% or more are entitled to register under the Scheme provided that they have not laid of any staff since 1 March 2020 and shall not do so during the period for which they are participating in the Scheme and the following period of equal length plus one month.

Under the Scheme the employees are entitled to unemployment benefit of 60% of their gross taxable emoluments subject to a maximum amount of €1.214 per month.

All employees of businesses employing less than 9 employees are entitled to participate. Where the business employs more than 9 employees then only a maximum of 90% of its employees may participate. Shareholders and partners holding more than 20% of the shares are excluded from the Scheme. Management staff are allocated to the 10% not eligible to participate in preference to non-management employees.

Special Scheme for Partial Suspension of Operations

Businesses that have not terminated their activities on the basis of Decisions of the Council of Ministers and the relevant Decrees of the Ministry of Health, but have suffered a reduction in their turnover by more than 25% in the period from 16th March to 13th June are eligible to participate in the Scheme, subject to them not laying off any employee during the period for which they are participating in the Scheme and the following period of equal length plus one month.

Up to 75% of the employees may be registered to receive a special unemployment benefit by businesses employing up to 50 employees and 60% of the employees of larger businesses. Shareholders and partners holding more than 20% of the shares are excluded from the Scheme. Management staff are allocated to the 25% or 40% not eligible to participate in preference to non-management employees.

The employer is entitled to employ the employee that is receiving the special unemployment benefit by remunerating the employee for the time he/she is occupied and for which he/she does not receive the special unemployment benefit at the usual salary rate which is subject to the relevant contributions. The Ministry has clarified that an employee receiving the special unemployment benefit should not be employed for more than 40% of the standard working week.

The benefit under the schemes for full and partial suspension of operations are provided for the period from 16 March till 16 June 2020. Further assistance will be provided for a further period of 4 months and the amount of benefit will be determined having regard to the degree to which turnover has recovered over that period.

Scheme for Self-Employed persons

Self-employed workers will be able to make use of the Special Scheme for Suspension of Operations for the period from 16 March 2020 to 12 April 2020 (and may be extended) and are entitled to the payment of a special allowance equal up to 60% of the gross taxable emoluments (as declared in the social insurance return for the last quarter of 2019). The maximum allowance is €900 for any four-week period. The allowance is conditional on the business not firing any employee during the period for which the allowance was received and the following period of equal length plus one month.

Granting of "Special Leave" to Parents

Parents working in the private and public (and wider public) sector can benefit from the special leave to care for children up to 15 years old (up to and including third grade high school) that are at home due to the closure of schools and nurseries. The leave maybe taken for up to a period of four weeks and is applicable only to persons whose monthly gross salary does not exceed euro 2.500. The maximum payable benefit cannot exceed euro 1.000 in a month.

Special Sickness Benefit

The beneficiaries of this allowance are persons falling in the below categories:

i. Workers with particular health problems falling under the List published by the Ministry of Health, who must be absent from work their protection and safety.

ii. Cases of compulsory absence from work of persons that fall under obligatory self-isolation or quarantine orders and provided they have a formal certificate issued by the Ministry of Health.

iii. Persons aged between 63 and 65 who do not receive a statutory pension and continue to work and should be absent from their work for the purpose of their protection and safety, provided that they hold a certificate from their Personal Physician.

The above measures also apply to self-employed persons.

 

Special measures to safeguard borrowers

On 30 March the Ministry of Finance announced the following measures:

1. The suspension of interest and principal repayments on loans granted or purchased by financial institutions.

2. Conditions: as at 29 February 2020, the borrower was not in arrears for more than 30 days in respect of its/his/her contractual obligation to pay any loan instalment or interest payable under the loan.

3. The special measures come into effect from 30 March 2020 till 31 December 2020.

4. Persons wishing to benefit from the measures are required to notify the financial institution in the prescribed form.

5. The payment of the suspended principal and interest shall accrue and shall not be made immediately payable on the termination of the special measures but shall be rescheduled as deemed necessary.


 

For more information or assistance in making claims under the relevant schemes, contact Rois Potamitis head of BDO Transaction Services, Petros Ioannides head of Restructuring advisory or Karlos Zangoulos, head of tax.