Central Bank Of Cyprus Eases Exchange Restrictions

by Lorys Charalambous, Tax-News.com, Cyprus

06 August 2003

The Cypriot Central Bank this week announced the lifting of exchange restrictions relating to current international payments, personal expenses, the issue of international cards and personal capital movements, in line with European Union accession requirements.

With immediate effect, the bank stated that all restrictions have been lifted relating to pre-payment of imports, foreign currency moved abroad for payment of local goods, and commission payments to non-residents.

In addition, in terms of personal expenses, the bank has lifted all limits with regard to the issuing of foreign currency to Cypriot residents to be used overseas for personal expenses, business travel, study, medical treatment and recreation. The rules surrounding the issuing of international payment cards to Cypriot residents and any foreign currency transactions undertaken with these cards have also been relaxed.

Moreover, restrictions controlling the movement of personal capital abroad, such as gifts, endowments, and inheritances have been removed.

Whilst limits have been abolished on direct investments abroad by Cypriot residents, certain restrictions remain in place pertaining to portfolio investments, foreign bank deposits, and the purchase of mutual funds, insurance schemes, and overseas residential property. According to the bank, this means that a limit of CYP£50,000 will be put in place with a view to a possible tax amnesty, and a CYP£200,000 limit has been placed on the purchase of secondary residences abroad.

Further easing of restrictions has taken placed concerning the involvement of non-residents in the share capital of Cypriot banks listed on the CSE. Additionally, the transfer of shares in these banks will no longer require the consent of the Central Bank of Cyprus.

However, the Central Bank stipulates that restrictions regarding short term foreign currency borrowing by residents in Cyprus pounds will remain in place until the Accession date in May 2004. This also applies to the free conversion of the local currency into foreign currency by Cypriot residents.

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