Wealthy Senior Expatriates in Cyprus May Be Taxed Up To 40% In EU Bailout “Deal”

March 25, 2013 - PRLog -- Expats in Cyprus may face a tax of up to 40% experts warn.
Expats who sold property recently face big losses in Cyprus.
French Finance Minister Pierre Moscovici names Cyprus a casino economy.
Massive job cuts in Cyprus banking sector.
Deposits over 100k Euros remain frozen and will be utilised to resolve debts.

British senior citizens who have retired in Cyprus may face absolute misery under the finalised EU bailout “deal”. In recent years, senior expatriates retired in Cyprus, preparing for the future, sold property for security in the form of bank savings and investments. Now, as news breaks of a 10 billion euro bailout plan for the island, those Expats that cashed in bricks and mortar for hard cash in the bank, could see as much as 40% taken.

George Osborne, U.K. finance minister announced that the British government would compensate the approximate 3,000 British military personnel and civil servants stationed on the island, but that doesn’t help the expatriates and travellers in Cyprus.

British expat in Cyprus Jean Stark said "What's unfortunate is that older expat couples, who thought a few years ago that they should prepare for one of them dying, decided to sell their property and put it in the bank. Now that money is going to be taxed."

John Barton, another British expat in Cyprus agreed with Stark adding "What they're proposing for people with over 100,000 euros is going to hit those who sold their properties quite hard. I think it's scandalous."

David Bond, CIO of iPMI Magazine said “100k euros in today’s globalised economy isn’t much. Where as I applaud the EU for honouring the 100k deposit guarantee, I know expatriate business consultants that earn much more and work very hard to do so. I know senior expats worldwide who have sold property and moved pensions, in exchange for cash at bank. For those individuals or small business' this is a serious breach of trust and a travesty that will change things forever.”

Gavin Hewitt, Europe editor at the BBC said “Bondholders and those with deposits of more than 100,000 euros face significant losses; perhaps 40% or more.”

Under the plan Laiki Bank, the islands second largest bank, will close and assets under 100K Euros shifted to Bank of Cyprus. Deposits above 100,000 Euros, which under EU law are not guaranteed, will be frozen and utilised to resolve debts.

President of the Eurogroup of eurozone finance ministers, Jeroen Dijsselbloem, told a press conference in Brussels the deal had "put an end to the uncertainty" around Cyprus's economy. He added he was "convinced" the new deal was better for the Cypriot people than the broader measure rejected by the Cypriot parliament last week, as it focused on two problem banks rather than the entire sector.

IMF head Christine Lagarde said the deal was "a comprehensive and credible plan" to help restore trust in the banking system. The 10 billion euro bailout will inflict heavy losses on uninsured depositors, including wealthy British and Russians. Locally the plan will see massive job cuts in the banking sector, with experts warning of a deep recession. Although Asian markets rose as news of the deal broke, the entire episode is guaranteed to affect investor and consumer confidence.

Robert Peston, Business editor at the BBC said “There may be some relief that smaller savings no longer face a 6.7% levy, but Cypriot citizens may over time end up feeling more than 6.7% poorer as a result of this so-called bailout.”

As bank accounts in Cyprus with more than 100k euros remain frozen, and some weeks before an announcement on the actual levy, life in Cyprus looks grim.

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