UK expats in Cyprus set to see their savings raided

money_euros

UK expats in Cyprus set to see their savings raided

All expats living in Cyprus with savings in Cypriot banks will lose some of their money under a bailout deal agreed by European finance ministers.

Under the deal all bank customers in the country will have to pay a levy of up to 9.9% on their savings, a charge which is expected to raise up to €6 billion Euros. All savers with more than €100,000 (£86,500) will be charged a one-off tax of 9.9% whereas those with less have to pay a charge of 6.7%.

After the plan was announced panic swept the financial market with the Euro plummeting against all of its peers as worried Cypriots and traders sold the currency or tried to withdraw their funds from Cypriot banks.

Private investors also face a second hit under a “withholding tax” imposed on interest on bank deposits. The tax will apply to all deposits held in banks within Cyprus, including an estimated €2 billion Euro’s (£ 1.75 billion) of British money, according to the European Central Bank.

However, it will not affect deposits held in the UK branches of Cypriot banks, such as Bank of Cyprus, whose UK subsidiary is regulated by the Financial Services Authority.

The controversial measures are expected to impact the islands large Expat community, over a third of all cash held in the Cypriot banking system belongs to foreign nationals. UK expats on the island stand at around 25,000 and 3,000 UK military personnel are stationed there.

On Saturday some expats complained that the government and banks had taken action to prevent worried people from withdrawing their cash. The country’s banks shut their doors after seeing a rush of savers keen to protect their money. Savers could apparently withdraw money but were not able to carry out electronic transfers.

Angry expats told Sky News; British expat David Symonds, who lives in Limassol, told Sky News: “Everybody was surprised. We were assured only a few days ago that the haircut on the deposits was a red line for the government.

“When we learned that it might become a possibility we were told it would only be on deposits above 100,000 Euros. Now of course we know it affects everybody.”

British Cypriot Andy Georgiou, 54, moved his life savings to Cyprus last year after selling his home in London.  ”I am extremely angry. I worked years and years to get it together and now I am losing it on the say-so of the Dutch and the Germans,” he said.

Andri Menelaou, 25, had thought anything below 100,000 Euros was protected by the state and said: “I don’t have much but I don’t see why I should pay for bank mistakes.”

British military personnel on the island will be compensated by the British government if they are affected by the tax, expats unfortunately will not be so lucky.

The decision has caused fear to spread across the Eurozone as it could set a precedent for such taxes being imposed on expat accounts in other troubled regions, especially Spain.

The Expat Hub
This post was written by
If you’ve already moved abroad, if you’re in the process of moving abroad or if you’re only thinking about it, the Expat Hub is here for you. For expatriates looking for advice, support and information, we’re the number one online stop.