Eurogroup agrees to allow Cyprus to tweak deposit tax as long as agreed target is met

Eurozone finance ministers agreed on Monday night that Cyprus should be allowed to tweak a controversial bank deposit tax agreed early Saturday morning in Brussels as long as it still raises the arranged amount.

Amid reports that President Nicos Anastasiades wants to lighten the load on small depositors in the hope of passing the tax through Parliament so Cyprus can receive a 10-billion-euro bailout, finance ministers discussed the one-off levy during a teleconference.

It had been previously agreed that Cyprus would tax deposits above 100,000 euros at 9.9 percent and those under 100,000 at 6.75 percent. However, on Monday it looked unlikely that the Cypriot Parliament would approve this.

The Eurogroup agreed during Monday evening’s teleconference that Nicosia could give greater protection to those with deposits under 100,000 euros, which are also guaranteed by the Cypriot state.

However, Cyprus will still have to meet the target of raising a reported 5.8 billion euros, Eurogroup President Jeroen Dijsselbloem indicated in a statement that does not specify the amount in question.

“The Eurogroup continues to be of the view that small depositors should be treated differently from large depositors and reaffirms the importance of fully guaranteeing deposits below 100,000 euros,” the joint statement said.

“The Cypriot authorities will introduce more progressivity in the one-off levy compared to what was agreed on 16 March, provided that it continues yielding the targeted reduction of the financing envelope and, hence, not impact the overall amount of financial assistance up to 10 billion euros.”

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