May 2016

Cyprus Economy Update

This newsletter covers updates regarding tourist arrivals, the Cyprus property market, the number of companies registered, the deposits in the Cyprus banking system, the number of motor vehicles registered, the 3rd Licensing Round for Hydrocarbon Exploration for Blocks 6, 8 and 10 and the Law regulating Financial Leasing.

Furthermore, the contracts dealing with the commercialisation of the ports were signed this week and relate to the licensing for managing the trade activities at the port as well as the licenses to manage the marine activities of the port.
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Costas Christoforou CPA, TEP
General Manager

Rodoula Demetriades MS, CPA
Senior Manager
Business Development

Cyproman Services Ltd


Tourist arrivals in March 2016 reached 137.013 persons, compared to 97.479 in March 2015, recording an increase of 40,6%, according to the latest figures of the Passengers Survey released by the Statistical Service of the Republic.

An increase of 44,1% was recorded in tourist arrivals from the United Kingdom (from 41.149 in March 2015 to 59.282 in March 2016), 73,5% increase from Germany (from 7.443 to 12.917), 63,4% increase from Russia (from 7.855 to 12.835) and 15,5% increase from Greece (from 10.557 to 12.191 this year). On the other hand a decrease of 19,8% was recorded in tourist arrivals from France (1.616 in March 2016 compared to 2.016 in March 2015).

For the period January – March 2016 arrivals of tourists totaled 251.608 compared to 189.988 in the corresponding period of 2015, recording an increase of 32,4%.

Total deposits in February 2016 recorded a net increase of €78,4 million, compared with a net increase of €234,5 million in January 2016.

The annual growth rate stood at 1,9%, compared with 1,3% in January 2016. The outstanding amount of deposits reached €46,2 billion in February 2016.
Cyprus Property Market

According to the Cyprus Land Registry data, which looked at the total number of property sale contracts submitted to the Registry, the sale contracts reached 539 in March this year, compared to 452 in March 2015, recording an increase of 19%.

Meanwhile, the first quarter of 2016 recorded 1.367 of sale contracts compared to 1.098 in the corresponding quarter of 2015, recording an increase of 24%. Significant growth was also recorded in sales from foreign buyers with an almost four-fold increase in sales by foreign buyers at 157 sales this March compared to just 41 in March last year.
Increase in applications for the registration in new companies

A significant increase in the number of applications for new companies was recorded in March. According to data by the Department of the Registrar of Companies and Official Receiver of the Republic of Cyprus, the number of applications for registration of a new company increased in March 2016 by 23% compared to March 2015.

The number of new applications in March this year was 1.205, compared to 980 in the corresponding month in 2015. Data shows that this was an increase for the seventh consecutive month and the 18th increase in the past 27 months.

On a monthly basis, the number of applications in March this year was by 8,1% higher compared to February. According to the data, the number of the registered companies stood at 202.764 in March 2016.

In addition, new registered companies in the first quarter of 2016 were 3.063, while only in March this year new registrations stood at 1.225. It is noted that new registrations in 2015 were 11.270.

As regards new registrations for offshore companies, data shows that they reached 19 in the first quarter of 2016, while their total number in 2015 stood at 71.
Motor vehicles

The Statistical Service announced the publication of the report entitled "Registration of Motor Vehicles" for the period January-March 2016. The main developments in the first three months of 2016, compared to the same period of 2015, were:

(a) The total registrations of motor vehicles increased by 28,0% to 7.475 in January-March 2016, from 5.840 vehicles in the same period of 2015.

(b) Passenger saloon cars increased to 6.394, from 5.080 in January-March 2015, i.e. there was an increase of 25,9%. Of the total passenger saloon cars, 3.254 vehicles or 50,9% were new and 3.140 vehicles or 49,1% were used cars.

(c) Goods conveyance vehicles increased by 52,6% to 589 in January-March 2016, compared to 386 in January-March 2015.
(Source: CYSTAT)
The Republic of Cyprus has launched a 3rd Licensing Round for Hydrocarbon Exploration for Blocks 6, 8 and 10 in its Exclusive Economic Zone (EEZ)

A notice was published in the Official Journal of the European Union on the 24th March 2016 announcing a 3rd licensing round for the exploration of hydrocarbons for Blocks 6, 8 and 10 offshore Cyprus.

Applications may be submitted within 120 days of the date of publication of this notice making the deadline at 13:00 hrs (local Cyprus time) on 22nd July 2016. The decision on the applications will be made by the Council of Ministers of the Republic of Cyprus and it is expected to take place within six months from the date of submission of applications referred to in the Notice.

A detailed Guidance Note regarding the submission of the applications, issued by the Ministry of Energy, Commerce, Industry and tourism can be found below, along with other additional informative material. (Source: Official Journal of the European Union)

The Law regulating Financial Leasing and the activities of Financial Leasing Companies of 2016 (the “Law”) was enacted by the Cyprus House of Representatives on 14th April 2016.

The Law aims to establish and regulate the framework for the provision of financial leasing services. Entities in this sector, as well as the persons managing such entities will be subject to adequate supervision as well as strict conditions regarding their organizational structure and operations. The Central Bank of Cyprus (the “Central Bank”) shall be the regulatory authority for the purposes of ensuring the smooth operation of the financial leasing market and protecting the parties to such transactions.

In accordance with the provisions of the Law, financial leasing activities and transactions may be provided to the public, by the following:

(a) financial leasing companies registered in Cyprus that have obtained a license from the Central Bank to provide financial leasing services, or

(b) licensed credit institutions, except for licensed credit institutions whose license does not include the provision of financial leasing services, or

(c) credit institutions established in another member state being licensed from the relevant supervising authority, provided that the financial leasing services offered are covered by their license, offering such services in the Republic through a branch or on a cross-border basis, or

(d) financial leasing companies, being the subsidiaries of credit institutions with legal seat in a member state, and subject to fulfilling certain criteria, offering financial leasing services in Cyprus through a branch or on a cross-border basis.

A financial leasing company established in Cyprus may set up or operate a branch or representative officer or offer services outside Cyprus, with the prior approval of the Central Bank.

A financial leasing company may provide both financial leasing services and ancillary services, including operating leasing services, the negotiation and purchase of movable or immovable property for the purpose of sale and lease-back transactions, services for the maintenance and safekeeping of property for leasing purposes, assignment of the manufacture or construction of buildings or premises for buying purposes in order to lease them, assignment of the improvement or maintenance of buildings or premises for leasing purposes, and any other relevant service which may be determined by the Central Bank. It is not allowed to provide any other services other than those provided under the Law, or to manufacture itself movable or immovable property. The law will be applicable once it is published in the Cyprus Government Official Gazette.
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