The new payment moratorium enacted in Cyprus

8 Apr 2021 | Andria Koukounis

The new payment moratorium enacted in Cyprus

The order of the Cyprus Minister of Finance in relation to a new payment moratorium came into force under the Financial and Regulatory Authorities’ Suspension Measures Law and was published on 15th January 2021.

In accordance with the Minister of Finance’s order, borrowers may apply by 31st of January 2021 to benefit from the new payment moratorium and their approval/rejection shall be notified by 28th of February 2021, with the payment holiday being activated with retrospective effect as of 1st of January 2021.

Financial institutions eligible to apply the payment holiday are licensed credit institutions, Cyprus Credit Acquiring Companies, the Cyprus Land Development Organisation, and non-credit institutions and credit brokers for consumer credit facilities relating to properties being used as a residence. Facilities include syndicated loans and loans concluded in Cyprus and governed by foreign law.

Applications for the new payment moratorium can be filed in relation to facilities concluded by 30th March 2020 the latest and which have either not been in arrears for more than 29 days as at 31st December 2020, or have been in arrears as at 31st December 2020 of not more than EUR 100 (retail loans) and EUR 500 (business loans).

Further, the right to apply for payment holiday is granted to physical persons, public legal persons, self-employed and businesses (their beneficial owners), provided they qualify under the criteria set by the relevant order, and the payment holiday relates to the repayment of both principal and interest.

The loan facilities eligible for the payment moratorium are:

  1. Loans obtained for any purpose by legal or physical borrowers, and secured with primary residence of market value up to EUR 350,000;


  1. Business loans to companies and self-employed persons whose operations are suspended in accordance with the order of the Minister of Health on 8th January 2021 under the Infectious Diseases Law Cap.260;


  1. Business loans to companies in the hotel industry regulated by the Hotels and Tourist Establishments Law; and


  1. Loans falling under any of the above categories, the beneficial owners of which applied for payment holiday under the 2020 payment moratorium, have not requested the return of any instalment payments made by them since 30th March 2020, and the period of suspension of their loan repayment is less than 9 months. Such applicants will be able to apply for payment holiday not exceeding 9 months in aggregate of the previous and the currently requested period.


Similarly to the payment moratorium that expired on 31st December 2020, under the new moratorium:

  1. Any instalment payments made during the payment holiday may be returned to borrowers upon their request. In case borrowers do not request return of instalment payments made, such payments count towards their contractual instalment payments, and as voluntary prepayments in specific;


  1. Applicants must be going through financial difficulties as a result of the COVID-19 pandemic and in case they fulfil the above criteria their application cannot be rejected;


  1. All contract terms in loan facilities, including guarantee documents and except for the repayment provisions, remain in full effect during and after the payment holiday;


  1. The interest accrued during the payment holiday is added to the outstanding amount and shall not be immediately due or payable at the expiration of the payment holiday. At such expiration, the repayment period of principal and interest shall be deemed to have been extended for as long as the instalment payment was suspended, so that the amount payable in each instalment remains the same;


  1. The taking of enforcement measures by financial institutions for debt recovery of loans eligible to payment holiday is suspended and the non-payment of instalments in eligible loans does not constitute a breach of the terms of such loan agreements.

The declaration that must be completed by interested applicants is annexed to the relevant law in a template form, and in case of multiple borrowers it must be completed by each borrower and sent together to the financial institution for processing.

Our firm would be delighted to support any person interested in applying under the new payment moratorium or in case of non-eligibility to the criteria set by the new payment moratorium, evaluating their rights and obligations under their loan facility.


This publication is provided for your convenience and does not constitute legal advice.


Authors: Andria Koukounis, Huseyin Erguven

About this Article
Andria Koukounis

Advocate / Partner

Link Copied!
Related articles