Brussels, 16 September 2024
Today, the Commission has endorsed a positive preliminary assessment of 37 out of the 38 milestones and targets linked to Cyprus’ second payment request including the second and third instalments, for €152 million (net of pre-financing) under the Recovery and Resilience Facility, the centrepiece of NextGenerationEU.
Positive preliminary assessment of all but one milestone
The payment request covers important steps in the delivery of 17 reforms and 19 investments and a new audit and control milestone, that will drive positive change for citizens and businesses in Cyprus in the areas of public health, education, energy efficiency and renewable energy, protection against forest fires and floods, water management, agriculture, research and innovation, financial support to enterprises, public administration, anti-corruption, and taxation.
Flagship measures in this payment request include:
- Improvement of the legal and institutional framework for fighting corruption: Cyprus has established the Independent Authority against Corruption, which was the last step in completing the measure aiming to improve the legal and institutional framework for fighting corruption.
- Facilitation of Strategic investments: The first step in addressing the challenges of low productivity and competitiveness of the economy and improving the social resilience of Cyprus was accomplished with the entry into force of a law facilitating strategic investments in Cyprus.
The Commission found that one milestone has not been entirely fulfilled at this stage. It concerns a reform to tackle aggressive tax planning (C3.5R10 /M209, ‘Entry into force of the law to tackle aggressive tax planning’). The Commission therefore proposes to suspend part of the payment as foreseen by Article 24(6) of the RRF Regulation. This procedure gives Member States additional time to fulfil outstanding milestones, while receiving a partial payment linked to the milestones that have been satisfactorily fulfilled.
Next steps
The Commission has now sent its positive preliminary assessment of the milestones and targets that it considers satisfactorily fulfilled to the Economic and Financial Committee (EFC), which has four weeks to deliver its opinion.
In parallel, the Commission has communicated to Cyprus the reasons why it considers the milestone on the aggressive tax planning is not satisfactorily fulfilled. Cyprus now has one month to submit its observations to the Commission.
Following the EFC’s opinion on the positive preliminary assessment and after assessing the observations submitted by Cyprus, the Commission will adopt a payment decision, after which the payment to Cyprus can take place.
Should the Commission, following Cyprus’ observations, confirm its assessment that the milestone in question has not been satisfactorily fulfilled, it will suspend part of the payment. The suspended amount is determined by applying the Commission’s methodology for payment suspensions (outlined in Annex II of the Communication published on 21 February 2023), which applies to all Member States.
From that moment, Cyprus will have a period of six months to fulfil the outstanding milestone. At the end of this period, the Commission will assess whether the target has been satisfactorily fulfilled. If so, it will lift the suspension and proceed with the payment of the suspended amount.
Background
Cyprus’ recovery and resilience plan includes a wide range of investment and reform measures. The plan will be financed by €1.2 billion, of which €1.02 billion in grants and €200 million in loans.
You can find more information on Cyprus’ Recovery and Resilience plan on this page, which features an interactive map of projects financed by the RRF, as well as on the Recovery and Resilience Scoreboard. More information on the process of payment requests under the RRF can be found in this document of questions and answers.
For more information
Commission’s preliminary assessment of Cyprus’ second payment request
Cyprus’ Recovery and Resilience plan
Recovery and Resilience Facility
- Recovery and Resilience Facility
- Recovery and Resilience Facility project map
- Recovery and Resilience Scoreboard
- Recovery and Resilience Facility Regulation
- EU as a borrower
Source – EU Commission