On Tuesday, November 11, the Cyprus Council of Ministers held a meeting during which officials extended the electricity subsidy for vulnerable households and businesses until the end of 2026. Finance Minister Makis Keravnos confirmed that the program — already used by thousands of families and enterprises — will remain in effect, including for “Tariff 08.”
Why Was the Subsidy Extended?
The decision reflects the government’s commitment to protecting citizens’ income, especially the most vulnerable groups. As the minister emphasized, one way to achieve this is through tax reform that raises the income tax-free threshold, as well as maintaining zero VAT rates on essential goods for families, the elderly, and young households.
Given rising energy costs and inflationary pressures, this measure provides essential support — reducing the financial burden for both families and businesses. He also noted that “Tariff 08” is an example of a targeted assistance measure that has already proven effective and necessary.
According to the law, the reduced VAT rate of 9% will continue to apply to the following tariffs:
- Tariffs 01 and 02 — for household consumption
- Tariff 08 — for vulnerable groups
- Tariff 56 — for energy storage
How It Works and What to Know
The subsidy is intended for specific groups: vulnerable households and businesses. Extending it until the end of 2026 ensures continuity and stability of support. Importantly, this measure is not the only one in place — tax reform and VAT relief form a broader system designed to protect incomes. For families, seniors, and young households, this means maintaining a favorable consumption regime.
A reminder: The Electricity Authority of Cyprus (EAC) applies VAT to the entire bill amount, which includes not just the cost of electricity but several additional fees. An EAC bill consists of:
- electricity consumption
- use of the electricity network
- costs of safe and uninterrupted operation (listed as Ancillary Services)
- meter management
- electricity supply
- fuel cost adjustments (electricity production cost depends directly on fuel prices, as power plants run on heavy fuel oil)
- EU-mandated emissions quota fees
Additionally, obligations for supporting vulnerable consumers (listed as Public Service Obligations) are factored into the bills of all other consumers. This forms the final amount on which VAT is calculated.
What to Expect Next
In the coming months, the government promises a cautious but steady dialogue regarding automatic wage indexation and strengthening the social safety net. Further expansion of support for energy efficiency and renewable energy is also expected — subsidies are already available through the Cyprus Renewable Energy and Energy Conservation Fund.
Companies and households should also be aware that, depending on market conditions, electricity tariff fluctuations, or legislative changes, new support mechanisms may be introduced.