From 1 April 2025, the VAT rate on electricity in Cyprus will be reduced from 19% to 9%. This measure is aimed at reducing the financial burden on citizens and will apply for one year.
The tax reduction was officially announced by Cypriot President Nicos Christodoulidis during an interview on the results of his two years in office. The Council of Ministers subsequently approved the decree, which was published in the Official Gazette on Friday 28 March. This means that the decision has entered into force.
The amendments were made to the twelfth annex of the VAT Act and concern the following categories of household consumers
Standard rates for households:
- Tariff 01 - single tariff;
- Tariff 02 - double tariff (different rates according to the time of day).
Vulnerable categories:
- Tariff 08 - special tariff for favoured categories of consumers.
Tariff for thermal energy storage:
- Tariff 56 - applies to households with storage heating systems if they are connected to tariffs 01, 02 or 08.
Thanks to these innovations, the average household is expected to save €20 every two months. Over the course of a year, the same family will be able to save around 120 euros. According to experts, the VAT reduction will result in a shortfall of about 40 million euros for the state budget over the entire period of the measure.
It is worth noting that in conditions of increased energy consumption in summer (due to the active use of air conditioning), the VAT reduction will help to reduce energy bills. It will also reduce inflationary pressures, as electricity is an important component of the cost of goods and services.
The government does not rule out the possibility of extending the reduced rate if the economic situation requires further support for the population. In addition, new energy efficiency measures are expected, including subsidies for solar panels and energy saving programmes.
The reduction of VAT on electricity is an important step towards reducing household costs and making utilities more affordable. Cypriots will now be able to pay less while maintaining their comfort and standard of living.