Cyprus will reduce VAT on electricity from 19% to 9% starting April 1, a measure expected to benefit 494,000 households and provide financial relief amid rising living costs.
President Nikos Christodoulides announced the tax cut during a televised interview marking his two years in office.
The measure, which will remain in effect for one year, fulfils a longstanding demand from political parties and trade unions as a response to inflation.
According to information obtained by philenews, an average household consuming 800 kilowatt-hours every two months will save approximately €20 per billing cycle, resulting in annual savings of about €120.
The government estimates the temporary VAT reduction will cost state coffers €40 million in lost revenue over the year.
The reduced VAT will apply only to residential consumers, as commercial users already receive VAT refunds. The measure will be implemented through a decree approved by the Council of Ministers and published in the Official Gazette of the Republic.
A government source told philenews that officials had been planning this reduction for some time, with the decision made possible by improving economic conditions.
The VAT cut will operate alongside existing electricity subsidies for vulnerable consumer groups, which remain in place until the end of the year.
This is not the first time Cyprus has implemented such a measure. The previous administration under President Anastasiades applied a similar VAT reduction to help consumers cope with rising energy costs and inflationary pressures following Russia’s invasion of Ukraine.
That measure was later replaced with a universal electricity subsidy, which the Christodoulides government subsequently narrowed to target only vulnerable consumers.
Political reactions to the announcement varied. AKEL spokesperson George Koukoumas welcomed the decision while warning it would be meaningless if the government insisted on imposing “green taxes”.
DISY criticised the president’s interview as “an anxious attempt at self-justification,” claiming citizens “are faring worse than two years ago”.
DIKO praised the VAT reduction as “a practical move to directly support households during a period of intense economic burden and high prices,” noting it satisfied demands the party had made since 2022.
EDEK expressed satisfaction and called for extending the measure beyond one year until natural gas is incorporated into the country’s energy mix.
