Breaking news

Cyprus projects €1.13 billion fiscal surplus in 2025 budget

by THEFUTURE.TEAM

October 7, 2024

Cyprus is set to deliver a fiscal surplus of €1.13 billion in 2025, equivalent to 3.3% of GDP, according to the state budget presented to the House of Representatives on Thursday. The budget outlines an overall increase in revenues of 6.2% in 2025, with a slight 1.2% reduction in expenditures compared to 2024.

Total state expenditure for 2025 is projected at €12.93 billion, encompassing debt repayments, interest, and investments. The breakdown includes €3.53 billion for the Fixed Fund, €7.85 billion in regular expenditures, and €1.55 billion for development expenses. This represents a slight decrease from the €13.1 billion allocated in 2024.

Follow THE FUTURE on LinkedIn, Facebook, Instagram, X and Telegram

In terms of revenues (excluding financial flows), the government forecasts a 6.2% increase, bringing the total to €10.31 billion in 2025, compared to €9.71 billion in 2024. The main sources of revenue will come from direct and indirect taxation, estimated at €8.48 billion—or 82% of total revenues. The remaining 18% will be generated from non-tax income, including the sale of goods and services, rental income, and transfers.

Direct tax revenues are projected to rise by 4.9% to €3.92 billion, while indirect taxes are expected to increase by 5.6%, totalling €4.56 billion. Non-tax revenues are forecast to see a significant 10.3% increase, reaching €1.83 billion.

While there is a slight 1% decrease in personnel-related expenditures, totalling €3.62 billion in 2025, operational expenditures are expected to surge by 21.4%, reaching €1.42 billion. This is attributed to increases in reserve funds, defence, policing, and consulting services.

Transfer payments—including social benefits, grants to public and private organizations, and contributions to the EU budget—are expected to grow by 5.3%, reaching €3.99 billion. The largest increases in 2025 will be in contributions to the General Healthcare System (GeSY) and social security funds.

Capital expenditures, which cover co-financed projects, land and equipment purchases, and building renovations, are projected to rise by 4% in 2025 to €1.14 billion. Meanwhile, debt service expenditures are expected to fall by 18.6%, dropping to €2.75 billion in 2025 from €3.38 billion in 2024.

Steady growth until 2027

Looking at key economic indicators, the Cypriot economy is expected to grow steadily through 2027. GDP for 2025 is projected at €33.86 billion, with an annual growth rate of 3.1%. By 2027, GDP is forecast to reach €37.54 billion, with growth rates of 3.2% and 3.3% in 2026 and 2027, respectively.

Unemployment is set to decline from 5.0% in 2024 to 4.5% by 2027, while inflation is expected to remain stable at 2.0% annually from 2025 to 2027. The fiscal surplus is forecast to remain strong, at 3.3% of GDP in 2025, declining slightly to 3.1% by 2027.

The primary surplus is expected to reach 4.8% of GDP in 2025 and stabilize at 4.4% by 2027. Meanwhile, public debt as a percentage of GDP is projected to decline from 69.3% in 2024 to 64.2% in 2025 and 53.5% by 2027. Capital expenditures are expected to peak at €1.39 billion (or 4.1% of GDP) in 2025, before dropping to 3.1% of GDP by 2027.

The Future Forbes Realty Global Properties

Cyprus Tax Reform Ushers In Revised Deductions And Elevated Penalties

by THEFUTURE.TEAM

February 12, 2026

Effective January 1, Cyprus has implemented significant changes to its tax legislation. The reform adjusts rates and deductions and imposes substantially higher penalties, signaling a robust commitment to boosting compliance and deterring evasion.

Enhanced Deterrence Measures

The revised framework significantly raises administrative fines across a wide range of activities. One of the most notable changes concerns the obligation to accept credit card payments. The penalty for non-compliance has increased to €6,000, up from €4,000 previously and €2,000 when the requirement was first introduced in 2021. The rule applies across retail, services, hospitality, and leisure sectors and forms part of broader efforts to limit undeclared transactions and protect public revenue.

Adjustments To Reporting And Submission Deadlines

Penalties for failures related to tax filings and data submissions have also been tightened. The daily fine for a continuing violation has risen from €17 to €20, while the penalty for unjustifiably omitting income from a tax return now reaches €5,000, compared with €2,000 under the previous regime. Non-compliance with invoicing and receipt requirements is subject to the same ceiling, replacing the earlier fine of €450. These measures reinforce stricter expectations around accurate reporting and documentation.

Graduated Consequences For Late Payments And Serious Breaches

A tiered penalty system now applies to late submissions. Individuals face a fine of €150, small companies with a turnover below €1 million are charged €250, and larger businesses incur a fine of €500. If deadlines set by the tax commissioner are missed, the penalties escalate further to €300, €500, or €1,000, respectively. No fine is imposed, however, when an official extension is granted, and returns along with self-assessed taxes are filed within the approved timeframe, typically by July 31 or January 31.

Strict Penalties For Serious Tax Offenses

The reform also strengthens sanctions for more serious violations. Where business premises are sealed due to breaches such as failure to issue lawful receipts or outstanding tax debts, any attempt to tamper with the seal constitutes a criminal offense. Such actions may result in fines of up to €30,000 and imprisonment of up to two years. In cases of unpaid taxes, company executives, board members, or financial officers may also be held personally liable.

Penalties linked to the extraordinary defence contribution have been significantly increased. A first conviction may lead to a fine of up to €5,000, together with payment of up to double the amount owed. A second conviction carries far heavier consequences, including fines of up to €100,000, imprisonment of up to two years, and payment of up to four times the original contribution. Offences related to defence procurement or associated financial benefits are punishable by fines of up to €30,000, rising to €100,000 when a public official or person acting on behalf of the Republic is involved.