Filenews 4 December 2025 - by Charalambos Zakos
The two sectors with the most profitable businesses in Cyprus in recent years are those engaged in finance and renewable energy production. Based on this, the discussion about taxing their super profits had begun, since both banks and Renewable Energy Sources companies have recorded huge revenues. However, these industries are not the only ones that can be considered to record super profits.
Interest rates and large profit margins
The reasons for these large revenues are simpler than some people think. On the one hand, large amounts of money entered the banks' coffers from the increase in interest rates, and therefore from the increase in borrowers' instalments, and on the other hand, RES companies, due to the large profit margin from the sale of energy, recorded high returns.
The idea of taxing these profits is not new and is rekindled at regular intervals. However, even industry professionals themselves comment that the facts have now changed, so their taxation has been delayed and may now be too late. In addition, in addition to this, other questions arise, mainly about how super profits can be determined and whether this will pave the way for taxation of companies operating in other sectors of the economy.
It's too late for RES companies
People active in the field of Renewable Energy Sources commented to "F" that the thoughts about taxing profits should, if they were to be imposed, have been made a few years ago, when huge profits were recorded.
Today, as they add, these profits have shrunk, while at the same time there is a great problem of finding suitable sites for the construction of photovoltaic parks, since the land that meets the conditions (such as being close to the EAC network, which can serve the purpose) has decreased, thus increasing the value of the land available for this use. As they add, due to the above factors, another phenomenon has recently been observed: the sale of plots that hold the relevant licenses, often at outrageous prices, which causes tremors in the sector but also difficulties in the entry of new investors into the market.
On the other hand, there is the other point of view. Energy experts who spoke to "F" commented that, although the profits of RES companies were huge in previous years, these companies will continue to record high returns. This is due, as they claim, to the amortization of the cost for photovoltaic parks, since over the years the large costs for the creation of the infrastructure have already been repaid.
As they explain, the cost of producing a kilowatt hour is around 5 cents, while its sale exceeds 10 cents. A large part of this cost was the initial investment, while the administrative costs of the companies are estimated to be negligible. Therefore, as they add, today some large companies that have been operating in Cyprus for years can produce green energy at a cost of even less than 5 cents, so they will continue to record significant profits.
Banks pay a special tax
As far as the taxation of banks is concerned, two views dominate. On the one hand, that the banks will have to return to society part of their super profits, due to the special situation with what happened in Cyprus with the "haircut" and the previous support of society and citizens to financial institutions to save themselves. On the other hand, the banks claim that they already pay large amounts of tax to the state coffers, which is also proven by the amounts they pay through a special tax, which amount to tens of millions of euros every year. In fact, as they report, this special tax is paid by the banks whether they record a profit or a loss, while at the same time interest rates have now started to decrease, so loan revenues will decrease and will not increase in the future.
Is the way open for the rest of us?
In the event that both banks and RES companies are taxed, then the way may be opened for additional taxation of companies that record large profits and excess profits in other sectors of the economy. For example, companies in the tourism industry and in the land development sector seem to record such revenues. People in the field who spoke to "F" wondered whether the taxation of excess profits should focus on specific types of businesses or whether all businesses operating in Cyprus should be included in the equation.
