Filenews 22 February 2026 - by Eleftheria Paizanou
The imposition of green taxation, or carbon tax, on fuels as well as other energy products may have been temporarily sidelined, but it is still on the table. This is because it is included in the commitments made by the Republic of Cyprus to the European Commission, in the context of the implementation of the National Recovery Plan.
The carbon tax, and the broader green transition plan in general, was incorporated in 2021 into the Recovery Plan and was accompanied by two more regulations, the imposition of the green water fee and the landfill tax. The last two have been approved by the Council of Ministers and the Commission has already been informed about Cyprus' compliance.
Regarding the carbon tax, Brussels, in a letter sent to the Cypriot authorities, asked for information on what will happen, as the implementation of the National Recovery Plan is completed by the end of the year. The Ministry of Finance has forwarded its response and is soon expected to receive a new letter from the European Commission, with its demands in relation to the controversial issue.
According to information from "F", from the day the Republic receives the relevant letter from the EU, it will have six months before it to comply, with a deadline of August 31. This is the last day on which member states can complete projects and levy the relevant taxes, in line with the commitments included in the Recovery Plan.
The initial amount that Cyprus was expected to receive for the implementation of green taxation amounted to €60 million. However, in the event that the country does not implement the carbon tax on fuel by August 31, Brussels will cut off part of the money it would receive under the National Recovery Plan.
However, the prerequisite of the green tax will be included in the last two instalments that will be submitted to the EU later this year. These two tranches provide for a total of milestones, of which 25 have been completed, while the rest are in progress.
The Director of the Directorate of Recovery and Resilience of the Development Directorate of the Ministry of Finance, Anthoula Savvidis, stated that the progress of the implementation of the overall Plan, combined with the targeted amendments made, ensure the full absorption of European funds. As he mentioned, this presupposes decisions on green taxation as well.
It is recalled that by the end of the year, the total amount that the Republic will receive from the Recovery Fund is estimated at €1.02 billion, provided that all milestones will be implemented. To date, Cyprus has disbursed five tranches of €568 million, while within 2025 two more requests have been submitted for the collection of €180 million. Therefore, the remaining funds will be disbursed with the 8th and 9th instalments.
It is worth noting that the green tax on fuel was originally supposed to be implemented in 2023, with a projected increase in the price of fuel by 6 cents per liter. Then, due to geopolitical developments, the application was postponed to 2024 and later to 2025, in a reduced form by 50%, i.e. to 3 cents per liter.
The Minister of Finance, Makis Keravnos, in a recent interview with "F", had stated that Cyprus is on an open line with Brussels. As he mentioned, this is a policy that presents contradictions, as Cyprus does not have sufficient public transport, however it is asked, as he explained, to impose a new tax on fuel in order to push citizens to use public transport. According to the minister, the implementation of the measure is delayed in time.
Regarding the water fee, there are some reactions, while in relation to the landfill fee, the relevant bill is expected to be submitted to the Parliament soon. The landfill tax will be imposed in stages. Specifically, the amount of the tax burden per ton of waste will start from €10 per ton and will gradually increase to €70 per ton by 2039, giving time for the development of waste management infrastructure.
