Cyprus extends zero VAT on essentials and cuts household solar rate

Zero rating for specified essentials in 2027

K.D.P. 362/2026 amends the Fifth and Sixth Schedules to the Value Added Tax Law 95(I)/2000. It removes the covered products from the Fifth Schedule's 5% treatment and places them in the Sixth Schedule's zero-rate list. The decree applies from 1 January through 31 December 2027.^[1][3]

The zero-rated products include infant milk, baby and adult nappies and feminine-hygiene products. It also covers the decree's listed fresh or simply chilled vegetables and fruit, using Combined Nomenclature descriptions across headings 0701 to 0709 and 0803 to 0810. Retailers and importers should therefore map products to the decree's CN wording rather than assume that every grocery line or processed product qualifies.^[1][3]

Nine per cent for household solar

K.D.P. 363/2026 adds residential-customer photovoltaic systems to the Twelfth Schedule. Section 18A applies the 9% rate to transactions in that schedule. The new paragraph is limited to systems for residential customers, as defined by Cyprus electricity-market legislation, that are used for electricity self-consumption at the customer's residence.^[2][4]

The solar decree contains no equivalent one-year sunset and does not create a general reduced rate for commercial installations or non-residential self-generation. Suppliers and installers should document that the buyer is a residential customer and that the system is for self-consumption at the dwelling before applying the reduced rate.^[2][4]

Implementation point for cross-border groups

Groups selling essentials in Cyprus should time-limit the 0% tax codes to the 2027 period and retain the product and CN-classification evidence behind each decision. Solar suppliers should keep the residential-customer and use conditions separate from ordinary equipment classification. Credit notes, returns and invoices spanning the year-end boundaries will also need the correct supply-date treatment. The two decrees have different temporal designs, so systems should not attach the essentials sunset to qualifying household photovoltaic supplies.^[1][2][3][4]