Cyprus seeks fiscal flexibility and heating oil tax relief at EU meetings

Cypriot Finance Minister Makis Keravnos attended Eurogroup and ECOFIN meetings in Luxembourg on October 8 and 9, 2026, to advocate for greater fiscal flexibility within the EU. The primary goal is to secure state capacity to support households and businesses amidst the ongoing energy crisis and high inflation. Cyprus has officially requested a derogation to reduce excise duty on heating oil, aiming to alleviate financial burdens for citizens during the winter months. The current national measures already include a reduction of the duty from 7.4 cents to 2.1 cents per litre, effective from November 1, 2026, to April 30, 2027.

Keravnos also initiated discussions with the European Commission regarding a revision of VAT calculation on electricity bills, characterizing the current structure as double taxation. While the Commission initially showed reluctance, Cyprus is leveraging its improved public finance performance and reduced debt levels to justify the request. These efforts align with broader initiatives by other member states, including Italy and Greece, who are similarly pressing for fiscal leeway ahead of the upcoming summit of the 27 EU leaders scheduled for October 15 and 16. The Minister emphasized that economic rules must adapt to current realities, warning that the energy crisis now threatens both economic stability and democracy.