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Cyprus is considering a controversial move to tax unexpected profits from private renewable energy companies, a measure aimed at funneling millions into programs that could ease the burden on consumers.
AKEL lawmaker Stefanos Stefanou, speaking on behalf of the AKEL-Left-New Forces parliamentary group, unveiled a legislative proposal to impose a tax on the “excess profits” of electricity producers and suppliers from renewable energy sources. According to the plan, the measure could generate a €50 million fund to support energy relief initiatives and other consumer-oriented programs.
“The goal is not to penalize companies, but to ensure that extraordinary profits, above what is reasonable given the market, benefit the public,” Stefanou said after presenting the proposal to the Parliamentary Finance Committee.
The move comes amid growing concern that private energy firms have reaped windfalls while ordinary consumers face rising bills. Stefanou cited figures showing that between 2018 and 2025, Cyprus paid €1.3 billion in emissions costs, expenses ultimately passed on to electricity users.
A European precedent
AKEL points to similar taxes already in place across 15 EU countries, where governments have acted to reclaim a portion of unexpected profits without disrupting market competition. European Commissioner Jorgensen has confirmed that member states may tax such profits when clearly defined, provided the measures do not hinder the functioning of the market.
Pushback from industry
Government and industry representatives have raised alarms. Officials from the Finance Ministry cautioned that the tax could reduce investment incentives and risk double taxation, while the Energy Ministry warned that the competitive energy market must not be constrained. The Employers & Industrialists Federation and the Chamber of Commerce echoed concerns, opposing the measure.
Legal authorities highlighted another potential pitfall: the proposed tax would be permanent, unlike temporary pandemic-era solidarity taxes, and lawmakers would need to justify why only renewable energy companies are targeted. Proportionality, clarity, and avoidance of selective treatment were emphasized as legal prerequisites.
Consumers and market transparency
Supporters of the proposal framed it as a consumer protection issue. Marios Drousiotis, representing the Consumer Association, argued that profits from renewable energy were not accidental, but the result of deliberate policy decisions. Taxing these windfalls, he said, would at least partially redress the imbalance for households facing rising electricity costs.
The Technical Chamber of Cyprus (ETEK), the Wind Energy Association, and the Consumer Association agreed that market distortions exist, though ETEK cautioned that current data on excess profits is less clear-cut than in previous years.
Christos Tsigkis of the Wind Energy Association noted that any excess profits are now primarily found in energy suppliers rather than producers, suggesting the tax include a built-in review period, perhaps two years, to assess effectiveness.
Next steps
The Energy Regulator, Tax Commissioner, and Transmission System Operator all indicated readiness to advise on technical details if the government moves forward, leaving the decision largely in the hands of political leadership.
Committee members questioned Stefanou and ministry representatives on how the measure compares to other EU nations and whether it could unfairly single out certain companies. Stefanou urged swift parliamentary action, criticizing the government for delays despite pre-election promises to pursue taxation of renewable energy windfalls.
“The conversation needs to move from committee to plenary quickly,” he said. “This is about political will and fairness for consumers.”
