The Council of Ministers has recently approved an amendment to Schedule 12 of the Cyprus VAT Law (95(I)/2000), providing for the application of the reduced VAT rate of 9% to photovoltaic systems, pursuant to Decree Κ.Δ.Π. 363/2026
More precisely, with effect from 16 October 2026, the supply of photovoltaic systems to residential customers, as defined in the Electricity Market Regulation Law, for the purpose of self-consumption of electricity in their residences is subject to the reduced VAT rate of 9%.
It should be noted that where the supply of photovoltaic systems does not meet the above requirements, the standard VAT rate of 19% should apply. As of the date of this update, the Cyprus Tax Department has not issued any further guidance or clarifications regarding the application of the new provisions.
Special rules in relation to the amendment of the VAT rate
Pursuant to Article 55 of the VAT Law, the supplier may opt to apply the new VAT rate of 9%, provided that the goods or services are supplied to the recipient after the date on which the change in VAT rate takes effect, even where payment has been received or a VAT invoice has been issued before that date. Accordingly, it is important to establish the date on which the supply of the goods or services takes place or is completed.
Where an advance payment has been received and a VAT invoice has been issued before the change in the VAT rate takes effect, but the relevant transaction has not yet taken place or been completed, the supplier may opt to apply the new VAT rate. The VAT adjustment in respect of the total amount received shall be made by issuing a credit note relating solely to the VAT amount. The credit note, entitled “Credit Note – Change in VAT Rate”, must be issued within 14 days from the date on which the VAT rate changes, in accordance with Regulation 13 of the VAT (General) Regulations 2001 ( Ê. Ä. Ð 314/2001).
