Cyprus State Revenue Rises to €3.8 Billion as Tax Income Continues to Grow

State budget execution reaches 35% of projected revenue and 32% of expenditure by the end of May 2026

Cyprus recorded state revenues of €3.8 billion by the end of May 2026, as stronger tax collections continued to boost government income, according to data released by the Treasury on Monday.

The implementation of the state budget reached 35 per cent on the revenue side and 32 per cent on the expenditure side during the first five months of the year.

Government revenue increased from €3.59 billion during the same period in 2025 to €3.8 billion this year. The rise was primarily driven by higher proceeds from both indirect and direct taxation.

Indirect tax revenue increased by €120 million, or 7 per cent, mainly due to stronger value-added tax (VAT) receipts, which rose to €1.42 billion from €1.28 billion in the corresponding period of 2025.

Direct tax revenue also grew by €110 million, representing an 8 per cent increase, with income tax collected from companies and individuals reaching €1.29 billion.

Meanwhile, actual expenditure amounted to €3.7 billion, maintaining an implementation rate of 32 per cent, compared with €3.54 billion during the same period last year.

The increase in government spending was mainly attributed to higher transfers and subsidies, social benefits, and operational expenses. Spending on transfers and subsidies rose by €70 million to €790 million, while social benefits increased by €40 million to €820 million, largely reflecting additional expenditure on healthcare, education, and housing support.

Operational and other expenses climbed to €330 million, partly due to increased spending on defence and policing. However, expenditure on salaries, pensions, and gratuities declined slightly by €10 million to €1.35 billion.

Capital expenditure for development projects reached €111.3 million by the end of May, with funds directed towards road infrastructure, construction projects, government facilities, and equipment purchases. The Treasury noted that development expenditure implementation reached 19 per cent, exceeding the average rate of 17 per cent recorded during the first five months of the past decade.

In loan activities, inflows from repayments reached €1.06 billion, while outflows for loan repayments and issuances totalled €2.06 billion. The Treasury said the variation compared with 2025 mainly reflected differences in the timing of European Medium Term Note issuances.

In addition, co-funded projects and other financial disbursements amounted to €83.9 million, supporting initiatives in industrial technology, education, and sustainable urban mobility. Sponsorships and contributions to academic and research institutions, including the University of Cyprus and the Cyprus University of Technology, totalled €69.7 million.

The government also distributed €24.5 million in targeted social support, including funding for education, culture, and housing assistance.