Overview

In Cyprus, the "professional tax" is a fee imposed by municipalities on individuals engaged in professional activities within their jurisdiction. This annual tax applies to self-employed professionals and businesses. Aradippou Municipality introduced a green fiscal policy to promote renewable energy and energy efficiency by ringfencing 10% of the professional tax increase. This fund supports incentives for organizations to reduce energy consumption and improve energy ratings, offering up to a 15% tax reduction. To qualify for the tax reduction, organizations must implement and certify ISO 50001 annually, demonstrating ongoing efforts to manage and reduce energy use. The remaining funds provide free consulting services on energy efficiency and renewable investments to professionals, progressively increasing the number of taxpayers eligible for the fiscal incentive. Later, Lympia and Kokkinotrimithia municipalities replicated the fiscal model.

Evidence of success

In 2017, Aradippou’s 632 taxed professionals consumed 32,645 MWh. If 10% of this electricity is produced via RES within 10 years due to incentives and consulting from the fiscal model, it could reduce CO2 emissions by 285 t/year.

LOCATION

Aradippou (CY); Lympia (CY); Kokkinotrimithia (CY)

TIMESCALE

2019-ongoing

Potential of learning or transfer

The innovative element of Aradippou’s professional tax policy is that the tax increase is accompanied by allocating the additional revenue to fund fiscal incentives for the professionals that implement ISO50001 by themselves and to fund free consulting for new professionals to implement renewable energy or energy efficiency actions, driving a virtuous cycle. In other countries, such as Spain and BiH, similar taxes are managed by local authorieties and the model could be replicated.

Contacts

For the Cypriot municipalities:
Cyprus Energy Agency: info@cea.org.cy