Revenue from taxes and social contributions climbs, but spending also accelerates

Cyprus recorded a general government budget surplus of €557.6 million (1.6 per cent of GDP) in the period from January to June 2025, according to preliminary figures released by the state statistical service on Monday.

This marked a slight increase from the €550.7m (also 1.6 per cent of GDP) surplus recorded during the same period in 2024.

Total revenue in the first half of 2025 rose by €393.6m, equivalent to a 5.9 per cent year-on-year increase, reaching €7.1 billion, up from €6.7 billion in the first six months of 2024.

Revenue from taxes on income and wealth grew by €171.3m, amounting to a 12.0 per cent rise, to reach €1.6 bn, compared to €1.4 bn in the same period of the previous year.

Social contributions increased by €208.3m, equivalent to a 9.7 per cent rise, totalling €2.4 bn, up from €2.1 bn in 2024.

Moreover, revenue from property income more than doubled, rising by €54m to €103.1m, compared to €49.1m in 2024.

Taxes on production and imports increased by €121.4m, amounting to a 5.4 per cent growth, reaching €2.4 bn, up from €2.3 bn a year earlier.

Within this category, net VAT revenue rose by €73.2m, equivalent to a 4.8 per cent increase, totalling €1.6 bn compared to €1.5 bn in the previous year.

Revenue from the sale of goods and services increased slightly by €3.8m, representing a 0.8 per cent rise, reaching €480.9m, compared to €477.1m in 2024.

In contrast, current transfers fell by €121.1m, equivalent to a 40.2 per cent decline, to €180.2m, down from €301.3m in the previous year.

Capital transfers also declined, dropping by €44.1m, representing a 63.3 per cent fall, to €25.6m from €69.7m in 2024.

The figures also showed that total government expenditure rose by €386.7m, amounting to a 6.3 per cent year-on-year increase, totalling €6.6 bn compared to €6.2 bn in the corresponding period of 2024.

Compensation of employees, including imputed social contributions and civil service pensions, increased by €110.8m, equivalent to a 6.1 per cent rise, reaching €1.9 bn, up from €1.8 bn a year earlier.

Spending on social benefits climbed by €178.2m, representing a 6.9 per cent increase, totalling €2.7 bn, compared to €2.6 bn in 2024.

Intermediate consumption rose by €36.5m, amounting to a 5.8 per cent rise, reaching €664.7m, compared to €628.2m in the previous year.

Interest payable increased by €22.3m, equivalent to a 9.8 per cent rise, totalling €250.9m, up from €228.6m in 2024.

The capital account grew by €91.1m, representing a 21.7 per cent increase, to €510.2m, compared to €419.1m in the same period last year.

Gross capital formation accounted for €419.5m of this amount, up €58.2m, equivalent to a 16.1 per cent increase, from €361.3m in 2024.

Other capital expenditure increased by €32.9m, amounting to a 56.9 per cent rise, to €90.7m, compared to €57.8m a year earlier.

On the expenditure side, current transfers decreased by €47.6m, equivalent to a 10.8 per cent decline, totalling €392.8m, down from €440.4m in 2024.

Subsidies declined by €4.6m, representing a 6.1 per cent decrease, to €70.8m, compared to €75.4m last year.

Finally, the statistical service explained that for a number of general government entities, and specifically for the local government subsector, estimates had to be produced due to the non-submission of sufficient data by the relevant authorities.