The Cyprus Property Developers Association (CPDA) has urged the government to replace the €1,000 per spouse or partner tax exemption for household green upgrades proposed in the draft tax reform with direct state grants, arguing that this would deliver faster and more meaningful results.

In addition, the association said the incentive should not be subject to income or socio-economic criteria, warning that such restrictions would limit participation and slow progress toward Cyprus’ commitment to the EU’s “Fit for 55” climate targets.

CPDA stressed that the scheme should cover both renovations of existing homes and newly built residences designed to modern environmental standards.

“This would ensure fairer treatment for buyers, encourage sustainable construction and support Cyprus’ efforts to reduce the environmental footprint of its building stock,” the association said.

In its proposals, CPDA called for the size of the support to be tied to the actual cost of the green investment, up to a ceiling, to ensure proportionality, fairness and efficient use of public funds.

The association said this approach would benefit both existing and new homeowners, achieve the environmental transition in a practical way and boost the construction and renovation sectors with positive effects for the wider economy.

It also pointed to successful examples from Italy, Germany and the Netherlands, where governments subsidise a significant portion of investments aimed at improving energy efficiency.

The proposals were submitted as part of the public consultation on a major tax reform package launched by the Finance Ministry.

The ministry said the six draft bills represent a central pillar for a fair, efficient and sustainable economic system, forming part of the president’s pre-election programme and responding to calls from businesses and society for an overhaul of the tax framework.

The reform package is based on an independent study by the University of Cyprus’ Economics Research Centre (CypERC) and incorporates opinions from foreign experts to ensure compliance with EU state aid rules, acquis and principles.

It also reflects the outcomes of earlier bilateral and open consultations with stakeholders.

The draft laws cover amendments to income tax, defence contributions, capital gains, tax certification and collection, and stamp duties.

The ministry said the reform comes at a time of rising fiscal pressures, widening inequality and the need to attract new investment.

Beyond safeguarding public revenues, the aim is to ensure social justice, combat tax evasion, strengthen entrepreneurship and restore citizens’ trust in the tax system.