Recovery Fund: Green Taxation Blocks Full Release of Cyprus’ 5th Payment
Brussels backs reforms but withholds part of RRF funds pending green taxation milestone.
The European Commission has granted Cyprus partial approval for its 5th payment request under the Recovery and Resilience Facility (RRF), a core pillar of the EU’s NextGenerationEU programme, unlocking most of the €70.5 million requested while temporarily withholding a smaller portion.
According to the Commission’s preliminary assessment, Cyprus has successfully fulfilled 10 out of 11 milestones and all 8 targets linked to the sixth instalment of RRF grants. The payment request, submitted on 1 August 2025, covers a broad package of reforms and investments across key sectors of the economy and public administration.
The approved milestones span critical policy areas including public administration, justice, transport, tourism, education, healthcare, and energy-efficient building upgrades.
Among the flagship reforms is the local government reform, which includes the merging of smaller municipalities to improve efficiency, reduce administrative costs and strengthen the competencies of local authorities. The Commission also highlighted progress in digitalising schools, with investments in laptops, projectors and interactive whiteboards aimed at improving learning environments and boosting students’ digital skills.
Despite the overall positive assessment, the Commission concluded that one milestone — Milestone M19, related to green taxation reform — has not yet been satisfactorily completed. As a result, it has proposed a partial suspension of the payment corresponding to that specific milestone.
Cyprus will still receive funding linked to the milestones and targets already approved, while being granted additional time to address the outstanding green taxation requirement. The government now has one month to submit its observations on the Commission’s assessment.
The preliminary positive evaluation has been forwarded to the Economic and Financial Committee, which has four weeks to deliver its opinion.
If the suspension is confirmed, Cyprus will have up to six months to fully comply. Once the pending milestone is met within that timeframe, the Commission will lift the suspension and disburse the remaining funds.
