Cyprus expands zero VAT to bread, milk, coffee, meat, and other essential food products
Cyprus has expanded its temporary 0% VAT regime for essential goods. Meat and fish are zero-rated from 1 October 2026, while bread, milk, coffee, sugar and baby food follow from 12 October. The measure will remain in force until 31 May 2027.
Cyprus has expanded the application of the 0% VAT rate to a wider range of basic food products, including meat, fish, bread, milk, coffee, sugar and baby food.
The measure was introduced through Decree K.D.P. 354/2026, approved by the Council of Ministers and published in the Official Gazette of the Republic of Cyprus on 30 September 2026. The Cyprus Tax Department issued detailed guidance on the measure on 2 October 2026. It can be found:
The new rules apply in two stages.
- From 1 October 2026 until 31 May 2027, the 0% VAT rate applies to qualifying fresh, chilled or frozen meat and fish.
- From 12 October 2026 until 31 May 2027, the zero rate is extended to several additional everyday products, including bread, milk, coffee, sugar and baby food.
The measure forms part of a wider package of government actions intended to limit the impact of inflation and support households with the cost of essential goods
The zero VAT rate applies from 1 October to fresh, chilled or frozen meat.
The official Tax Department guidance covers beef, pork, sheep and goat meat, as well as certain edible offal, poultry, rabbit and hare meat under the relevant Combined Nomenclature tariff classifications.
This is effectively a continuation and extension of an earlier temporary measure. Cyprus had already applied 0% VAT to qualifying meat and fish between 6 April and 30 September 2026 under Decree K.D.P. 168/2026. The new decree continues the treatment from 1 October rather than allowing the measure to expire.
The official guidance specifically covers fish falling under CN headings 0302, 0303 and 0304, as well as certain cuttlefish, squid and octopus falling under CN heading ex 0307
However, the zero rate does not apply automatically to all products containing meat or fish.
Processed meat products such as marinated or smoked meat, sheftalia, burgers, chicken nuggets, sausages and similar prepared meat products remain subject to the existing reduced VAT rate.
Similarly, processed fish products such as canned fish, smoked fish, marinated fish and breaded fish continue to be taxed at the 5% reduced VAT rate.
This distinction is important for food retailers because the VAT treatment depends on the precise type and classification of the product rather than simply whether it contains meat or fish.
The second phase begins on 12 October 2026. From this date, qualifying bread, milk, coffee, sugar and baby food will also be subject to 0% VAT until 31 May 2027.
For bread, the measure covers a wide range of fresh and frozen bread, with or without sourdough. Examples given by the Tax Department include white, brown, wholegrain, multigrain, village-style, rye and corn bread, as well as baguettes, ciabatta, sliced bread, bread rolls and pitta bread.
However, pastries, dried bakery products and bread containing additional ingredients such as raisins, nuts or flavourings are excluded from this category and do not automatically qualify for the zero rate.
The zero rate also applies to a relatively broad range of milk products. The official guidance includes fresh cow's, goat's and sheep's milk, as well as condensed milk, long-life milk and flavoured milk such as chocolate or banana milk.
Plant-based alternatives are also specifically included. This means products such as almond, soy and rice milk can qualify for the temporary zero rate. Businesses should therefore not interpret the new treatment as applying only to traditional fresh dairy milk.
Coffee products become zero-rated, but ready-made drinks do not Coffee is another important category for retailers.
The 0% rate covers unroasted coffee, roasted coffee beans, ground coffee, powdered or instant coffee, flavoured coffee, and both caffeinated and decaffeinated products, regardless of the type of packaging.
However, the Tax Department specifically excludes ready-made beverages where coffee is used as an ingredient.
This means that the sale of packaged coffee beans or ground coffee may qualify for 0% VAT, while a prepared takeaway coffee or another ready-to-drink coffee beverage does not benefit from the same treatment.
That distinction will be particularly relevant for supermarkets that also operate cafés, bakeries, vending aras or other food-service activities.
Qualifying sugar is also included from 12 October. The official guidance covers white, brown and dark granulated sugar, icing sugar, coarse sugar, sugar cubes and sugar sold in individual sachets.
Baby food in powdered, dry or liquid form, intended for consumption by children, is also covered. However, ordinary snack products are excluded. The guidance specifically identifies items such as crisps, nuts, sweets, chocolates, ice cream and some yoghurt products as outside the baby-food zero-rate category.
For retailers, the biggest practical issue is not simply changing one VAT rate in the POS system.
Different products that appear very similar may receive different VAT treatment.
Fresh meat may qualify for 0%, while processed meat remains at 5%. Packaged coffee may qualify for 0%, while a prepared coffee drink does not. Qualifying bread may be zero-rated, while pastries and bread containing certain additional ingredients remain outside the category
Retailers will therefore need to review their product master data and VAT mappings at SKU level.
The relevant implementation dates must also be respected: meat and fish from 1 October, and bread, milk, coffee, sugar and baby food from 12 October.
In our view, this is a commercially important measure for retailers because it directly affects high-volume everyday products and requires precise product-level VAT classification.
For retailers with large catalogues, careful SKU mapping and clear coordination between tax, purchasing and POS teams will therefore be essential
Implementation impact and what the business should do:
Retailers should update their POS, ERP and product-master systems to apply 0% VAT to qualifying meat and fish from 1 October 2026 and to qualifying bread, milk, coffee, sugar and baby food from 12 October 2026.
Businesses should review each affected SKU against the official product descriptions and tariff classifications, especially where fresh and processed products are treated differently.
Particular attention should be paid to processed meat and fish, prepared coffee drinks, pastries and other excluded products, which continue to be taxed under the applicable reduced or standard rate.
Retailers should also configure the measure as temporary, because the new 0% treatment currently expires on 31 May 2027. Unless the government extends the measure again, systems will need to return the affected products to their normal VAT treatment after that date.
The source for this text above is an article published by VATupdate. Source
Nikolina Basić, Senior Legal Consultant at Fiscal Solutions
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