The financial aspect of the operation of Municipalities is one of the most important activities of the Union of Cyprus Municipalities. Particularly, this issue has emerged strongly in recent years with the economic crisis that has covered all sectors of the economy.
Over time, both the Union of Cyprus Municipalities and the Municipalities, have demanded that the financial independence of the Municipalities has to be regulated effectively. Relevant reference is also made to the European Charter of Local Self-Government (adopted in Cyprus by Law 27/1988).
Unfortunately, up to the present time, Municipalities are economically dependent on the Central Government, as the received annual state subsidy is determined by the Government on the basis of its economic capabilities and does not include any criteria, either for granting or for any cuts. In addition to the annual state subsidy, Municipalities receive an amount from the State as a grant against the abolition of the professional tax that was imposed in the past to individuals.
More specifically, the main grants received by Municipalities per year are as follows:
| YEAR | GOVERNMENT SUBSIDY (€) | PROFESSIONAL TAX GRANT (€) |
| 1999 | 6.099.271,45 | – |
| 2000 | 20.124.950,02 | – |
| 2001 | 14.767.271,40 | – |
| 2002 | 20.509.607,47 | – |
| 2003 | 22.319.460,63 | 21.138.634,00 |
| 2004 | 29.826.554,74 | 21.138.634,00 |
| 2005 | 40.951.759,35 | 21.899.145,00 |
| 2006 | 49.499.892,36 | 28.015.625,00 |
| 2007 | 50.325.919,14 | 27.075.778,00 |
| 2008 | 57.084.604,00 | 27.621.985,00 |
| 2009 | 72.170.399,00 | 29.166.265,00 |
| 2010 | 72.354.370,00 | 29.165.183,00 |
| 2011 | 68.795.153,00 | 27.701.330,00 |
| 2012 | 60.976.514,00 | 20.528.538,00 |
| 2013 | 58.082.868,00 | 19.912.681,00 |
| 2014 | 51.093.530,00 | 17.501.520,00 |
| 2015 | 51.130.120,00 | 17.501.520,00 |
| 2016 | 51.130.920,00 | 17.501.520,00 |
| 2017 | 51.157.520,00 | 17.545.000,00 |
Municipalities revenues come mainly from the following taxes / fees:
- Municipal Immovable Property Tax.
- Professional Tax.
- Garbage Collection fees.
- Entertainment Duty.
- Fees for overnight stay in Hotels.
- Extrajudicial Fines.
- Several other licenses.
The financial reform of the Municipalities is a major challenge, a large part of which goes beyond the control of the Municipalities itself, since their framework of operation, as public organizations, does not allow them to make the desired incisions.
The Union of Cyprus Municipalities, as the coordinating body of the Municipalities, claim the rights of Municipalities, either to the Parliament or to the competent Ministries. In many cases, we collect and process financial information relevant to the operation of Municipalities and transmit it to the competent Departments of the State. At the same time, we are actively involved in the preparation of the budget template and other relevant financial reports, which are followed by all Municipalities.