Tax Alert: Cyprus Tax Department Extends Deadline for VAT Exemption on Property Leases
Key Update for Property Owners and Businesses: Deadline Extended to 31 December 2025
The Cyprus Tax Department has issued Circular 2/2025, granting an extended deadline for landlords to opt for VAT exemption on property leases. This update applies to property leases used for taxable business activities in accordance with Paragraph 1(a)(vi) of the Eighth Schedule of the VAT Law N.95(I)/2000.
What’s New?
+ Landlords who have not previously notified the Tax Commissioner about their choice to exempt their leases from VAT must now submit Form T.F.1220 by 31 December 2025.
+ The extension applies retroactively to leases dating back to 13 November 2017, provided that:
– The landlord did not previously submit Form T.F.1220 and did not charge VAT on the lease.
– The lease income has been declared for direct taxation purposes (i.e., income tax, GHS contributions, and special defence contribution where applicable).
Who is Affected?
+ Landlords leasing property to taxable persons for business activities.
Important Limitations
+ The exemption does not apply to leases where VAT has already been charged and deducted by the lessee as input VAT.
+ From 1 January 2026, landlords must notify the Tax Department within 30 days of signing a lease agreement if they wish to opt for VAT exemption.
Action Required
+ Review your existing lease agreements to determine if you are eligible for VAT exemption.
+ Submit Form T.F.1220 before 31 December 2025 to benefit from the extended deadline.
This extension presents a valuable opportunity for landlords to regularize their VAT status on past leases and avoid potential penalties.
Need Assistance?
If you need professional guidance on how this update impacts your tax obligations, contact our experts today for a consultation.
Contact details
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