Cyprus: Extended deadline for non-taxation election on property leasing
Form T.D. 1220 can be submitted until December 31, 2025.
The tax department on March 24, 2025, issued Circular 2/2025, allowing the submission of Form T.D.1220 until December 31, 2025, for electing the non-taxation of immovable property leasing and/or renting, without any implications arising from late notification to the tax commissioner.
The circular applies to lease agreements made on or after November 13, 2017 (the effective date of Law 157(I)/2017), if the following conditions are met:
- The lessor has not informed the tax commissioner of their choice to exempt the lease from value added tax (VAT) via Form T.D.1220 and must not have charged VAT on the transaction
- The lessor has declared the lease for direct tax purposes, fulfilling obligations related to income tax, general healthcare system (GHS) contribution, and special defence contribution
The circular does not apply if the lessor has imposed VAT on a taxable person using the property for business activities, allowing the lessee to deduct the VAT.
Circular 2/2025 is effective until December 31, 2025. Starting January 1, 2026, lessors must notify the tax commissioner within 30 days from the lease date to opt for non-taxation for leases to taxable persons using the property for business activities.
Read an April 2025 report prepared by the KPMG member firm in Cyprus