Exemption for rental income from commercial property

Pursuant to Par.1(a)(iv), Schedule.8 of the Cyprus VAT Law, from 13 November 2017 the leasing of immovable property to a taxable person for commercial purposes is subject to VAT. 

Under certain conditions however, the lessor can opt out from this obligation by notifying the Tax Department of their intention within prescribed deadlines. This notification is made by the submission of document T.F. 1220. Failure to make this submission entails that the lessor may be liable to account for the VAT irrespective of whether or not this has been collected from the lessee. 

Circular 2/2025 extends the option for lessors to submit Form T.F. 1220 retroactively until 31 December 2025 where the lessor has not imposed VAT on the rent, has not notified the Tax Commissioner using Form T.F. 1220, and has fulfilled their direct tax obligations

Circular 2/2025 has effect until 31 December 2025, after which date the deadline for submission of  T.F. 1220 for new leases will be 30 days from signing of the lease agreement.

Circular 2/2025 may be found here.

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