VAT Alert

Exemption for rental income from commercial property (update)

Kyriakos Fili
By:
Kyriakos Fili
23 Jan 20261 min read
The Cyprus Tax Department has issued a Notice extending the option for lessors to submit Form T.F. 1220 retroactively until 31 March 2026 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.

On 24 March 2025, the Cyprus Tax Department issued VAT Circular 2/2025 extending the deadline for lessors who have not abided by the timing conditions in excercising the option to exempt from VAT rental income derived from commercial property by submitting Form T.F. 1220, to do so retroactively until 31 December 2025. Reference may be made to a previous alert which was issued here for more details.

According to the new notice, in continuation of VAT Circular 2/2025 the date for submission of Form T.F.1220 is extended until 31 March 2026, subject to the conditions outlined in the aforementioned VAT Circular.

From 1 April 2026 concerning the rental of property to a taxable person for the purpose of the tenants taxable business activities, the owner must notify the Tax Commissioner for their intention not to tax this income within 30 days from the date of signing the rental agreement, by submitting Form T.F.1220.

VAT Circular 2/2025 may be found here.

The new notice may be found here. 

 

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  • Kyriakos Fili
    Kyriakos Fili Kyriakos is the VAT Partner of Grant Thornton in Cyprus. He is a member of the Institute of Chartered Accountants in England and Wales (ICAEW) and the Institute of Certified Public Accountants of Cyprus (ICPAC). View Profile