14/07/2025
In a significant move towards greater fiscal harmonization and support for small and medium-sized enterprises (SMEs), Cyprus has officially adopted new VAT rules aimed at aligning with the relevant EU Directive, which introduces a simplified VAT regime for small businesses across the European Union.
This development marks a major shift in how VAT obligations are handled for SMEs operating within Cyprus, bringing both compliance relief and new opportunities for cross-border trade.
The revised VAT regime, effective from 1 January 2025, allows qualifying SMEs in Cyprus to benefit from simplified VAT obligations, including the option to remain outside the VAT system until their annual turnover exceeds €15.600 in Cyprus and €100.000 across the European Union.
The scheme applies not only to Cyprus-based businesses but also to EU-based SMEs that are VAT-registered in other Member States and meet the relevant thresholds.
Key Features :
- No VAT charged on sales under the scheme.
- Eligibility for cross-border VAT exemption
- Enhanced monitoring through digital tools to prevent misuse.
Businesses should start evaluating whether they qualify under the new VAT regime and how the changes may impact their operations. Specifically, they must review their annual turnover, check if they qualify under the new thresholds and consult their tax advisors to prepare for the changes.
The adoption of the new VAT regime by Cyprus represents a strategic step toward greater alignment with EU tax policy, while offering tangible administrative relief for SMEs. These changes not only streamline compliance but also enhance cross-border business potential within the Single Market.
Cyprus’ commitment to harmonizing its tax system underscores its role as a forward-looking, business-friendly jurisdiction within the EU — one that supports sustainable growth for its SME sector.
Prepared by:
Niki Vlachou
VAT department
Contact Niki: niki.vlachou@pgeconomides.eu
PGE&Co remains at your disposal for any clarifications and for further assistance that might be needed on this or on any other matter.