Cyprus’ outstanding tax debt reached €4.64 billion at the end of 2025, up from €3.93 billion a year earlier, according to Tax Department data reported by Philenews. Immediately collectable debt totalled €3.32 billion, while €1.31 billion was classified as not immediately recoverable.
Collectable Arrears Continue To Grow
Nearly one-third of immediately collectable debt, or €979.4 million, relates to tax arrears outstanding for less than one year. Another €992.6 million, representing 29.9% of the total, has remained unpaid for between one and four years.
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Liabilities outstanding for more than four years account for the remaining €1.32 billion, or about 40% of immediately collectable debt.
Immediate Recovery Potential Improves On Paper
Debt classified as immediately recoverable increased from €2.29 billion at the end of 2024 to €3.32 billion a year later.
Around €901.5 million is already subject to enforcement measures, including €325.9 million in court proceedings and €575.4 million under administrative recovery measures such as MEMOs and bank account seizures.
Bank account seizures have so far recovered €263,000. After deducting debt already under enforcement and amounts recovered through bank account seizures, €2.42 billion remains immediately payable.
New Powers Expand The State’s Leverage
Tax reforms that took effect on January 1, 2026, expanded the Tax Department’s enforcement powers. Businesses with unpaid tax exceeding €20,000 can now have their premises sealed, while the same measure also applies to businesses that fail to issue receipts or invoices.
Beginning in 2027, taxpayers who fail to submit tax returns will also face the same sanction.
Criminal proceedings continue against cases involving unpaid value-added tax (VAT), Pay As You Earn (PAYE) deductions, the Special Defence Contribution and failures to submit tax returns.
Convictions may result in court-imposed penalties, repayment agreements or out-of-court settlements linked to compliance measures.
Debt Age Signals A Deeper Structural Problem
Some outstanding liabilities have been incorporated into repayment plans, although not all agreements have been completed.
Average collectable tax debt reached an age of 80.3 months, or about 6.7 years, by the end of December 2025, compared with 58.3 months a year earlier.
According to the Tax Department, that figure is influenced by large volumes of long-standing unpaid liabilities accumulated over many years and considered difficult to recover.
