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Cyprus’ Outstanding Tax Debt Rises To €4.64 Billion

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.

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.

Cyprus Company Registration: Two To Four Days, Unless Security Checks Intervene

Cyprus aims to register companies within two to four working days when applicants submit complete documentation. However, regulatory approvals, sanctions checks, foreign ownership and national security considerations can extend the process or prevent registration.

Energy, Commerce and Industry Minister Michael Damianou outlined the timeframe in a written response to MP Efrem Christou, who asked about company formation procedures and the checks required before approval.

Fast Registration Depends On Complete Documentation

Damianou said authorities seek to process complete applications within two to four working days, regardless of a company’s structural complexity. The timeframe also depends on whether applicants pay an additional fee for expedited processing.

According to the official incorporation requirements, the standard registration fee is €165, rising to €235 for companies without share capital. Expedited processing costs an additional €100.

Applicants must submit an approved company name, a memorandum and articles of association, and forms HE1, HE2 and HE3. Public companies must also provide form HE5.

Regulated Businesses Require Additional Approval

Companies operating in certain sectors must obtain prior clearance from the relevant authorities or professional bodies. These include medical and dental businesses, law firms, insurance and reinsurance companies, and firms supervised by the Cyprus Securities and Exchange Commission.

The Central Bank of Cyprus must also approve company names associated with payment institutions, electronic money and foreign exchange services. Additional restrictions apply to educational institutions using terms such as “university” or “college”, casino operators, broadcasters and wine producers.

Non-profit organisations seeking to register without “Limited” or “Ltd” in their names also require ministerial authorisation.

Sanctions And Foreign Ownership Trigger Extra Checks

Applications involving shareholders, directors or company secretaries subject to EU, UN or US sanctions receive additional scrutiny. Registration can proceed only if the competent sanctions authority does not prohibit it. Damianou noted that US sanctions are considered indirectly but have not been incorporated into Cyprus legislation in the same way as EU and UN restrictions.

Applications involving Turkish interests are also subject to additional review. Under procedures introduced around 20 years ago, the registrar must consult national security services before proceeding with registrations involving Turkish interests or businesses that could threaten the Republic’s security.

Damianou distinguished these cases from applications submitted by Turkish Cypriots, saying there is “no substantial difference” in how their registration documents are examined. Applications may nevertheless be refused if classified information raises concerns about national interests or national security.

Public Servants Face Separate Restrictions

Under Article 65 of the public service law, government employees cannot act as directors, company secretaries or shareholders in private or public companies without prior special permission from the finance minister.

Proposed Law Would Expand Registrar’s Powers

The government is also seeking to strengthen the Registrar of Companies’ authority to address potential security risks. An amendment to the companies law, submitted to Parliament on September 17, would allow the registrar to reject applications, refuse company filings or remove existing businesses from the register on grounds including national security, public order, public interest and the protection of state sovereignty.

The proposal, approved by the Council of Ministers on August 6, remains before the House commerce committee. It would allow authorities to withhold detailed justifications where disclosure could reveal sensitive information, while informing affected companies of the general grounds for decisions.

The bill follows parliamentary discussions about companies controlled by non-EU nationals, particularly those with Turkish ultimate beneficial owners, and possible implications for property ownership through foreign-controlled businesses. Further details are available in the proposed amendment and earlier parliamentary reporting.

Balancing Investment And Oversight

Cyprus is seeking to maintain an efficient company registration process while strengthening checks on ownership, sanctions compliance and potential security risks.

The two-to-four-day target supports the country’s appeal to entrepreneurs and international investors, but the actual timeline depends on the nature of the business, the documentation submitted and any additional regulatory or security reviews required.

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