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EU E-Commerce VAT Systems Generate €257.9 Million Revenue for Cyprus in 2024

by THEFUTURE.TEAM

August 11, 2025

Robust Revenue Growth Through Streamlined VAT Collection

Cyprus has demonstrated a significant fiscal boost in 2024 with €257.9 million generated from the European Union’s e-commerce VAT systems, according to Tax Commissioner Sotiris Markides. This impressive performance underscores the effectiveness of the One Stop Shop (OSS) and Import One Stop Shop (IOSS) frameworks in simplifying cross-border tax compliance.

Simplified Procedures for EU and Non-EU Businesses

The OSS system allows Cyprus-registered businesses to streamline VAT declaration and payment on sales to consumers in other EU countries. Companies simply register on the local OSS platform, apply the consumer’s VAT rate, aggregate their submissions quarterly or monthly, and remit a single consolidated payment. Subsequently, Cyprus allocates the appropriate share to each respective EU country. This efficient process extends to non-EU sellers as well, who can have their intra-EU distance sales managed under the Union Scheme.

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Breakdown of VAT Revenue Streams

Last year’s declarations under the various schemes illustrate the system’s broad reach: €217.9 million was collected via the Union Scheme, €36.9 million through the Non-Union Scheme, and €3.1 million via the Import Scheme. While the Union Scheme caters to both EU and non-EU sellers engaging in distance sales, the Non-Union Scheme specifically accommodates non-EU firms delivering services to EU consumers. Furthermore, the Import Scheme targets goods valued at less than €150 that are imported from outside the EU.

Implications and Broader Impact

Implemented in July 2021 as an evolution from the more limited MOSS system, these reforms have not only consolidated tax collection through an expansive OSS but also integrated the IOSS for low-value imports. By designating certain online marketplaces as “deemed suppliers,” the new framework ensures that VAT collection is both efficient and equitable. Across the EU, these mechanisms have generated over €33 billion in VAT revenues in 2024, reflecting a successful effort to simplify tax compliance, reduce administrative burdens, and promote fair taxation across the bloc.

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Thousands Of Overdue Cyprus Tax Cases Expire, Resulting In Millions In Lost Revenue

by THEFUTURE.TEAM

August 11, 2025

Fiscal Oversight Failure Threatens Public Funds

Cyprus is facing a significant loss in tax revenue as thousands of cases fall outside the statutory timeframe for assessment. According to the latest audit service report, the state risks forfeiting millions in unpaid taxes, undermining fiscal discipline and governmental funding.

Expired Assessments Undermine Revenue Collection

The audit revealed that 139,078 individual tax cases from 2014 to 2017 can no longer be assessed or amended due to lapse in the legal timeframe of the superintendent’s jurisdiction. Corporate liabilities are similarly affected, with an additional 6,070 outstanding taxes from the same period rendered unenforceable. This statutory expiry highlights the critical need for timely audits and due diligence in tax administration.

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Widening Gap in Tax Compliance

The report further indicates that numerous taxpayers with taxable income, yet to file their returns, are not factored into current pending tax assessments. This omission compounds the risk of missed revenue, placing additional pressure on fiscal management and policy enforcement.

Declining Trends In Tax Assessments

In a concerted effort to eliminate arrears, the tax department issued 789,519 assessments in 2024, a decrease from 943,413 in 2023 and 905,967 in 2022. Despite these efforts, between 12,254 assessments for the years 2014–2016 issued in 2023 and 11,428 for 2014–2017 issued in 2024 have lapsed under legal constraints. Such delays predominantly affect legal entities, accentuating the need for a streamlined approach to audit and collection practices.

Call For Enhanced Scrutiny And Prompt Action

Critics argue that many assessments from the past two years were imposed without adequate auditing or income adjustments. With high-risk sectors such as construction and land development, along with businesses suffering prolonged losses, under scrutiny, it is imperative that the tax authority re-evaluates its processes. Prioritizing high-risk cases and ensuring assessments occur within the legal timeframe is vital to safeguarding public funds and bolstering fiscal integrity.