Tax Reform in Cyprus: Fines Increased to €100,000 and Imprisonment Possible

From January 1, an updated tax reform came into effect in Cyprus, which not only changed rates and deductions but also significantly tightened the penalty system. Authorities state that the main goal is to strengthen tax discipline and make sanctions a truly deterrent factor.

One of the most notable changes concerns the mandatory acceptance of bank cards. Now, businesses that refuse to accept card payments risk a fine of €6,000. Previously, it was €4,000, and in the initial implementation stage — €2,000. The obligation to accept cards has been in effect since autumn 2021 for retail, services, restaurants, and leisure establishments, aimed at combating tax evasion.

Fines have also been increased for failure to submit declarations, reports, and other mandatory data. The daily fine for ongoing violations has risen from €17 to €20.

Penalties for income concealment have increased significantly: for unjustified non-declaration of income in the tax return, a fine of up to €5,000 is now imposed (previously — £2,000). For violations of invoicing and receipt issuance rules — also up to €5,000 instead of the previous £450.

Fines for late submission of declarations vary depending on the taxpayer category:

• €150 — for individuals,
• €250 — for small companies with turnover up to €1 million,
• €500 — for large companies.

If the violation continues after the deadline set by the tax commissioner, amounts increase to €300, €500, and €1,000 respectively. However, if an official extension is granted (for example, until July 31 or January 31), no fine is imposed provided the declaration is submitted and the tax is paid within the extended period.

Separate emphasis is placed on liability for breaking into premises sealed by the tax office: this is a criminal offense punishable by a fine of up to €30,000 and/or imprisonment of up to two years. Executives and persons responsible for the company’s financial management may bear personal criminal liability for tax non-payment.

Penalties for the special defense contribution have also been tightened. For the first violation — a fine of up to €5,000 and payment up to double the debt. For a repeat violation — a fine of up to €100,000, up to two years in prison, and payment of four times the debt amount.

Thus, the reform emphasizes not only updating the tax system but also strict control over its compliance.