**Title: Cyprus Tax Arrears Surge to €4.64 Billion as Collectable Debt Increases**
By [Your Name]
Cyprus Daily Life
As of December 2025, Cyprus has reported an alarming rise in outstanding tax debt, which has reached €4.64 billion, according to the latest data from the Tax Department. This figure reflects a substantial increase from €3.93 billion recorded a year earlier, representing an uptick of approximately €710 million.
The data, as reported by Philenews, indicates that the immediately collectable portion of this tax debt stands at €3.32 billion. This figure highlights the growing trend of overdue liabilities within the country and the Tax Department's intensified efforts to recover unpaid taxes through various enforcement measures.
Breaking down the immediately collectable debt, €979.4 million, or 29.5%, pertains to tax arrears that have been outstanding for less than one year. Additionally, €992.6 million, accounting for 29.9%, has remained unpaid for one to four years. The remaining sum of over €1.32 billion, which constitutes approximately 40% of the collectable debt, relates to liabilities that have been outstanding for more than four years.
The Tax Department has categorized the total outstanding debt into two segments: immediately recoverable and not immediately recoverable. Of the total €4.64 billion, €1.31 billion is deemed difficult to collect, which, when excluded, leaves a total of €3.32 billion as the amount considered immediately payable.
Among the €3.32 billion in immediately collectable debt, €901.5 million is already under enforcement action. This includes €325.9 million in overdue tax liabilities that have led to legal proceedings, meaning these cases have progressed to the courts. Furthermore, €575.4 million is undergoing administrative collection measures, which involve actions such as the registration of charges against immovable property and the seizure of funds from bank accounts. Notably, the Tax Department has already seized €263,000 from bank accounts through these enforcement measures.
After accounting for the debts currently subject to enforcement and bank account seizures, the remaining immediately payable amount stands at €2.42 billion. The Tax Department has been granted additional enforcement powers under a tax reform that took effect on January 1, 2026. These powers include the ability to seal business premises where tax debts exceed €20,000 and to take action against businesses that fail to issue receipts or invoices. Starting in 2027, these measures will also extend to taxpayers who do not submit their tax returns.
The Tax Department has emphasized that these enforcement measures are designed to enhance the collection of overdue taxes and to bolster the overall effectiveness of tax administration in Cyprus. In tandem with these efforts, the department is pursuing criminal prosecutions for non-payment of withheld taxes, including Value Added Tax (VAT), Pay As You Earn (PAYE) deductions, and the Special Defence Contribution. Such prosecutions may result in criminal penalties, repayment arrangements, or out-of-court settlements that ensure compliance through the submission of outstanding tax returns or agreed repayment schedules.
The analysis from the Tax Department also reveals that the average age of immediately collectable tax debt has risen to 80.3 months, or approximately 6.7 years, as of the end of December 2025. This is a significant increase from the average of 58.3 months reported at the end of 2024. However, the department has cautioned that this metric may not fully represent the situation, as it is influenced by a considerable volume of long-standing unpaid tax liabilities that are regarded as effectively uncollectable.
As Cyprus grapples with this escalating tax debt, the Tax Department's ongoing efforts to enhance compliance and recovery will be critical in addressing the growing financial burden. The measures implemented under the recent tax reform are expected to play a pivotal role in improving the collection rates and ensuring that taxpayers meet their obligations in a timely manner.