The Cyprus government has just passed a law making it illegal to pay in cash without getting an official receipt from the supplier. If the supplier is registered for VAT, and let’s face it most of them should be, then VAT should always be charged. Fines are leviable on both the supplier and recipient of the service, in serious cases this can be punishable by a jail term for both participants in the transaction.
The black economy is rife in Cyprus, it is not only your friendly builder, plumber or electrician who is engaged in it. We know of dentists, surgeons and doctors who do the same, we wonder if any of those will ever be jailed!