Cyprus VAT was introduced on the 1st of July 1992 and is obligatory on the supply of goods and provision of services in Cyprus and on imports into Cyprus from non-Member States of the European Union.
All enterprises and persons performing a business activity and being registered or required to be registered. A taxable person can be an individual or a company, a partnership, a self-employed person including clubs, associations, institutions, and other, irrespective if these organisations have been incorporated or not in accordance with the regulations of any law or regulation.
Every person is required to register to Cyprus VAT if:
• at the end of any month where the turnover for the preceding 12 months exceeds €15.600 or
• at any time it is anticipated that the turnover within the next 30 days will exceed €15.600
• at anytime a business provides or anticipates to provide services into VAT-registered persons in any Member State of the European Union.
• at any time it is received or anticipated to be received services from the European Union or Third Countries.
• when the distance sales of goods to persons not subject to VAT registration in Cyprus, by supplier resident in other EU country and exceeds €35.000.
A person that makes taxable supplies but does not meet the above requirements for compulsory registration may voluntarily register to Cyprus VAT unless he deals with exempt supplies.
The main transactions which are exempt from Cyprus VAT could be summarised as follows:
• Financial services
• Hospital and medical care
• Postal and insurance services
• Management services provided to Cyprus funds
• Leasing of buildings used for residence
• Certain cultural educational and sports activities
• Supplies of second hand buildings
Cyprus VAT rates
Cyprus VAT legislation uses the following tax rates:
• Standard rate 19%
• Zero rate 0%
• Reduced rate of 5% (it applies also as from 1/10/11, under conditions, for the acquisition of residence to be used as the primary place of residence. Also the renovation and repair of used primary residence is subject to 5% as from 20/8/20, if 3 years have passed from first use of the residence)
• Reduced rate of 9%
Difference between zero-rated transactions and exempt transactions
The basic difference between zero-rated transactions and exempt transactions is that the businesses making exempt supplies of goods or provision of services are not eligible to recover the tax paid on their purchases and expenses while the businesses making zero-rated supplies of goods or provision of services are eligible to recover the tax paid on their purchases and expenses.
Cyprus VAT returns and payments
All persons liable to Cyprus VAT must file a quarterly return within 40 days following the end of each quarter and pay the balance between output VAT (collected) and input VAT (paid).
As from 2 May 2017 the electronic submission of VAT returns will be compulsory, through the taxisnet system.
The following returns must be submitted by person trading intra-community, buying from or selling to the other Member States of the European Union:
• Include in the VAT return (total)
• VAT Information Exchange System (VIES form)
• Included in the VAT return (total with 0%)
As of 1 January 2010 Cyprus VAT legislation had been altered so that to comply with the EU legislation.
From 2010 onwards, enterprises resident in the Republic providing services to other Member State set the recipient liable to take care of the VAT involved under the reverse charge. Whether there is a sale of goods or provision of services in other Member State, enterprises are liable to submit the VIES return electronically (from this year onwards) on the 15th day following the end of each month through the website: https://taxisnet.mof.gov.cy/displayWelcome.do.
Penalties will be imposed in cases that a taxpayer failed to apply the law in respect of the obligations of registration, submission of returns, keep books and records for a period of 6 years, reverse change application.
Important law amendments
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Last update: March 2022
The authors expressly disclaim all and any liability and responsibility to any person, entity or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.
Accordingly no person, entity or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.
PKF Cyprus firms are member firms of the PKF International Limited network of legally independent firms and do not accept any responsibility or liability for the actions or inactions on the part of any other individual member firm or firms.