FOCUS ON
COMPANY - VAT ISSUES
VAT
VAT is imposed on the supply of goods and provision of services in Cyprus, provided the supply of goods or provision of services is not specifically exempt from VAT. In addition, VAT is imposed on the acquisition of goods from the European Union and on the importation of goods from third countries.
Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on services, goods, machinery, etc which they receive (input tax). If output tax in a VAT period (normally 3 months period) exceeds total input tax, a payment has to be made to the VAT athorities. If input tax exceeds output tax, the excess input tax is carried forward as a credit and set off against future output VAT. Under certain circumstances immediate refund of excess input VAT can be obtained.
The standard VAT rate is 19%. The Cyprus VAT Legislation provides also for two reduced VAT rates 5% and 9% as well as for zero rated supplies.
For the supplies & aquisitions of goods and in general for the provision of services within European Union no VAT is charged. The recipient, applies the reverse charge mechanism and without paying VAT it self-charges VAT and at the same time claims it back, provided it relates to supplies for which the right to recover input VAT is granted.
The exportation of goods to third countries is zero rated, thereby there is no output VAT and any input VAT can be recovered.
COMPULSORY REGISTRATION WITH THE CYPRUS VAT REGISTER
| Cases of compulsory registration | Registration threshold € |
|---|---|
| Taxable supplies within Cyprus | 15.600 (Note 1) |
| Taxable supplies to persons established in other Member States, where they do not hold a VAT number | 15.600 (Note 1) |
| Taxable supplies to persons established in other Member States, where they hold a VAT number | Nil |
| Distance sales: Sales of goods from Suppliers resident in another EU Member State to non-VAT registered persons in Cyprus | 35.000 (Note 2) |
| For receipt of services from abroad for which the recipient must account for VAT under the reverse charge provisions | 15.600 (Note 3) |
| For acquisition of goods in Cyprus from suppliers resident in other EU member states |
10.252 (Note 4) |
Notes:
- The threshold is either the accumulated turnover subject to VAT during the 12 preceding months or the expected turnover subject to VAT within the following 30 days.
- The threshold is the accumulated sales made during any calendar year.
- The threshold is either the accumulated services received during the 12 months preceding any point of time or the expected services to be received within the following 30 days from any point of time.
- The threshold is either the accumulated acquisitions made during any calendar year or the expected acquisitions to be made during the following 30 days.
VOLUNTARY REGISTRATION WITH THE CYPRUS VAT REGISTER
Businesses have the option to register voluntarily when they do not meet the registration thresholds or when they have supplies that are outside the scope of VAT but for which the right to claim the related VAT input is granted.
BASIC ADMINISTATION ISSUES ONCE REGISTER WITH CYPRUS VAT AUTHORITIES
- Every VAT registered business must submit quarterly the VAT returns and pay the excess of Output tax over Input tax
- Every VAT registered business must keep proper accounting books and records