VALUE ADDED TAX (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 authorities. 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 & acquisitions 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 by organizations involved with exempt supplies||10.250 (Note 4)|
- The threshold is either the accumulated turnover subject to VAT during the 12 months preceding any point of time or the expected turnover subject to VAT within the following 30 days from any point of time.
- 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.
|Standard rate (until 29/02/2012 the rate was 15%. From 01/03/2012 to 13/01/2013 the rate was 17%, from 14/01/2013 to 12/01/2014 the rate was 18% and from 13/01/2014 is 19%)||19%|
|Reduced rate (restaurant services and other catering services, accommodation in hotels and other tourist accommodation, transportation with rural and tourist buses or city and rural taxis, etc) (Up to 12/01/2014 the rate was 8% and from 13/01/2014 the rate is 9%)||9%|
|Reduced rate (foodstuffs, pharmaceutical products, books, liquid gas, entrance fees to concerts, museums, etc)||5%|
|Zero rate (export of goods, international transport of goods and passengers, etc)||0%|
Reduced rate 5% on the acquisition and/or construction of residencies for use as the primary and permanent place of residence:
The reduced rate 5% applies to contracts signed from 01/10/2011 onwards with the condition that the residency will be used as the primary and permanent residency for the next 10 years. The eligible person must submit an application to obtain a certified confirmation from the Commissioner of Taxation.
Until 7 June 2012 residents of non EU Member States could not apply for the reduced rate, however, from 8 June 2012 they can apply provided the condition of the primary and permanent residency is met.
Reduced rate 5% on the renovation and repair of private residences:
The reduced rate 5% applies to renovation contracts signed from 4/12/2015 onwards with the condition that a period of at least 3 years has elapsed from the date of their first use. The scheme excludes the value of materials which constitute more than 50% of the value of the services.
VAT EXEMPT SUPPLIES
- The letting of immovable property
- Most hospital, medical and dental care services
- Most banking, financial and insurance services
- Certain educational and sports activities
- Management services provided to mutual funds
- Supplies of real estate including supplies of land and of second-hand buildings (except supply of new buildings before their first use)
- Postal services provided by the national postal authorities
VAT ON IMMOVABLE PROPERTY
- 19% VAT is imposed on leasing of immovable property (land and commercial buildings, other than residential buildings) when used by lessee in making taxable supplies. The lessor has the right to opt not to impose VAT on the specific property. The option is irrecoverable.
- 19% VAT is imposed on the sale of non – developed building land in the course of carrying out a business activity (exemptions apply).
IRRECOVERABLE INPUT VAT
- Input VAT cannot be recovered in a number of cases which include the following:
- Acquisitions used for making exempt supplies
- Purchase or hire of saloon cars
- Entertainment and hospitality expenses (except those relating to employees and directors)