Value Added Tax (VAT) was introduced in Cyprus in 1st of July 1992. The local name for VAT is Fóros Prastithémenes Axías (Φόρος Προστιθέμενης Αξίας) and the abbreviation is ΦΠΑ (FPA).
The VAT legislation in Cyprus is based on the European model of VAT and is administered by Cypriot Ministry of Finance.
Reduced Rates: 9%
Applies to: All restaurant catering services, accommodation in hotels, tourist lodgements and transportation of passengers and their accompanying luggage within Cyprus using urban, intercity, water, and rural taxis and tourist and intercity buses.
Reduced Rates: 5%
Applies to: The supply of food and/or beverages (excluding alcoholic drinks, beer, wine, and soft drinks) or both, irrespective of whether the goods are delivered from the supplier to the customer or taken away by the customer. The supply of pharmaceutical products. Newspapers, books, and magazines. Hairdressing services. Entry fees to cultural and port events. The renovation and repair of private households after three years of the first residence. The supply of catering services from school canteens.
The 0% VAT in Cyprus applies to:
The exportation of goods. Repair, maintenance, chartering and hiring of sea-going vessels which are used for navigation on the seas and carrying passengers for reward or used for the purpose of commercial, industrial, or other activities. Supply, modification, repair, maintenance, chartering and hiring of aircraft, used by airlines operating for reward mainly on international routes. Supply of services to meet the direct needs of seagoing vessels and aircrafts. Transportation of passengers from Cyprus to a place outside Cyprus and vice versa using a seagoing vessel or aircraft.
VAT is imposed on the supply of goods and provision of services in Cyprus, as well as on the acquisition of goods from the European Union (EU) and the import of goods in Cyprus.
Registration is compulsory for businesses with turnover subject to VAT in excess of €15,600 during the 12 preceding months or expected turnover subject to VAT in excess of €15,600 within the next 30 days.
Businesses with turnover of less than €15,600 or with supplies that are outside the scope of VAT, but for whom the right to claim related input VAT is granted, have the option to register on a voluntary basis.
An obligation for registration also arises for businesses which make acquisition of goods from other EU Member States in excess of €10.251,61 during any calendar year.
In addition, an obligation for VAT registration arises for businesses engaged in the supply of intra-community services for which the recipient must account for VAT under the reverse charge provisions.
Furthermore an obligation for VAT registration arises for businesses carrying out economic activities from the receipt of services from abroad for which an obligation to account for Cyprus VAT under the reverse charge provision exists subject to the registration threshold of €15,600 per any consecutive 12 month period.
No registration threshold exists for the provision of intra-community supplies of services.
Cypriot VAT invoices must contain:
Our VAT technology platform, Comply helps companies manage their complex, country-specific tax requirements including Cyprus’ VAT obligations.
Using AI and machine learning, our technology puts your VAT data through over 300 automated VAT rules, checking for errors, and preparing VAT returns for approval and submission. Comply provides a full audit trail for the Cypriot Ministry of Finance.
VAT returns must be submitted, and any VAT that is due must be paid, within 1 month and 10 days following the end of the reporting period. If the due date falls on a weekend, or on a public holiday, then the due date for filing and payment is moved to the next working day.
The filling Frequency of Cypriot VAT returns are on a quarterly basis
Electronic Registration and filing of VAT returns via the Taxisnet System is mandatory for all taxable persons VAT registered in Cyprus except for those registered under the special scheme of taxis and farmers.
The House of Representatives in Cyprus has approved the amendment of the payment deadline, so that the businesses can pay the due VAT liability in 6 equal instalments, each payable no later than the 10th of each calendar month.
A one-off penalty of €51 per VAT return is charged for the late submission of the VAT return. Late payment of outstanding VAT results in the imposition of a penalty of 10% of the outstanding amount. Interest is charged at the rate of 3.5% annually on the amount of VAT outstanding. The 3.5% interest rate applies to the late payment of VAT, late registration, and late submission of the VAT return. The interest rate does not fluctuate.
Penalties are also assessed for the following offenses:
The VAT form you that is expected to be submitted in Cyprus is called VAT4. This can be submitted electronically through the TaxisNet system.
Cyprus does require a tax representative for non-EU businesses. A fiscal representative in Cyprus will have to submit periodically on behalf of the business.
The IOSS in Cyprus will allow businesses, either from the EU or a third country (through an EU established intermediary), which sell from distance imported goods in the EU with a value up to €150, to collect, declare and pay VAT to the tax authorities.
Where the business is using IOSS, which is not compulsory, VAT will be charged at the point of sale (the buyer will be charged VAT at the time of purchase thus avoiding customs clearance). VAT will be charged on all goods which are being imported to the EU, abolishing the previous no VAT rule on goods which did not exceed the value of €17.
In case of dispatches/arrivals of goods from EU monthly Intrastat returns need to be submitted.
The thresholds for 2015 are: arrivals €100,000; dispatches €55,000.
Thresholds are reviewed annually.
On 15 February 2021, the Cyprus Tax Authorities (CTA) issued a new Implementing Guideline (IG 10/2021) to clarify that there is no obligation for taxable persons who carry out or will carry out taxable transactions in Cyprus and are based in the United Kingdom, to appoint a VAT fiscal representative or provide a bank guarantee to the CTA.
Since 1 January 2021, the United Kingdom is no longer considered part of the European Union. It is now considered a third country for VAT purposes.
As a result, the protocol on administrative cooperation and combating fraud in the field of VAT and on mutual assistance for the recovery of claims relating to taxes and duties has been provisionally implemented (subject to final ratification by the European Union bodies).
Based on this provisional implementation, the CTA have confirmed that a taxable person established in the United Kingdom will be able to register for VAT purposes or remain VAT registered in Cyprus without having to appoint a VAT fiscal representative or provide a bank guarantee to the CTA.
It is also clarified that if this protocol is not ratified by the European Union bodies, the CTA will allow reasonable time for appointment of a VAT fiscal representative or placement of bank guarantee if necessary.
Contact Taxback International to find out how we can help you with your VAT Compliance requirements.
We fully manage all of your VAT obligations across multiple countries, wherever they arise.
Our VAT Compliance technology delivers full visibility over your historic and current global VAT activities.
Our combination of knowledge-based technology and our in-house VAT experts ensure 100% VAT compliance.