fbpx

VALUE ADDED TAX - VAT

Value Added Tax is imposed on the supply of all goods and services in Cyprus, on the acquisition of goods from EU Member States and on the imposition of goods from third countries.

 

Zero rates  0% Export sales (to countries outside of EU as from 01/05/2004) ship management services. Intra community supplies to EU V.A.T. registered persons. 
Reduced rates 5% Books, newspapers, non-bottled water, supply of food, hotel accommodation, rural and tourist buses, supply of medicines, hairdressing, renovation and repairs, entry fees to theaters, circus, festivals, luna parks, concerts, museums etc., acquisition or construction of residence (subject to conditions),renovation and repair of private residential homes (subject to conditions).
Reduced rates 9% Tourist, excursions, interurban bus services, transport of passengers by taxi, supply of food and drinks in a restaurant, catering services, sea transport.
Standard rate 19% The standard rate applies to the supplies of all goods and services in Cyprus which are not subject to zero rate, the reduced rate or are not exempt.
 Exempted   Rental of immovable property, hospital and medical and dental caring services, postal services provided by the national postal authority , insurance services, educational services under certain conditions, financial services (with exceptions), disposal of immovable property where the application for building permission has been submitted prior to 1 May 2004, certain cultural educational and sports activities, supplies of second-hand buildings, lottery tickets and betting coupons for football and horse racing; management services provided to mutual funds.

VAT Registration

Every individual or company is obliged to register to VAT if:

at the end of any month, the value of the taxable supplies recorded in the last 12 months exceeds €15.600.
at any point in time the value of the taxable supplies are expected to exceed €15.600 in the next 30 days.
provides services to a VAT registered person within European Union with nil registration threshold.
offers zero rated supplies of goods or services.
acquires a company on a going concern basis.
a taxable person from abroad makes distance sales with registration threshold of €35.000.
is involved in the acquisition of goods from other EU member states (relates to persons who offer exempt supplies of goods and services or are non for profit organisations) with registration threshold of €10.250.

 

VAT on immovable property

A number of recent amendments to Cyprus VAT Legislation concerning transactions in real estate were enacted during 2017, these amendments comprise of:

  1. Imposition of VAT 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 irrevocable.
  2. The imposition of 19% VAT on the sale of non-developed building land, as from 2 January 2018, which is defined as a land intended for the construction of one or more structures in the course of carrying out a business activity. No VAT will be imposed on the purchase or sale of land located in a livestock zone or areas which are not intended for development such as zones/areas of environmental protection, archaeological and agricultural.
  3. The application of reverse charge on transactions relating to transfers of immovable property during the process of loan restructuring and for compulsory transfer to the lender, as from 2 January 2018.

Intra-community trading of goods and services

Businesses that undertake intra-community trading, i.e. Acquisitions and sales of goods and supply of services from/to EU member states need to complete the following forms:

  • Intra-Community Acquisitions: (a) Intrastat-Arrival of goods, (b) Inclusion in the VAT return on a total basis.
  • Intra-Community Supplies: (a) Intrastat-Departures of goods, (b) Recapitulative statement for supplies of goods and services (VIES form), (c)Inclusion in the VAT return on a total basis.

INTRASTAT forms are submitted electronically only to the VAT authorities not later than the tenth (10) days from the end of the related month.

 

Imposition of the reduced rate of 5% on the renovation and repair of private residences

As from 4 December 2015 the renovation and repair of old private residences (for which a period of at least three years has elapsed from the date of their first use) is subject to VAT at the reduced rate of VAT of 5%, excluding the value of materials which constitute more than 50% of the value of the services. In addition as from 4 December 2015 the renovation and repair of old private residences (for which a period of at least three years has elapsed from the date of their first use) and which are used as the place of residence of vulnerable groups or residences that are used as the place of residence and which are located in remote areas are subject to VAT at the reduced rate of VAT of 5%.

 

Imposition of the reduced rate of 5% on the acquisition and/or construction of residences for use as the primary and permanent place of residence.

The reduced rate of 5% applies to contracts that have been concluded from 1 October 2011
onwards provided they relate to the acquisition and/ or construction of residences to be used as the primary and permanent place of residence for the next 10 years. Following a legislative amendment, the restriction that existed for the imposition of the reduced rate of VAT on the first 200 square meters for private residences up to 275 square meters no longer applies. Based on the amendment, the reduced rate of VAT of 5% applies on the first 200 square meters whereas for the remaining square meters as determined based on the building coefficient, the standard VAT rate is imposed. The reduced rate is imposed only after obtaining a certified confirmation. The eligible person must submit an application on a special form, which will state that the house will be used as the primary and permanent place of residence. The applicant must attach a number of documents supporting the ownership rights on the property and evidencing the fact that the property will be used as the primary and permanent place of residence. The application must be filed prior to the actual delivery of the residence to the eligible person. As from 8 June 2012 eligible persons include residents of non EU Member States, provided that the residence will be used as their primary and permanent place of residence in the Republic.

The documents supporting the ownership of the property must be submitted together with the application. The documents supporting the fact that the residence will be used as the primary and permanent place of residence (copy of telephone, water supply or electricity bill or of municipal taxes) must be submitted within six months from the date on which the eligible person acquires possession of the residence. A person who ceases to use the residence as his primary and permanent place of residence before the lapse of the 10 year period must notify the Commissioner of Taxation, within thirty days of ceasing to use the residence, and pay the difference resulting from the application of the reduced and the standard rate of VAT attributable to the remaining period of 10 years for which the property will not be used as the main and primary place of residence. In addition based on the amendment, persons who have already acquired a residence on which the reduced VAT rate was imposed, can re-apply and acquire a new residence on which the reduced VAT rate will be imposed, irrespective of whether the 10 year prohibition period
for using the residence has lapsed or not. A condition for this to apply is that in case the 10 year period of using the residence as the main and permanent place of residence
has not lapsed, the persons must pay back to the Tax Department the difference in the VAT between the standard and reduced VAT rates applicable at the time of the acquisition
or construction of the residence.

 

VAT Returns

VAT returns are submitted electronically, quarterly and the payment of the VAT must be made by the 10th day of the second month that follows the month in which the tax period ends.

 

VAT Penalties and interest

 Penalty for late submission of VAT return.  €51 for each return
 Penalty for omission to keep books and records for a period of 6 years  €341
 Penalty for late submission of VIES return  €50 for each return
 Penalty for late submission of corrective VIES return.  €15 for each return
 Omission to submit the VIES return constitutes a criminal offence with a maximum penalty of  €850
 Penalty for late registration with the VAT authorities  €85 per month of delay
 Penalty for late de-registration with the VAT authorities  €85 one-off
 Late payment of VAT  10% of amount due plus interest

 

 

formation co

Cyprus Company formation for trade, service, e-commerce, IPs.

learn the criteria

Cyprus, a Member State of the European Union, has been an important centre for trade and commerce since antiquity.
The small but dynamic country has a long established reputation as a “Centre of Excellence” for international business activities  Read more...

trust form

Trust Formation for effective wealth management and succession planning.

learn the criteria

Forming a company in Cyprus can take the form of a private or public limited liability companies by shares and companies limited by
guarantee which are all incorporated pursuant to the Cyprus
Companies Law.  Read more...

live work

Live and work in cyprus for non-european citizens

learn the criteria

Get in touch with P. KALOPETRIDES & CO. for a tailor made advice on the process for acquiring permanent residency
We provide guidance on the documents required and assist with preparation (employment agreement and the like. Read more...

Newsletter Subscriber

Photos From Office

Office Locations

Head office

2 Christ. Sozos Str. Eiffel Tower, 1096 Nicosia, Cyprus
P.O.Box 21855, 1514 Nicosia, Cyprus

Click here for 2GIS Directions

Click here for Google Maps Directions

District  offices

Limassol / Lemesos
Paphos / Pafos