Our clients can be significantly benefited by our exceptional commercial and legal awareness, as well as by our technical and presentation skills. We recommend to our clients that they should always be aware of the ongoing reforms of VAT policy since any change is most likely to affect their company. Our team of experts, through their practical approach and expertise can deliver large amounts of VAT savings, thereby offering great returns as well as peace of mind to our clients.
Transactions between companies within the EU (European Union) and other transactions involving EU companies are becoming more and more complex in respect to VAT. Specialized VAT guidance and valuable advice is therefore vital.
Our Cyprus VAT / VIES planning team can provide among others:
- Registering companies for VAT in Cyprus or other EU countries
- Preparing and submitting EU Sales Lists and IntraStat reports for companies which trade within the EU
- The tax efficient repatriation of profits accounting for withholding and exit taxes
- Advising clients on the regulations and obligations for VAT within the EU
- Preparing and submitting VAT reports to the authorities
- Assisting clients in dealing with VAT investigations and enquiries.
Cyprus VAT – VAT Registration of your Company
VAT is imposed on the acquisition of goods from the EU and the importation of goods into Cyprus, as well as on the provision of goods and services in the Republic of Cyprus.
There is “output tax” and “input tax”. Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on services or goods which they receive (input tax).
With regards to intra community trade or acquisitions of goods (except goods subject to excise duty or new means of transport) the trader does not pay VAT on receipt of the goods in Cyprus but accounts for VAT using the acquisition accounting method which involves a simple accounting entry in the books of the business whereby he self-charges VAT and can, at the same time claim it back if it relates to taxable supplies. This creates no cost to the business. However, the trader must pay the VAT that corresponds to the acquisition where the acquisition relates to an exempt transaction.
Significant changes have come into effect in the EU and Cyprus VAT legislation as of 1stJanuary 2010 in the following areas stated here below and as a result, additional compliance obligations also arise for Cyprus resident businesses supplying services to businesses established in other EU Member States for which the recipient is liable to account for VAT under the reverse charge provisions:
- Procedure for refund of VAT paid in another Member State
- Changes in the country of taxation of services provided between businesses established in two different European Union Member States
- Changes in the time of supply of services for which VAT is due by the recipient
- Changes in the country of taxation of services supplied to consumers
Reduced Rate 5%
Reduced Rate 9%
- Processing carried out on goods in Cyprus on behalf of a customer abroad provided that the goods will be exported outside the EU.
- Supply of services and goods to other EU Member States
- Commissions received from abroad for the import-export of goods
- Exports to non-European Union countries
- International transportation via sea and air
- Certain vaccines and medicines
The Standard Rate applies to any sale of goods or to the provision of services within Cyprus that are not subject to exemption or to any one of the other rates.
Reduced rates apply for the following:
- Catering and restaurants with the exception of alcohol (8%) – (5% as from 01/01/2010 until 30/04/2010; 8% from 01/05/2010 and onwards)
- Fees for hotel accommodation (8%)
- Long distance bus services and tourist excursion (8%)
- Rural and private tax transport services (8%)
- Stocks of live animals for human consumption (5%)
- Stocks of fertilizers, animal feeding products and seeds (5%)
- Non-bottled water (5%)
- Magazines, newspapers and books (5%)
- Various goods for the use of handicapped persons (5%)
- Transfer of persons on a city or rural bus (5%)
- Liquid gas (5%)
- Ice cream and similar products (5%)
- Recycling, garbage collection and road sweeping (5%)
- Funeral service and supply of coffins (5%)
- Services of artists, authors and composers (5%)
These consist of the provision of financial services, the rental of immovable property, medical and hospital services, insurance services, postal services, the disposal of immovable property provided the application for building permission was submitted prior to 1 May 2004 and the disposal of land for building purposes.
Intra-community trading undertaken by merchants are required to fill in and submit with the VAT authority the forms of (a) Intrastat (Arrivals) and Inclusion in the VAT return (on a total basis for Intra-Community Acquisitions) and (b) Intrastat (Departures) and Inclusion in the VAT return on a total basis with 0% for Intra-Community Supplies.
For businesses with a turnover in excess of €15.600 in a year or with an expected turnover in excess of €15.600 in a period of thirty days following, registration is compulsory. Businesses with less than this turnover stated above, have the option to register only if they so elect. Businesses which also make acquisitions of goods from other EU member states in excess of €10.252 during any calendar year are also obligated for registration. Exempt services and goods including transactions of capital nature are not taken into consideration when determining the annual turnover for the purposes of registration.
Additionally, as from 1 January 2010 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 rules. Furthermore, an obligation for VAT registration arises for businesses carrying out economic activities whereby they receive any services from abroad for which an obligation to account for Cyprus VAT under the reverse charge provision exists.
For the intra-community supply of services or from the receipt of services from abroad there is no registration threshold.
Any individual carrying on business outside Cyprus and whose operations would be taxable if they were carried out in Cyprus, is able to apply for voluntary registration. In such a case, the advantage is that that individual’s supplies will not be subject to VAT but the individual will be able to claim input VAT on its expenses and purchases, subject to certain conditions.
Returns and Payment
Registered businesses must submit to the VAT authority a return within forty (40) days from the end of any tax period and pay the VAT which is due.
It is now possible for single registration for a group of companies incorporated in Cyprus. Group registration means that transactions between members of the group are disregarded for VAT purposes and only one VAT return is required to be submitted per tax period for all the companies in the group.
Issuing of Legal Receipts
Taxable individuals making taxable supplies of services and goods to non-taxable individuals are obligated to issue and deliver legal receipts.