VAT is imposed on the provision of goods and services in Cyprus, as well as on the acquisition of goods from the EU and the importation of goods into Cyprus.
Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods or services which they receive (input tax).
(i) VAT rates:
The VAT legislation provides for the following VAT rates depending on the nature of the supply:
- zero rate (0%)
- reduced rate (5%)
- reduced rate (8 %)
- standard rate (18% as from 14 January 2013 and 19% as from 13 January 2014)
(ii) VAT registration:
Registration is compulsory for businesses with:
- taxable supplies in excess of €15.600 during the 12 preceding months or
- expected taxable supplies 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 which the right to claim the amount of the related input VAT is granted, have the option to register on a voluntary basis.
(iii) Filing of VAT return and payment:
VAT returns must be submitted 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 VAT period ends.
Where in VAT period input tax is higher than output tax, and therefore a repayment is due, the difference is refundable or is transferred to the next VAT quarter to be credited against any payable account.
VAT Information Exchange System (VIES)
(i) Intra – community transactions:
In the case that a Cyprus company supplies goods which are shipped from Cyprus to VAT registered business in another EU Member State (MS), then the Cyprus company does not need to charge VAT and may zero rate the supply as an intra-EU dispatch, given that:
the customer`s VAT number is obtained and quoted on the sales invoice
evidence is obtained of the goods removed from Cyprus
A company involved in such transactions will need to be submitting VIES declarations to the VAT Office.
(ii) Triangular trade:
Triangular trade exists where:
- a company in Member State A sells goods to a company in Member State B, which in turn sells it to a company in Member State C, although the goods are physically moved only once - from A to C
- companies A, B and C are VAT registered
In the case of triangular trade involving a Cyprus company as the intermediate supplier (i.e as company B above), the Cyprus company may zero rate the supply.
Such transactions will need to be stated on the VIES declarations.
(iii)Provision of services within the EU:
As from 1 January 2010, additional compliance obligations arise for Cyprus resident businesses supplying services to businesses established in another EU MS for which the recipient is liable to account for VAT under the reverse charge provisions. Such businesses will be required to complete and submit a VIES declaration for services which are taxed by the recipient under the reverse charge provisions.
INTRASTAT
VAT registered businesses with a value of dispatches or arrivals to or from other EU Member States, which exceed the exemption threshold set out by the VAT Office must also submit INTRASTAT returns (acquisitions and supplies) on a monthly basis.
Businesses that exceed the ‘simplification threshold’ must provide full information as specified on the INTRASTAT returns. Business that fall within the ‘exemption threshold’ and ‘simplification threshold’ have the option to provide less information.