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Value Added Tax (VAT)

Taxable person
 
A taxable person under the provisions of the VAT legislation is every person (Company or Individual) that:
 
·         Exercises business and
·         It is registered or must be registered with the VAT (Customs & Excise) either in Cyprus or within the European Union.
 
All taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods or services which they receive (input tax).
 
Imposition of the VAT
 
VAT is imposed on
 
·         delivery of goods in Cyprus
·         delivery of services in Cyprus,
·         acquisition of goods from other EU member states and
·         the importation of goods into Cyprus from non EU Member states.
 
Rates


The following VAT rates are applicable in Cyprus depending on the nature of the supply:
·         zero rate (0%)
·         reduced rate (5%)
·         reduced rate (8%) .
The reduced rate will be increased to 9% as of 14th January 2014.
·         standard rate (17%).

As of 14th January 2013, the standard rate will increase to 18% and from 14th January 2014 will reach 19%.

VAT registration
Compulsory
 
Taxable person must register when:
·         its taxable supplies exceeds the €15.600 threshold during the 12 preceding months or
·         it expects that its taxable supplies will exceed the  €15.600  threshold within the next 30 days
·         Receives goods in Cyprus of a value exceeding €10.251,61
·         provides services to another EU VAT registered person within European Union
·         receives services from countries outside the European Union

Voluntary
 
Taxable persons not exceeding the threshold of €15.600 have the option to register voluntary.

 VAT Exempt Supplies
 
-Rental income derived from immovable property
-Financial Services
-Medical services
-Postal services
-Insurance services
-Social welfare
-Education
 
VAT Return (VAT 4)

The submission of the VAT returns are usually prepared and filed quarterly.
 
Mainly the VAT return must be submitted every three calendar months by every taxable person.
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.
 
In case where the input tax is higher than the output tax in the taxable period the difference is refundable or is transferred to the next VAT period in order to be credited against any payable account.
 
VAT Information Exchange System (VIES)

VIES declarations are required for the supplies of goods and services between EU Member States.
 
A company involved in intra-community transactions must submit VIES declarations to the VAT Office for every calendar month by the fifteenth (15th) day of the month which follows the month for which it relates.
 
Penalties
 
-Late Registration - €85 for every month of delay
-Late submission of VAT Return -€51 for every VAT return
-Late payment of VAT – 10% surcharge on the amount due + 5% interest
-Late deregistration from VAT-€85
-Late submission of VIES declaration -€50 for every VIES return
-Amendment of VIES declaration-€15 for every amendment
 
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