Value Added Tax
Cyprus Tax Facts
Value Added Tax was introduced in Cyprus on 1st July 1992 and is imposed on the provision of goods and services as well as on the importation of goods into Cyprus.
- Standard rate – 19%
- Reduced rate – 9%
- Reduced rate – 5%
- Zero rate – 0%
Registration is compulsory for a business:
- If the value of the taxable supplies is in excess of €15,600 during the 12 preceding months
- At any time, if the expected turnover is in excess of €15,600 in a period of 30 days.
- If it provides services to a VAT registered person within the European Union with a nil registration threshold
Businesses with an annual turnover of less than €15,600 have the option to register voluntarily.
Standard Rate of 19%
The standard rate applies to the provision of all goods and services in Cyprus which are not subject to the zero rates, the reduced rate or are not exempt.
Reduced rate of 9%
The reduced rate of 9% applies to:
- All restaurant catering services (including the supply of alcoholic drinks, beer, wine, and soft drink). (Effective from 10th January 2011)
- Accommodation in hotels, tourist lodgements, and any other similar lodgements. (Effective from 1st January 2011)
- Transportation of passengers and their accompanying luggage within Cyprus using urban, intercity, water and rural taxis and tourist and intercity buses.
Reduced Rate 5%
The reduced rate of 5% applies to:
- The supply of foodstuff 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. (Effective from 10th January 2011)
- The supply of pharmaceutical products. (Effective from 10th January 2011)
- Newspapers, books, and magazines
- Hairdressing services
- Entry fees to theatres, circus, festivals, Luna parks, concerts, museums, etc
- Entry fees at sports events and fees for using athletic centres
- Renovation and repair of private households after three years of first residence
- Supply of catering services from school canteens.
The zero rate applies to:
- The exportation of goods
- Repair, maintenance, chartering and hiring of sea-going vessels, which are used for sea navigation and carrying passengers for reward or used for the purpose of commercial, industrial or other activities
- Supply, modification, repair, maintenance, chartering and hiring of aircrafts, used by airlines operating for a reward primarily 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.
- Rental of immovable property*
- Insurance services
- Financial services (with some exceptions)
- Hospital and medical caring services
- Postal services
- Disposal of immovable property where the application for building permission has been submitted prior to 1st May 2004.
*As from 13 November 2017, the renting/leasing of immovable property to a taxable person who will carry out taxable activities from the property is subject to VAT at the standard rate of 19%, provided that the said rental income surpasses the VAT registration threshold (currently at EUR 15,600 over a 12-month period).
The rental of residential properties and properties where the tenant will not use them to carry out taxable activities are exempt from VAT.
The owner of the property has the option to irrevocably exempt (by submitting the relevant form to the Tax Authorities) a specific property’s rents from VAT, however in such a case the owner will not be able to reclaim any input VAT suffered on the purchase of the said property or on any ongoing maintenance expenses.
Penalties and Interest
- Late registration – €85 for every month of delay
- Late submission of return – €100 for each return
- Late payment of VAT – 10% plus interest at the annual Unified Public Interest Rate
- Late de-registration – €85
- Late submission of Intrastat form – €15 for each return
- Late submission of VIES return – €200 for each return.