Value Added Tax (VAT) in Cyprus

blog's thumbnail

Our blogs are regularly updated to ensure information is current and accurate.

author's portraitAndreas Nicolaou
7/29/2024

Value Added Tax (VAT) is a special tax imposed on all goods and services (with some exceptions). Every time you buy something, you also pay VAT even if you don't realise it.


Most of the time, VAT is included in the price and the person who sold you that good or service is responsible for paying that VAT to the government.

Tax rates

VAT Tax RatesRate %
Standard Rate19%
Reduced Rate9%
Reduced Rate5%
Reduced Rate3%
Zero Rate0%

Standard Rate

The standard rate of VAT applies to the sale of all goods and services in Cyprus, unless they fall under reduced rate or exempt categories.

Reduced Rate 9%

9% VATDescription
Passenger Transport ServicesTransportation of passengers and their luggage within the Cyprus using taxis and buses.
Restaurant and Catering ServicesProviding food and drinks for immediate consumption.
Accommodation ServicesStaying in hotels and similar places, including holiday rentals.
Sea Passenger TransportTransporting people and their luggage by sea within the country.
Elderly CareServices and goods provided by nursing homes (unless they are exempt).

Reduced Rate 5%

5% VATDescription
Funeral Goods and ServicesServices related to funerals and burials as well as the supply of coffins.
Artistic Services and RightsServices and royalties related to works by authors, composers, and other artists.
Bus TransportationBus transport services in cities and rural areas where the passenger pays a fare.
Campsite and Caravan RentalRenting spaces in campsites and caravan parks.
Admission FeesEntry fees to cultural and entertainment events such as shows, circuses, fairs, amusement parks, concerts, museums, zoos, cinemas, exhibitions and similar cultural events and facilities.
Sports Events and FacilitiesEntry fees for sports events and access to sports facilities.
Medical Equipment RepairRepair services for medical equipment.
Medical and Dental ServicesMedical and dental care which are not exempt from VAT, excluding medical examinations and procedures of cosmetic nature.
HairdressingServices provided by hairdressers.
Home Renovation and RepairRenovation and repair services for private homes.
School Canteen CateringCatering services by school canteens.
Fertilizers and Agricultural ChemicalsSubstances for enhancing soil and controlling pests.
Animal Feed and SeedsFeed for livestock, seeds for food crops and live animals for food.
WaterSupply of water for consumption and use.
Food and Non-Alcoholic DrinksMost food and drinks except alcohol and soft drinks.
Liquefied Petroleum GasGas used for heating and cooking.
Medicines and VaccinesPharmaceuticals and vaccines for medical and veterinary use.
ContraceptivesProducts for birth control.
Medical Equipment for DisabledEquipment for personal use by disabled individuals.
Child Car SeatsSeats designed for children up to 12 years old.
Handcrafted ArtOriginal, handmade art pieces.
Primary ResidencePurchase or construction of a new house for the use as the primary and permanent residence. 5% VAT on the first 130sqm up to a value of €350,000. The total house value should not exceed €475,000 and 190sqm in size.

Reduced Rate 3%

3% VATDescription
Books, Newspapers, and MagazinesPrinted or electronic materials including brochures, maps, and music scores (excluding those for advertising or mainly video/audio content).
Audiobooks for the DisabledAudiobooks designed for individuals with disabilities.
Special Equipment for the DisabledLift devices, wheelchairs and other vehicles for the disabled, orthopedic items, hearing aids and other devices aimed at compensating for or treating a disability.
Street Cleaning and Waste ManagementServices for street cleaning, waste collection, and waste treatment (excluding those by public authorities).
Sewage and Septic Tank ServicesWastewater treatment and septic tank cleaning services.
Theatre and Concert AdmissionEntry fees for performances of theatrical, musical, and dance works.

Reduced Rate 0%

0% VATDescription
Import-Related ServicesServices connected to bringing goods into the EU from outside, which are included in the total value of the import for tax purposes.
Exportation of GoodsServices on movable goods that are acquired or imported within the EU and then exported outside the EU.
Ship-Related ServicesDelivery, modification, repair, maintenance, chartering, and leasing of ships and ship equipment used for international or commercial purposes.
Aircraft-Related ServicesDelivery, modification, repair, maintenance, chartering, and leasing of aircraft and aircraft equipment used for international passenger transport.
Port and Airport ServicesServices for ships and aircraft at ports and airports.
Gold Deliveries to Central BankDeliveries of gold to the Central Bank.
Non-Profit Organization GoodsDeliveries to non-profits that export goods outside the EU for humanitarian, charitable, or educational activities.
Braille and Electronic TypewritersBraille typewriters and special electronic typewriters for disabled individuals, including new embossing typewriters
Wheelchairs and Mobility VehiclesWheelchairs and other mobility vehicles intended exclusively for the personal use of disabled persons.

Exemptions

ExemptionsDescription
Postal ServicesPostal services and related delivery of goods.
Hospital and Medical CareServices provided by public or private hospitals and closely related services and goods.
Medical Care by Health ProfessionalsServices provided by doctors, dentists, nurses, physiotherapists, and other registered health professionals.
Education and TrainingServices and goods related to education at all levels, provided by public and private educational institutions including private tutoring.
Non-Profit OrganizationsServices from non-profit organizations for political, religious, and other purposes to their members.
Insurance ServicesInsurance and reinsurance services, including related services from agents and brokers.
Financial ServicesServices such as loans, credit facilities, and management of financial instruments.
Lottery and BettingLottery tickets, betting coupons for horse races or football games, and other related betting services
Postage Stamps and Fiscal StampsDelivery of postage stamps and similar fiscal stamps at their nominal value.

VAT on Property

Renting Property

Renting property, like an apartment, is generally exempt from VAT.


However, there are circumstances when renting property is subject to VAT, including:


ExemptionsDescription
Hotel or Similar AccommodationIf the property is rented as part of the hotel or similar accommodation services, including camping sites.
Vehicle Parking SpacesRenting spaces specifically for vehicle parking is subject to VAT.
Permanently Installed Equipment and MachineryIf the property includes permanently installed equipment and machinery.
SafesRenting safes and other similar secure storage units.
Rent with an Option to PurchaseWhen the tenant has an option to purchase the property they are renting in their agreement.
Renting to BusinessesRenting property to a taxable person (business) for their business activities, unless the property is used as a residence.
Purchasing Property

Purchasing property, like a house or an apartment, is also generally exempt from VAT.


However, there are circumstances when purchasing property is subject to VAT, including:



ExemptionsDescription
New BuildingsNewly constructed house, apartment or other building that was not occupied by anyone else before.
Commercial PropertiesProperties used for business purposes, such as offices or retail spaces.
Undeveloped LandLand that is not yet developed but is intended for construction as part of a business project.


Essentially, if you are purchasing a previously owned property, such as a used house where people have already lived, you will not have to pay VAT on the transaction. However, the transaction will be subject to Land Registry Transfer fees, which you can read more about here.


If the property is newly built, then the standard rate of 19% VAT applies.


However, if you plan to use the property as your primary and permanent residence, you may be eligible for a reduced VAT rate of 5%.


This reduced rate applies on the first 130 square meters of the property provided that:


  1. The property's value does not exceed €350,000.
  2. The total value of the property does not exceed €475,000.
  3. The total size of the property is not larger than 190 square meters.

Registration, Returns and Payment


Every business, whether that be a company or an individual, has to register for VAT and obtain a VAT number if they meet one of the following conditions:


  • Their turnover subject to VAT exceeded €15,600 in the last 12 months

  • They expect to exceed €15,600 within the next 30 days

  • They have been providing services to taxable persons in other EU countries

  • They bought goods worth more than €10,251.61 from other EU countries in the year starting from the 1st of January or they expect to exceed that threshold in the next 30 days

  • They are not established in Cyprus but are engaging in taxable transactions with individuals in Cyprus or expect to do so in the next 30 days

Registration

If you meet any of the above conditions, you need to register to obtain your VAT number


StepsRegistration
1Fill out the relevant application form (T.D. 1101)
2Obtain proof that you are conducting taxable transactions, such as an invoice or a contract.
3Submit them in person to your district's Tax Department Office along with your Company's certificates (if applicable) and a copy of your ID.

VAT Returns

After you have obtained your VAT number, you will be required to submit your VAT returns online through the TFA Taxpayer Portal every quarter (three-month period) even if no transactions took place during that time.

VAT Payment

After submitting your VAT returns, you must pay any VAT owed by the 10th day of the second month following the end of that reporting period.


For example:

Let's say you submit your VAT returns on the 1st of August, which means that you are reporting on the VAT period between the 1st of May until the 31st of July.


The second month following July is September. That means that you'd have to pay any VAT due by the 10th of September.

VAT Refunds

In short, businesses can claim a VAT Refund when they pay more VAT on their business expenses (input) than VAT they receive from selling their goods and services (output).


In order to understand how VAT refunds work, you must first understand the concepts of input VAT and output VAT.


Input VAT

Input VAT is the amount of VAT that a business pays on the goods and services it purchases as part of its business operations.


For example:

Let's say you have an electronics store and you buy laptops worth €10,000 from your supplier.


You also buy office supplies worth €5,000. Along with VAT (19%), you pay €17850 in total and €2,850 from that is your input VAT.


Output VAT

Output VAT is the amount of VAT that a business charges on the goods and services it sells to its customers.


Following the previous example

Let's say you then sell all the laptops to your customers for €12,000. Along with VAT (19%), you receive €14280 in total. So, €2,280 is your output VAT.


In this instance, your input VAT is more than your output VAT. So, at the end of the tax period, you can deduct your input VAT (€2,850) from your output VAT (€2,280) and claim a refund of €570.


Claiming the Refund

If your input VAT is more than your output VAT, you can choose to carry that surplus forward so that you can offset future VAT liabilities. Alternatively, you can claim to have that amount refunded to you from the Tax Department.


Claims for VAT refunds are made through the TFA Taxpayer Portal.

Additionally, you must also complete form T.D.2008 and submit it to your local Tax Department office along with an IBAN certificate so the refund can be made into your bank account.


Keep in mind that you can only claim a refund within 6 years from the date the surplus was created. Also, the Tax Department can suspend your VAT refunds if you have not submitted income tax returns, until you have done so.

VIES (VAT Information Exchange System)

VIES is the VAT Information Exchange System is a search engine used to validate VAT numbers of businesses registered in Member States of the European Union and you can find it in the website of the European Commision.


When a business in one EU country sells goods or services to a business in another EU country, the transaction is referred to as an intra-community transaction.


Cypriot businesses that carry out intra-community transactions must register as such with the Tax Department.

Registration

There is no threshold for transactions in order to register to VIES. As soon as you start selling goods or services to other EU countries you must register.


StepsRegistration
1Fill out and scan the relevant application form (TFA 01)
2For a company, attach the Certificate of Directors along with the ID of the person signing the form. For self-employed or partnerships, only attach the ID of the person signing the form.
3Send all the documents via email to vatvima@vat.mof.gov.cy

VIES Returns (Recapitulative Statement)

Once registered, you must submit a Recapitulative Statement, which is a report of your sales in the EU, through the TFA Taxpayer Portal every month.


Particularly, you must submit the Recapitulative Statement by the 15th day of the month following the month you're reporting for.

For example:

If you're reporting for January, you must submit the Recapitulative Statement by February 15th.

INTRASTAT

Aside from VAT returns, every business that imports goods to Cyprus from other EU countries or exports goods from Cyprus to other EU countries may also need to submit Intrastat reports.


Particularly, the government sets the threshold for submitting Intrastat each year. For 2024, businesses that trade within the EU are required to submit Intrastat only if:


  1. Their imports from EU countries exceed €320,000
  2. Their exports to EU countries exceed €75,000

Registration

If you exceed the thresholds, you must register with the Tax Department to gain access to the Intrastat system.


StepsRegistration
1Fill out and scan the relevant application form (TAXISnet 01 - INTRASTAT)
2For a company, attach the Certificate of Directors along with the ID of the person signing the form. For self-employed or partnerships, only attach the ID of the person signing the form.
3Send all the documents via email to vatvima@vat.mof.gov.cy or submit it in person to your Districts Tax Department Office.

Intrastat Returns

Once you're registered, you must submit Intrastat returns every month electronically through TaxisNet. Intrastat returns must include information about your business' exports/imports.


Particularly, you must submit your Intrastat returns by the 10th day of the month following the month you're reporting for.

For example:

If you're reporting for January, you must submit your Intrastat returns by February 10th.





Our blogs are regularly updated to ensure information is current and accurate.