Value Added Tax (VAT)
VAT is imposed on the provision of goods and services in Cyprus and on the importation of goods into Cyprus. It comprises of three rates: zero rate (0%), reduced rate (5% or 9%) and the standard rate (19%).
Registration is compulsory for businesses with a turnover of over €15,600, or with acquisitions from another member state more than €15,600 or distance sales from another member state supplier of over €35,000 per annum. Businesses that do not exceed the above threshold may still register voluntarily if they wish to do so. Voluntary registration is usually sought when businesses wish to recover VAT paid on local services received.
If a holding company’s activity is limited to the holding of shares, it will be VAT exempt. If a holding company is involved in more than just the holding of shares, such as the management services, it will be obliged to register for VAT.
Zero rated goods and services (0%)
- Supplies to other members of the European Union.
- Exports.
- Foods.
- Machines.
- International air and sea transport.
- Commission received from abroad for exported goods.
Reduced rated goods and services (5%)
- Funeral services and the supply of coffins.
- Road sweeping, rubbish collection and recycling.
- Services of composers, artists and critics of works of art.
- The supply of fertilizer, animal feed and seeds.
- The supply of animals used for the preparation of food.
- Non-bottled water.
- Newspapers, magazines and books.
- Equipment for disabled people.
- Ice cream, yogurt and similar products.
- Salted or spicy foods made from cereal, potato or potato substitute, and dry roasted nuts.
- Bottled butane gas.
- Travelling on a public bus.
- Repair and maintenance of private residence after three years of first residence (subject to conditions).
- Hairdressing services.
- Entry fees to a theater, circus, festival, concert, zoo, museum, cinema, exhibition, sports event and athletic center.
Reduced rated goods and services (9%)
- Local transport of passengers by sea and air within Cyprus.
- Hotel accommodation fees.
- Taxi services, tourism, excursions and intercity buses.
- Supply of goods during the course of catering (except alcoholic drinks, which are standard rated).
* All other goods and services are subject to the standard rate of VAT.
Dealing with VAT, especially within the European Union, can be confusing and time consuming and is beset with many hidden pitfalls which could turn out costly to any company.
FinExpertiza Cyprus team of experienced professionals can guide you through the rules and regulations and help you plan properly and navigate through the unexpected difficulties, to make your venture smoother and fully productive.
For more information and/or advice, please contact us via email at info@finexpertiza.cy