Below article will briefly go through what you need to know about Cyprus VAT, VAT returns, VAT rules and rates which currently applies in Cyprus 2023.
The aim of VAT is to drive tax income to the government. The value added tax is set on every product or service by a business and is inclusive the final sale price charged to its customers/clients. In Cyprus, the value added tax was presented as late as the 1st of July 1992.
The Value Added Tax helps raise government revenues without functioning as an inhibitory factor for wealth or success as the income tax can be misinterpreted and cause tax loopholes. VAT is a constant and consistent revenue source as it is based totally on consumption.
Types of VAT
There are three categories of supplies that can be made by a Cyprus VAT vendor: standard-rated, reduced rated and zero-rated. There are also supplies that are totally exempted from Cyprus VAT.
Who needs to register for VAT Cyprus?
You must register for value added tax (VAT) if you are: A physical or legal person registered in Cyprus and the taxable transactions value of your goods and services over the 12 past months – or which will be carried out within the next 30 days – surpass or will surpass the amount of €15,600.
Vat returns are filed Quarterly. The reporting quarters are not the same for all business as they are divided in to three groups: retailers, industry or services. Businesses that deals with trade, export or intra-community dispatches etc may apply to file monthly.
Today, the filing is made electronically via Taxisnet and should be delivered 40 days after the end of the reporting quarter.
Calculation of VAT Payment = Output VAT –Input VAT
The difference between the output and input VAT is the amount payable every 3 months your business files its VAT returns
If you need to proceed with any changes which doesn’t exceed the amount of €1,708 then you can freely arrange that during the next VAT return. If the correction concerns a higher amount than the above mentioned, then you need to complete a special corrective application form.
Penalties & other charges:
If you have missed to file your VAT return on time then a fine of €100 is incurred: If you have missed to pay the VAT an interest of 1.75% is incurred. There are also fines for: incorrect use of the reverse charge (up to €4,000), missing invoices €85, 10% penalty on undeclared VAT liabilities, plus late interest, € 50 for each late submission of VIES, etc.
Need of an accountant to file my VAT return?
In order to be up to date with your corporate obligations, avoid any penalties and save time then it’s highly recommended to have your accountant. You can either outsource the job or have an in-house accountant to submit the VAT return on your behalf. Preserving up to date records will provide better information for running your business.
The applicable Cyprus VAT laws is the Value Added Tax Act, Ν.95(Ι)/2000, the legislative orders, regulations and notices and the EU VAT Directive which takes sovereignty as Cyprus is a part of the EU.
The current Cyprus VAT rates as to 2023 can be viewed below:
|Rate||Type||Related goods and services|
|19%||Standard||All other taxable goods and services; land transactions for business use|
|9%||Reduced||Domestic road passenger transport, domestic passenger transport by sea, hotel accommodation, restaurants, catering services, cafes|
|5%||Reduced||Certain foodstuffs such as non-alcoholic beverages, water supplies, pharmaceutical products, medical equipment for disabled persons; children’s car seats, certain passenger transport, books (excluding e-books), newspapers and periodicals, admission to cultural events and amusement parks, writers and composers; renovation and repair of private dwellings, some agricultural supplies; admission to sports events; use of sporting facilities; domestic waste collection; hairdressing; some undertaker and cremation services, LPG (in cylinders), take away food (excluding soft drinks and alcoholic beverages), social housing; cut flowers for food production; waste and waste water treatment; works of art, collectors’ items and antiques; certain services on intracommunity flights|
|0%||Zero||Intra-community and international transport; goods purchased on international flights|
Cyprus VAT rates historically
|Dates / Periods||Standard Rate||Reduced Rate 1||Reduced Rate 2|
|01/07/1992 – 30/09/1993||5%||—||—|
|01/10/1993 – 30/06/2000||8%||—||—|
|01/07/2000 – 30/06/2002||10%||5%||—|
|01/07/2002 – 31/12/2002||13%||5%||—|
|01/01/2003 – 31/07/2005||15%||5%||—|
|01/08/2005 – 29/02/2012||15%||5%||8%|
|01/03/2012 – 13/01/2013||17%||5%||8%|
|14/01/2013 – 12/01/2014||18%||5%||8%|
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