Value added tax

Imposition of tax

VAT is imposed on the provision of goods and services in Cyprus, as well as, on the acquisition of goods from other EU member states and the importation of goods to Cyprus.

VAT Rates 

  • Zero rate
  • Reduced rate 5 percent
  • Reduced rate 8 percent
  • Standard rate  17 percent

Zero rate

The zero rate applies to:

  • Supply of goods and services to other EU member states
  • Exports to non EU countries
  • Commissions received from abroad for import-export of goods
  • International air and sea transport
  • Processing carried out on goods on Cyprus on behalf of a customer abroad provided that the goods will be exported outside the EU when the processing finishes

Reduced rate 5%

The reduced rate of 5% applies to:

  • The supply of foodstuff
  • The supply of prepared or unprepared foodstuff and/or beverages excluding alchoholic drinks, beer, wine and softdrinks or both, irrespective of whether the goods are delivered from the supplier to the customer or taken away by the customer
  • The supply of pharmaceutical products and vaccines that are used for health care, prevention of illnesses and as treatment for medical or veterinary purposes
  • The supply of animals used for the preparation of food
  • Books, newspapers and magazines
  • Entry fees to theaters, circus, festivals, luna parks, concerts, museums etc
  • Entry fees at sports events and fees for using athletic centres
  • Hairdressing services
  • Renovation and repair of private households after three years of first residence
  • Supply of catering services from school canteens
  • Acquisition or construction of residence subject to conditionas from 1/10/2011.

 

Reduced rate 8%

The reduced rate of 8% applies to:

  • All restaurant and catering services including  such as the supply of alcoholic drinks, beer, wine and soft drink
  • Accomodation in hotels, tourist lodgements and any other similar lodgements including the provision of holiday lodgements
  • Transportation of passengers and their accompanying luggage within the Republic using urban, intercity and rural taxis and tourist and intercity buses
  • Movement of passengers in inland waters and their accompanying luggage

 

Standard rate

The standard rate applies to the provision of all goods and services in Cyprus which are not subject to the above or are not exempt.

Exemptions

The following services are exempt from VAT:

  • Rents
  • Most medical services
  • Most insurance banking and financial services
  • Educational services
  • Management services provided to mutual funds
  • Supplies of real estate, excluding new buildings before their first use but including supplies of land and of second-hand buildings
  • Postal services provided by the national postal authority
  • Lottery tickets and betting coupons for football and horse racing

 

Registration

Is compulsory for Companies and Individuals with turnover in excess of  €15.600 in a year or with an expected turnover in excess of €15.600 in a period of thirt days following.

However, Companies or Individuals with less than this turnover have the option to register on a voluntary basis.

 

VAT returns and payment of VAT

Any registered person has to submit to the VAT Commissioner a VAT return within 40 days from the end of any tax period and pay the VAT due.

 

Administration of intra-community trading and intracommunity services

Businesses that undertake intra-community trading, i.e. purchases and sales of goods and provision of services from/to EU member states need to complete INTRASTAT ans well as VIES forms.

 

Refund of foreign EU VAT (in terms of the 8th Directive)

From 1 January 2010, EU established businesses are able to reclaim foreign (EU) VAT by an electronic process.

The VAT which is to be reclaimed will have to be classified with the following categories:

  • Fuel
  • Hiring of means of transport
  • Road tools and road usage charges
  • Accommodation
  • Food, drink and restaurant services
  • Expenditure on luxuries, amusement and entertainment
  • Other

 

Reduced rate 5 percent for acquisition on first residence

It is effective from 1 November 2011 and applies to primary and permanent residences.

The rate will apply for the first 200 sq meters of a total covered area of up to 300 sq meters of the residence, subject to the following conditions:

  •  Has completed 18 years of age at the time of submission of application
  •  Is a citizen of Cyprus or any other member state of the EU
  •  Does not own any other place of residence in Cyprus

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