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.

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.

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

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

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:

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.

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

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

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.

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.

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

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

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 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.

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.

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.

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

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

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.