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.
VAT Tax Rates | Rate % |
---|---|
Standard Rate | 19% |
Reduced Rate | 9% |
Reduced Rate | 5% |
Reduced Rate | 3% |
Zero Rate | 0% |
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.
9% VAT | Description |
---|---|
Passenger Transport Services | Transportation of passengers and their luggage within the Cyprus using taxis and buses. |
Restaurant and Catering Services | Providing food and drinks for immediate consumption. |
Accommodation Services | Staying in hotels and similar places, including holiday rentals. |
Sea Passenger Transport | Transporting people and their luggage by sea within the country. |
Elderly Care | Services and goods provided by nursing homes (unless they are exempt). |
5% VAT | Description |
---|---|
Funeral Goods and Services | Services related to funerals and burials as well as the supply of coffins. |
Artistic Services and Rights | Services and royalties related to works by authors, composers, and other artists. |
Bus Transportation | Bus transport services in cities and rural areas where the passenger pays a fare. |
Campsite and Caravan Rental | Renting spaces in campsites and caravan parks. |
Admission Fees | Entry 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 Facilities | Entry fees for sports events and access to sports facilities. |
Medical Equipment Repair | Repair services for medical equipment. |
Medical and Dental Services | Medical and dental care which are not exempt from VAT, excluding medical examinations and procedures of cosmetic nature. |
Hairdressing | Services provided by hairdressers. |
Home Renovation and Repair | Renovation and repair services for private homes. |
School Canteen Catering | Catering services by school canteens. |
Fertilizers and Agricultural Chemicals | Substances for enhancing soil and controlling pests. |
Animal Feed and Seeds | Feed for livestock, seeds for food crops and live animals for food. |
Water | Supply of water for consumption and use. |
Food and Non-Alcoholic Drinks | Most food and drinks except alcohol and soft drinks. |
Liquefied Petroleum Gas | Gas used for heating and cooking. |
Medicines and Vaccines | Pharmaceuticals and vaccines for medical and veterinary use. |
Contraceptives | Products for birth control. |
Medical Equipment for Disabled | Equipment for personal use by disabled individuals. |
Child Car Seats | Seats designed for children up to 12 years old. |
Handcrafted Art | Original, handmade art pieces. |
Primary Residence | Purchase 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. |
3% VAT | Description |
---|---|
Books, Newspapers, and Magazines | Printed or electronic materials including brochures, maps, and music scores (excluding those for advertising or mainly video/audio content). |
Audiobooks for the Disabled | Audiobooks designed for individuals with disabilities. |
Special Equipment for the Disabled | Lift 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 Management | Services for street cleaning, waste collection, and waste treatment (excluding those by public authorities). |
Sewage and Septic Tank Services | Wastewater treatment and septic tank cleaning services. |
Theatre and Concert Admission | Entry fees for performances of theatrical, musical, and dance works. |
0% VAT | Description |
---|---|
Import-Related Services | Services connected to bringing goods into the EU from outside, which are included in the total value of the import for tax purposes. |
Exportation of Goods | Services on movable goods that are acquired or imported within the EU and then exported outside the EU. |
Ship-Related Services | Delivery, modification, repair, maintenance, chartering, and leasing of ships and ship equipment used for international or commercial purposes. |
Aircraft-Related Services | Delivery, modification, repair, maintenance, chartering, and leasing of aircraft and aircraft equipment used for international passenger transport. |
Port and Airport Services | Services for ships and aircraft at ports and airports. |
Gold Deliveries to Central Bank | Deliveries of gold to the Central Bank. |
Non-Profit Organization Goods | Deliveries to non-profits that export goods outside the EU for humanitarian, charitable, or educational activities. |
Braille and Electronic Typewriters | Braille typewriters and special electronic typewriters for disabled individuals, including new embossing typewriters |
Wheelchairs and Mobility Vehicles | Wheelchairs and other mobility vehicles intended exclusively for the personal use of disabled persons. |
Exemptions | Description |
---|---|
Postal Services | Postal services and related delivery of goods. |
Hospital and Medical Care | Services provided by public or private hospitals and closely related services and goods. |
Medical Care by Health Professionals | Services provided by doctors, dentists, nurses, physiotherapists, and other registered health professionals. |
Education and Training | Services and goods related to education at all levels, provided by public and private educational institutions including private tutoring. |
Non-Profit Organizations | Services from non-profit organizations for political, religious, and other purposes to their members. |
Insurance Services | Insurance and reinsurance services, including related services from agents and brokers. |
Financial Services | Services such as loans, credit facilities, and management of financial instruments. |
Lottery and Betting | Lottery tickets, betting coupons for horse races or football games, and other related betting services |
Postage Stamps and Fiscal Stamps | Delivery of postage stamps and similar fiscal stamps at their nominal value. |
Renting property, like an apartment, is generally exempt from VAT.
However, there are circumstances when renting property is subject to VAT, including:
Exemptions | Description |
---|---|
Hotel or Similar Accommodation | If the property is rented as part of the hotel or similar accommodation services, including camping sites. |
Vehicle Parking Spaces | Renting spaces specifically for vehicle parking is subject to VAT. |
Permanently Installed Equipment and Machinery | If the property includes permanently installed equipment and machinery. |
Safes | Renting safes and other similar secure storage units. |
Rent with an Option to Purchase | When the tenant has an option to purchase the property they are renting in their agreement. |
Renting to Businesses | Renting property to a taxable person (business) for their business activities, unless the property is used as a residence. |
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:
Exemptions | Description |
---|---|
New Buildings | Newly constructed house, apartment or other building that was not occupied by anyone else before. |
Commercial Properties | Properties used for business purposes, such as offices or retail spaces. |
Undeveloped Land | Land 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:
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:
If you meet any of the above conditions, you need to register to obtain your VAT number
Steps | Registration |
---|---|
1 | Fill out the relevant application form (T.D. 1101) |
2 | Obtain proof that you are conducting taxable transactions, such as an invoice or a contract. |
3 | Submit them in person to your district's Tax Department Office along with your Company's certificates (if applicable) and a copy of your ID. |
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.
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.
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.
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 is the amount of VAT that a business charges on the goods and services it sells to its customers.
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.
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.
Steps | Registration |
---|---|
1 | Fill out and scan the relevant application form (TFA 01) |
2 | For 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. |
3 | Send all the documents via email to vatvima@vat.mof.gov.cy |
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.
If you're reporting for January, you must submit the Recapitulative Statement by February 15th.
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:
If you exceed the thresholds, you must register with the Tax Department to gain access to the Intrastat system.
Steps | Registration |
---|---|
1 | Fill out and scan the relevant application form (TAXISnet 01 - INTRASTAT) |
2 | For 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. |
3 | Send all the documents via email to vatvima@vat.mof.gov.cy or submit it in person to your Districts Tax Department Office. |
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.
If you're reporting for January, you must submit your Intrastat returns by February 10th.