VAT in Cyprus

1. What is the VAT rate in Cyprus?
In Cyprus, the standard VAT rate is 18%, but there is a reduced rate of 8% and 5%. The 8% VAT rate is applied to transport of passengers, restaurants, accommodation, while the 5% rate applies to hair salons, maintenance of private households, confectionary products, bottled water and juice, pharmaceutical products and entry fees to cultural events.  There are also some services and goods to which a zero VAT rate is applied, such as financial service, insurance, education or medical care.

2. How can I get a VAT refund in Cyprus?
Since Cyprus joined the European Union, applying for a VAT refund can be done not only to the tax authorities’ office, but also via website. Electronic filing for VAT refunds has been introduced since 1st January 2010, therefore one can claim a refund by submitting the application form an uploading the required invoices. The claim can be submitted to the Member State of Establishment platform. The deadline for filing an application in order to get a VAT refund is 30th September of the following year. The procedure will take as long as the authorities will check the eligibility for a refund.

3. How can I register for VAT in Cyprus?
If the annual turnover of the company does not exceed 15,000EUR or does not exceed distance sales of 33,400EUR, the VAT registration in Cyprus is not compulsory. Otherwise, businesses need to register for VAT. In order to do so, they must complete a VAT Form and submit it to the VAT district office. In Cyprus there are four VAT districts: in Nicosia, Larnaca, Limassol and Paphos. The registration can be made personally or by a representative who has been appointed. It is important to know that the Cypriot tax system is very complex, so the procedure of VAT registration in Cyprus can be a lengthy procedure.

4. How does intra-community VAT work in Cyprus?
An intra-community VAT number can be obtained after VAT registration in Cyprus. Once the company is set up and registered, the VAT number can be obtained within 10 days. In Cyprus, there is also a system called VIES (VAT Information Exchange System) that contributes to observing the VAT system and any abuse of the zero-rated transactions intra-community. If you perform intra-community supplies to another Member State, you need to submit a recapitulative statement where you declare all the trades made in three months.