Worldwide VAT, GST and Sales Tax Guide
EY
Street address:
Mail address: Ernst & Young House
P.O. Box 50123 27 Spyrou Kyprianou Avenue, Mesa Geitonia Limassol 3601 Limassol 4003
Cyprus Cyprus
Indirect tax contact
George Liasis +357 22 209-759 george.liasis@cy.ey.com
EY
Street address:
Mail address: EY Building
P.O. Box 21656 10 Esperidon Street Nicosia 1511 Nicosia 1087
Cyprus Cyprus
Indirect tax contacts
George Liasis
+357 22 209-759 george.liasis@cy.ey.com
Maria Raspa +357 22 209-712 maria.raspa@cy.ey.com
George Pitsillis +357 22 209-787 georgios.pitsillis@cy.ey.com
Elpida Papachristodoulou +357 22 209-907 elpida.papachristodoulou@cy.ey.com
Simos Simou +357 22 209-894 simos.simou@cylaw.ey.com
Iacovos Kefalas +357 22 209-885 Iacovos.kefalas@cy.ey.com
A. At a glance
Name of the tax
Local name
Value-added tax (VAT)
Date introduced 1 July 1992
Trading bloc membership European Union (EU)
Administered by Tax Department, Indirect Taxation (https://www.mof.gov.cy/tax)
VAT rates
Standard 19%
Reduced 3%, 5%, 9%
Other Zero-rated (0%) and exempt
VAT number format 12345678X
VAT return periods Quarterly
• Any supply of goods or services performed by a member of the group to another member of the group is disregarded.
• Any supply of goods or services by or to a third party is treated as a supply to or by the representative member.
• All members of the group are jointly and severally liable for any VAT payable and/or penalties owed by the representative member. In addition, former members of the group continue to be liable for tax debts incurred during the time they were members of the group.
The tax authorities have discretion to dismiss a VAT group application for the purpose of protecting public revenue.
There is no minimum time period required for the duration of a VAT group.
Holding companies. In Cyprus, a pure holding company cannot be a member of a VAT group. However, there is scope to further examine applicability on a case-by-case basis.
Cost-sharing exemption. The VAT cost-sharing exemption (in accordance with VAT Directive 2006/112/EEC Article 132(1)(f)) has been implemented in Cyprus. This provides an option to exempt support services that the cost-sharing group supplies to its members, providing certain conditions are met (in accordance with specific requirements laid out in Cyprus VAT law).
Fixed establishment. A foreign business has a fixed establishment for VAT purposes in Cyprus if there is a sufficient degree of permanence and a suitable structure in terms of human and technical resources to receive and use or to make the respective supplies. Simply having a VAT identification number does not in itself mean that an establishment qualifies as a fixed establishment.
Non-established businesses. A “non-established business” is a business that has no fixed establishment in Cyprus. A non-established business that makes supplies of goods or services in Cyprus must register for VAT if it is liable to account for Cypriot VAT on the supply or if it makes intra-Community supplies or acquisitions of goods.
Consequently, a non-established business must register for Cypriot VAT if it makes any of the following supplies:
• Intra-Community supplies
• Intra-Community acquisitions
• Distance sales in excess of the threshold
• Supplies of goods and services that are not subject to the reverse charge (e.g., goods or services supplied to private persons)
• Supplies of services that are taxable in Cyprus if the reverse charge is not applicable to the recipient
Tax representatives. The VAT authorities may instruct any taxable person that does not have any business establishment, fixed establishment or usual place of residence within the EU to appoint a VAT representative to act on its behalf with respect to VAT. This representative is personally liable for any VAT that is not paid. In most instances where a taxable person is established in Switzerland, a VAT representative appointment is not required.
If the taxable person fails to appoint a VAT representative, the Tax Commissioner may require the taxable person to provide adequate security for the payment of any VAT that is or may become due.
Reverse charge. The reserve-charge mechanism applies in situations where services subject to specific exceptions are supplied by a person outside Cyprus to a person who is carrying on a business in Cyprus. The recipient is treated as having made the supply himself and as if that supply was a taxable supply and thus must account for output tax. The person will then have the right to claim a corresponding amount as input tax, subject to their partial exemption status.
(i.e., less than EUR150), the VAT can be collected using the special scheme for postal services and couriers.
For more details about the special scheme for postal services and couriers, see the EU chapter.
Online marketplaces and platforms. Under the new EU VAT e-commerce rules, effective 1 July 2021, taxable persons that “facilitate” certain B2C sales of goods are deemed to have purchased and then supplied those goods themselves. This means that the single supply from the “underlying” supplier to the final consumer is split into two deemed supplies:
• A supply from the supplier to the facilitator (deemed B2B supply).
• A supply from the facilitator to the final customer (deemed B2C supply). The intermediation service provided by the facilitator is disregarded for VAT purposes.
This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceeding EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local shipments within one Member State, as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.
For more details about the rules for online marketplaces, see the EU chapter.
Vouchers. As from 1 January 2019, the Cypriot VAT treatment of vouchers is determined in line with the EU VAT Directive. In essence, the Cypriot VAT law provides definitions of what constitutes a voucher separating a single-purpose voucher (SPV) and a multipurpose voucher (MPV) according to their contractual terms and conditions.
A SPV is a voucher for which the country of supply is known at the time of the issue and the goods/services that can be redeemed are subject to one VAT rate (one of 5% or 9% or 19%). VAT is accounted at the time of issue or subsequent transfer (sale) of the voucher.
An MPV is a voucher for which at the time of its payment, the nature of goods/services that will be delivered is not known. VAT is accounted at the time of redemption. Issue and subsequent transfer (sale) is not subject to VAT.
Registration procedures. A person must notify the VAT authorities regarding its obligation for VAT registration through the “Tax for All” platform by electronically submitting Form T.F. 1101, “Supplementary application for registration to the VAT registry,” along with proof that it carries on (or its intention to carry on) economic activities, within 30 days from the end of the relevant month in which the obligation arose. The registration process can be completed within one to four weeks.
Deregistration. Registration is canceled in the following cases:
• Decreasing business turnover. Where any registered person notifies the Tax Commissioner that the value of taxable supplies in one year has fallen below EUR13,668.81 and applies for cancellation of his registration, then an authorized VAT officer, if satisfied of this fact, shall cancel the registration with effect from the date of the notification or from any other later date as may be agreed between the Tax Commissioner and that person.
• Termination of taxable supplies or termination of the intention to make taxable supplies. When a registered person ceases to make taxable supplies and is not entitled to remain registered or ceases to have the intention to make taxable supplies, it must notify the Tax Commissioner within 60 days of the date of the termination by submitting an Application for Cancellation of Registration (Form VAT 204). Failing to comply, the person is liable to a levy of EUR85. If an
• Human organs
• Education services
Option to tax for exempt supplies. The option to tax exempt supplies is not available in Cyprus.
E. Time of supply
The time when VAT becomes due is called the “time of supply” or “tax point.”
For a supply of goods, the tax point is the earliest of the following:
• The date of delivery of goods
• The date of issuance of the invoice
• The date of payment
For a supply of services, the tax point is the earliest of the following:
• The date of completion or performance of the services
• The date of issuance of the invoice
• The date of payment
If an invoice is issued within 14 days after the date of delivery of the goods or the performance of the services, the tax point is the invoice date, unless this date is overridden by the date of an earlier payment. The period of 14 days may be extended with the approval of the VAT authorities.
Deposits and prepayments. Prepayments create a tax point for Cypriot VAT purposes for the value of the paid amount. However, in the case of intra-Community supplies, a prepayment does not create a tax point for Cypriot VAT purposes.
Continuous supplies of services. In the case that no invoices have been issued and/or no payments have been made for a period of a calendar year, an annual tax point is created.
Goods sent on approval for sale or return. Goods sent for “sale or return” are considered as a supply of goods for VAT purposes, only where it is certain that the sale will take place (i.e., client shows intention to keep the goods or pays for the goods).
If no sale or return of the goods takes place within a period of 12 months and the 12-month period has elapsed, then the tax point is created at 12 months. Where it is certain that the sale will take place, the normal tax point rules in relation to goods apply (as per the above) being the earliest of delivery, invoice issuance or payment.
Reverse-charge services. For reverse-charge supplies, the tax point is the earliest of:
• The date of completion or performance of the services
• The date of issuance of the invoice
• The date of payment
For continuous supplies of reverse-charge services, refer to the paragraph below for continuous supplies of services.
Leased assets. There are no special time of supply rules in Cyprus for supplies of leased assets. As such, the general time of supply rules apply (as outlined above). In accordance with Court of Justice of the European Union (CJEU) case law, financial leases where the economic rationale lies in acquiring the asset at the end of the lease may be considered to be supplies of goods and VAT on the full amount of the asset’s value is due from the onset of the lease.
Imported goods. The time of the supply for imported goods is either the date of importation or the date on which the goods leave a duty suspension regime.
Intra-Community acquisitions. For an intra-Community acquisition of goods, the tax point is the earliest of the following:
• The 15th day of the month following the month in which the goods are sent
• The date of issuance of the invoice by the supplier
Intra-Community supplies. For an intra-Community supply of goods, the tax point is the earliest of the following:
• The 15th day of the month following the month in which the supplier sent the goods, or the recipient receives them to transfer them outside Cyprus
• The date of the issuance of the invoice by the supplier
Distance sales. There are no special time of supply rules in Cyprus for supplies of distance sales. As such, the general time of supply rules apply (as outlined above).
F. Recovery of VAT by taxable persons
A taxable person may recover input tax, which is VAT charged on goods and services supplied to it for business purposes. Input tax is generally recovered by deduction from output tax, which is VAT charged on supplies made.
Input tax includes VAT charged on goods and services supplied within Cyprus, VAT paid on imports of goods and VAT self-assessed on the intra-Community acquisition of goods and reverse-charge services (see the EU chapter).
A valid tax invoice or customs document must generally accompany a claim for input tax.
The time limit for a taxable person to reclaim input tax in Cyprus is six years. This is from the date of submission of the relevant VAT return with a refundable balance, unless otherwise approved by the Tax Commissioner.
Nondeductible input tax. Input tax may not be recovered on purchases of goods and services that are not used for business purposes (for example, goods acquired for private use by an entrepreneur). In addition, input tax may not be recovered for some items of business expenditure.
The following lists provide some examples of items of expenditure for which input tax is not deductible and examples of items for which input tax is deductible if the expenditure is related to a taxable business use.
Examples of items for which input tax is nondeductible
• Purchase, hire and lease of saloon cars
• Accommodation, food and entertainment (other than for employees)
• Private expenditure
Examples of items for which input tax is deductible (if related to a taxable business use)
• Purchase, hire, lease and maintenance for vans and trucks
• Fuel
• Parking costs
• Attending conferences, seminars and training courses
• Business gifts (if valued at more than EUR17.09, output tax is due)
• Business use of home telephone
• Mobile phones (the invoices must be issued in the name of the business)
• Advertising
Partial exemption. Input tax directly related to the making of exempt supplies is generally not recoverable. If a Cypriot taxable person makes both exempt and taxable supplies, it may not recover input tax in full. This situation is referred to as “partial exemption.”
Find below specific rules for Cyprus:
• For a person registered for VAT in an EU country, a claim for repayment must be made by 30 September of the calendar year following the refund period. To obtain a refund of Cypriot VAT, a taxable person not established and/or registered for VAT in Cyprus must submit an application in electronic format in the EU Member State of its establishment via the electronic portal of that Member State.
• If the refund application relates to a refund period of less than one calendar year but not less than three months, the minimum amount of VAT for which an application for a refund can be submitted is EUR400. If the refund application relates to a refund period of a calendar year or the remainder of a calendar year, the minimum amount of VAT for which an application for a refund can be submitted is EUR50.
Non-EU businesses. For businesses established outside the EU, refunds are made under the terms of the EU 13th Directive. For full details, see the EU chapter.
For a person established in a country outside the EU, the refund system applies if that country provides reciprocal arrangements for similar repayments to be made to Cypriot businesses. In addition, to take advantage of this refund system, the person must not be established or registered in any of the other EU Member States. Cyprus has a reciprocity agreement with Switzerland and the United Kingdom for the refund of 13th Directive VAT claims. Cyprus also provides refunds on the basis of reciprocity to Norway and Israel. In the event of such refund applications, advance consultation ought to be sought.
For persons established in a country outside the EU, claims with respect to VAT incurred in the one-year period from 1 July to 30 June must be made within six months of the end of that oneyear period (i.e., by 31 December).
Claims may be submitted in Greek language. The application for refund must be accompanied by the appropriate documentation (see the EU chapter).
The minimum claim period is three months; the maximum period is one year. The minimum claim for a period of less than a year is EUR25.63. For an annual claim, the minimum amount is EUR205.03.
Applications for refunds of Cypriot VAT may be sent to the following address: Commissioner of Tax VAT Headquarters 1471 Nicosia
Cyprus
Late payment interest. In the case of late VAT refund payments to EU businesses, according to the Directive n° 2008/9/EC, implemented in the Cyprus VAT law, Cyprus must pay late payment interest at a rate of 5% per year for late refund payments (i.e., payments made later than 10 days following the day of the approval of the refund application).
In Cyprus, interest is not paid on late refunds to non-EU non-established businesses.
H. Invoicing
VAT invoices. A Cypriot taxable person must generally provide a VAT invoice for all taxable supplies made, including exports and intra-Community supplies. Invoices are not automatically required for retail transactions valued at less than EUR85 (if the supply is not to a person in another EU Member State), unless requested by the customer.
A VAT invoice is necessary to support a claim for input tax deduction or a refund under the EU 2008/9/EC Directive or 13th Directive refund schemes (see the EU chapter).
An invoice should be issued, if a prepayment has been received for the supply of goods or services to a customer.
Credit notes. A VAT credit note may be used to reduce the VAT charged and reclaimed on a supply of goods or services. Credit notes adjusting the initial amount of VAT charged may be issued if a genuine mistake or overcharge has been made or if agreement on a discount has been reached. To be valid for VAT purposes, the credit note must be issued within one month after the date on which the mistake is discovered or the agreement on the discount is reached. It must be marked “Credit Note” and contain details of the original supply and the circumstances under which the credit is given (e.g., the return of faulty goods).
Electronic invoicing. Electronic invoicing is allowed in Cyprus, but not mandatory.
Scope of electronic invoicing. For B2B, B2C and business-to-government (B2G) supplies, electronic invoicing is allowed but not mandatory in Cyprus. This is in line with EU Directive 2010/45/EU and 2014/55/EU (see the EU chapter).
There is no threshold beyond which taxable persons are required to adopt electronic invoicing in Cyprus. The requirements related to electronic invoicing are the same as those for paper invoicing.
For the EU VAT in the Digital Age (ViDA) proposals, refer to the EU chapter.
Simplified VAT invoices. Simplified invoices are allowed for retail supplies where the gross value does not exceed EUR85. Such invoices must contain the name, address and VAT number of the supplier, the date of issue, a description of goods supplied, the total gross value of the goods inclusive of VAT, as well as for each applicable VAT rate – the total amount payable inclusive of VAT together with the applicable VAT rate.
Self-billing. Self-billing is allowed in Cyprus. Cyprus VAT law permits self-billing upon preapproval from the Tax Commissioner and subject to certain conditions in line with the EU VAT Directive. The person operating the self-billing system is liable for any understated VAT. There are various requirements for self-billing and the mutual consent of the two parties is a prerequisite. Such requirements among others include:
• The existence of a self-billing agreement between the parties, whereby the customer will be authorized to bill itself for supplies by the supplier (no invoicing by supplier).
• Period for the effect of such agreement is 12 months, unless prolonged by the Tax Commissioner.
• Self-billing documentation to be signed by both parties.
Proof of exports and intra-Community supplies. Cypriot VAT is not chargeable on supplies of exported goods or on intra-Community supplies of goods (see the EU chapter). However, to qualify as VAT-free, exports and intra-Community supplies must be supported by evidence that the goods have left Cyprus. Acceptable proof includes the following documentation:
• For an export, a copy of the export document, officially validated by the Department of Customs and Excise, showing the supplier as the exporter
• For an intra-Community supply, a range of commercial documentation, such as purchase orders, transport documentation, proof of payment and contracts
No special documentation applies in Cyprus for evidencing the application of the Quick Fixes. Normal intra-Community documentation rules apply. Normal documentation rules apply.
Foreign currency invoices. If Cypriot VAT is charged on an invoice, the invoice must be issued in euros (EUR). If an invoice is issued in a foreign currency, the amount before VAT and the VAT amount must be converted to euros using the exchange market rate or the rate issued by the Department of Customs and Excise.
Intrastat returns must be submitted electronically by the 10th day of the month following the end of the month to which they relate (i.e., for the reporting month of December 2025, the Intrastat form must be submitted by 10 January 2026). Cypriot taxable persons must complete Intrastat declarations in EUR, rounded up to the nearest whole number. The Intrastat return period is monthly.
EU Sales Lists. Every VAT-registered person who supplies goods and/or provides services to VAT-registered persons in other EU Member States has been required to submit an EU Sales List (i.e., a VIES form) every month to the Cypriot VAT authorities.
The VIES form must be submitted electronically by the 15th day of the month following the end of the relevant month (i.e., for the reporting month of December 2025, the VIES form must be submitted by 15 January 2026). The VIES form must be submitted even if no intra-Community supplies are made in the month.
Correcting errors in previous returns. Correction of Intrastat form. A corrected Intrastat table must be submitted to the tax authorities with one corrected table per month. Submission can be made either in person or via email to the tax authorities.
Correction of a VIES form. A corrected VIES table must be submitted to the tax authorities with one corrected table per month. Submission can be made either in person or via email to the tax authorities. If corrections need to be made for more than one monthly VIES form, then one corrective table should be submitted for each relevant monthly VIES form that needs correction/ amendment.
Correction of VAT returns. A company is entitled to claim input tax on prior period expenses without a correction, provided that the total VAT amount does not exceed the threshold of EUR1,708. If the threshold is exceeded, a company can submit a correction of error letter to the tax authorities to claim input tax. Submission can be made either in person or via email to the tax authorities.
Digital tax administration. There are no transactional reporting requirements in Cyprus.
J. Penalties
Penalties for late registration. A penalty is applied to late registration equal to EUR85 for each month the failure continues.
Penalties for late payment and filings. A one-off penalty of EUR100 per late submitted VAT return applies. Late payment of an outstanding VAT amount results in the imposition of a penalty of 10% of the outstanding amount. Interest is charged at the rate of 5% per annum on the outstanding amount and the penalty (interest is calculated for complete months).
For Intrastat forms, a one-off penalty of EUR15 is imposed for each late submitted form. Any omission or delay in submission of Intrastat forms for a period beyond 30 days constitutes a criminal offense and in the case of conviction the penalty may reach up to EUR2,562.
For VIES forms, a one-off penalty of EUR50 is imposed for each form that is submitted late. Continuous omission to submit the VIES forms constitutes a criminal offense and in the case of conviction the penalty may reach up to EUR850.
Penalties for errors. Penalties may be also assessed for the following offenses:
• Failure to apply the reverse charge: a EUR200 one-off penalty per VAT return but does not exceed the total penalty amount of EUR4,000
• Failure to keep records for a prescribed period: a penalty of EUR341
• Issuing an unauthorized invoice: a penalty of EUR85
There are no specific penalties associated with the late notification or failure to notify the tax authorities of changes to a taxable person’s VAT registration details. For further details, see the subsection Changes to VAT registration details above.
Penalties for fraud. Fraudulent evasion of VAT may be penalized by up to three years’ imprisonment or a fine up to three times the amount due, or both.
Receipt of goods on which VAT was evaded may result in up to 12 months’ imprisonment or a fine of EUR8,543, or both.
VAT shown in assessments issued by the Tax Commissioner and not paid may result in up to 12 months’ imprisonment or a fine of EUR8,543, or both.
Personal liability for company officers. In accordance with legislation and recent case law, any persons of authority (i.e., directors and secretaries) may be personally liable for the above offenses.
Statute of limitations. The statute of limitations in Cyprus is six years. Following the submission of a VAT return, the Cyprus tax authorities have six years from the end of the relevant tax year to go back and raise an assessment/tax audit to the taxable person. Taxable persons have three years to voluntarily correct errors in previous VAT returns following the end of the specified VAT return period for which the tax return was filed. The Tax Commissioner may also approve a voluntary correction of error application made even after the three-year limit passed upon its discretion.