The legislation defines the following cases when a Company is obliged to become VAT-registered:
- Turnover subject to VAT is in excess of 15.600 during the 12 preceding months
- Expected turnover subject to VAT in excess of 15.600 within the next 30 days
- Businesses which make acquisition of goods from other EU member states in excess of 10.251,61 within a calendar year
VAT is imposed on the supply of goods and provision services in Cyprus, as well as on the acquisition of goods from the European Union (EU) and the importation of goods into Cyprus.
Taxable persons charge VAT on their taxable supplies (output tax) and are charged with VAT on goods or services, which they receive (input tax).
If output tax in a VAT period exceeds total input tax, a payment has to be made to the state. If input tax exceeds output tax, the excess input tax is carried forward as a credit and set off against future output VAT.
There cases where an immediate refund of excess input VAT can be obtained. Please refer below for some of these possible scenarios:
- the input VAT relates to zero rated transactions
- the input VAT relates to the purchase of capital assets of the company
- the input VAT relates to transactions which are outside the scope of VAT but would have been subject to VAT had they been carried out within Cyprus
It is important to note that the treatment of VAT over inter-company transactions is different and is widely referred to as the “reverse charged method”. In simple terms, the Company selling goods must self-charge VAT and at the same time claim it back, always provided that the VAT on the supplies is recoverable under the Cyprus Law. Otherwise VAT must be paid on the sale.
- Zero-rated (0%)
- Reduced rate of five percent (5%)
- Reduced rate of nine percent (9%)
- Standard rate of nineteen percent (19%)
- Exempt supplies
Certain supplies are exempt from VAT meaning that no VAT is charged on a potential sale of these goods/services. Details over which supplies fall under this category can and will be communicated to our clients when requested.
Note now that the difference between zero-rated supplies and exempt supplies Is that business making exempt supplies are not entitles in recovering their input VAT.
For more in-depth information on our Cyprus VAT & VIES experience please email us directly on email@example.com.