VAT compliance and reporting rules in Cyprus 2024
Below is summary of the major rules provided under Cyprus VAT rules (Value Added Tax Act). Plus adoption of the EU VAT Directive. Check our country VAT guides for other jurisdictions.
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Cyprus VAT country guide
| Highlights | Local term | Φόρος Προστιθέμενης Αξίας (ΦΠΑ) or 'FPA' |
| VAT Rates - standard | 19% | |
| VAT Rates - reduced | 9%; 5%; 3%; 0% | |
| Rates news | Temporary foodstuffs rate cut | |
| VAT number format | CY 12345678X (last character always a letter) | |
| Registration threshold | €15,600. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions €10,251 | |
| VAT Group | Permitted for resident linked businesses | |
| VAT recovery foreign businesses | Permitted. Non-EU businesses will have to have reciprocal agreements (see separate) | |
| Fiscal Representative | A resident VAT Representative is required for non-EU businesses wishing to VAT register if no reciprocity agreement. It also possible to direct register non-EU businesses if they provide a bank guarantee. | |
| Currency | Euro €, January 2008 | |
| Administration | Introduction | Cyprus introduced VAT in July 1992. It joined the European Union in May 2004. |
| VAT laws | Value Added Tax Act, Ν.95(Ι)/2000 (Ο περί Φόρου Προστιθέμενης Αξίας Νόμος του 2000). And statutory instruments - Orders, Regulations and Notices. Also EU VAT Directive which takes supremacy as part of EU membership | |
| Tax Authorities | Commissioner of Taxation. Non-resident traders are managed by Nicosia. | |
| VAT Rates | Standard rate | 19% |
| Rates news | Temporary foodstuffs rate cut | |
| Reduced rates | 9%: accommodation; domestic passenger transport; restaurant and hospitality. 5%: residential construction; water; basic foodstuffs; water treatment; admission cultural and sporting events; undertakers; animal foodstuffs; books and newspapers; renovation residential housing; medicines; 3% books, magazines; public cleaning; certain entry fees and other. | |
| Zero-rated | Intra-community passenger travel by air and sea; Exports and intra-community supplies of goods; gold to central banks; services related to vessels and aircraft | |
| Exempt | Education; financial services; health, hospital, and social welfare; public postal; letting immovable property; betting and gambling; welfare services; international passenger transport; certain copyrights | |
| Scope of VAT | Scope of VAT | Provision of domestic taxable goods and services; EU imports; intra-community acquisitions; Distance selling of goods B2C (OSS or IOSS); receipt of services or goods via the reverse charge |
| Time of supply | Goods & Services (general rule) | The soonest of the: delivery/provision; invoice date; or payment of consideration. Receipt of prepayments creates a tax point - intra-community supplies excluded. Intra-community supplies must be invoices (and therefore tax point) by 15 of the following month |
| Reverse Charge | General rule applies. | |
| Continuous Services | General rule applies unless longer than twelve months without an invoice, then tax point is the end of the VAT period. | |
| Imports | Date of clearance into free circulation from customs or bonded warehouse | |
| Goods on approval and return | Tax point when customer confirms will accept and not return. Tax point also triggered automatically after twelve months | |
| Registration | VAT registration threshold | €15,600. Nil for non-residents; €10,000 for pan-EU digital services and goods OSS return. Intra-community acquisitions €10,251 |
| Voluntary VAT registration | Permitted for residents only | |
| VAT number format | CY 12345678X (last character always a letter) | |
| VAT Group | Permitted for resident businesses linked by financial, organisational or economic links. Holding companies without a taxable supply may not join. All members share a single VAT number, and intra group transactions are zero-rated. Group members share their VAT liabilities. A nominated representative completes and files a consolidated VAT return. | |
| Non-residents | Permitted, but non-EU businesses must appoint a Fiscal Representative, known as a VAT Representative (see separate) | |
| Fiscal Representative | A resident VAT Representative is required for non-EU businesses wishing to VAT register if no reciprocity agreement. Cyprus has agreements with: Norway; Switzerland; Israel; and the UK (to confirm). It also possible to direct register non-EU businesses if they provide a bank guarantee. The VAT Representative is liable for their clients' VAT. | |
| Digital Services | Cyprus participates in the EU single One Stop Shop (OSS) VAT return for digital, telecoms and broadcast services. This was formerly the MOSS regime until 30 June 2021 | |
| Pre VAT registration costs | Permitted where directly relate to the provision of the taxable supply for 6 months on services prior to registration. This extends to three years for goods. | |
| VAT Invoices | Issuance | Should be issued within 30 days of tax point (supply). Intra-community supply invoices should be issued by 15th of the following month. Same for reverse charge invoices. Not required for retail transactions unless customer requests. |
| Content | Date; unique sequential invoice number; name and address of supplier and customer; Customer VAT number for intra-community supplies or reverse charge; date of supply or advance payment if different from invoice date; Description, quantity or units etc of supply of goods or services; price per unit; taxable amount; VAT charged; rate (broken out if supplies at different rates); total; explanation if zero-rated supply. | |
| E-invoices | Permitted with agreement of customer. In accordance with EU e-invoice Directive EU Directive 2010/ 45/EU | |
| Simplified invoices | Permitted for invoices not exceeding €85. Does not need to breakout VAT amount, but must be calculable from net amount and VAT rate displayed. Not permitted for intra-community transactions | |
| Self-billing | Permitted with written and signed agreement between parties. The Commissioner should be informed in advance. | |
| Retention of invoices | Six years. Paper or e-invoices may be stored outside Cyprus with the tax office's approval. They should be accessible within five working days. | |
| FX rules | Invoices may be issued in foreign currencies, but the VAT due must be shown in €. The European Central Bank rate may be used at the date of the tax point. | |
| Invoice corrections | Credit or debit notes may be used if agreement between parties. Should refer to original invoice number and include reason for adjustment. | |
| Compliance | Right to deduct | Excluded: business entertainment and accommodation; business gifts above €17; passenger vehicles purchase (except taxis; resale etc); staff entertainment and food & drink; |
| Call-off stock | Following the EU's 2020 Quick Fix harmonisation reforms, stock may be transferred from an EU state to an customer location/warehouse in Cyprus without triggering a VAT registration and supply for a non-Cypriot supplier. Title has not passed until the customer takes the goods for production and sale. At which time a zero-rated transaction may be effected. This must happen within 12 months of the original movement | |
| Reverse Charge - B2B | In addition to the normal B2B cross-border services reverse charge, Cyprus requires non-resident to apply it on supply and install (see separate) and the supply of natural gas & electricity. Cyprus applied the domestic reverse charge on: construction; scrap and used metals; laptops; CPUs; mobile phones etc. | |
| Cash discounts | Adjustments of take-up cash discounts are done via corrective accounting documents and not credit note. The taxable value is the net of discount amount. | |
| Bad debt relief | Permitted: over twelve months due; written off in accounts; can demonstrate reasonable efforts to recover; have notified customer | |
| Import VAT deferment | Postponed VAT Accounting not permitted. 30-day VAT payment deferral permitted on approval by Commissioner but may require a bank guarantee. An application for a licence is required, and will be granted if good compliance history and have more than 50% of sales as zero-rated supplies. Exemption is allowed in the case of an import and immediate (30 days) intra-community supply. | |
| VAT warehouse | Goods prescribed by Annex V of the VAT Directive may be stored in authorised warehouses and are not subject to VAT. Cyprus also offers customs bonded warehouse for duty suspense and import VAT trading | |
| Supply & install | A non-resident offering goods and install service will normally use the reverse charge for VAT-registered customers. | |
| Use and enjoyment services | Cyprus has implemented use & enjoyment VAT compliance on non-EU providers of: telecoms, broadcast and electronic (TBE) services; hire of tangible goods; hire of transport; goods transport services. | |
| Capital goods adjustment period | Movable property: five years. Immovable property: ten years | |
| Non-residents VAT recovery | EU businesses may apply for Cypriot VAT reclaims through the electronic portal of the tax authorities of their company of residency (8th Directive). Quarterly claims above €400 permitted, with final claim above €50 by 30 Sept of following year. For non-EU businesses, Cyprus does require a reciprocal agreement with the country of residence of the claimant. Currently this is: Norway; Switzerland; Israel; and the UK (subject to confirmation). Non-EU businesses must submit a paper-reclaim with supporting invoices via the Cypriot authorities directly (13th Directive). Non-EU businesses do not have to appoint an Cypriot resident Fiscal Representative for the reclaim process. | |
| VAT on Digital Services | Cyprus follows the EU VAT on digital services regime, introduced in 2015. This includes participation in the One-Stop-Shop (OSS) single EU VAT return (formerly MOSS until 30 June 2021) | |
| Live events | ||
| Distance selling threshold for goods | Nil. Following the EU ecommerce VAT package reforms from 1 July 2021, local Cypriot VAT must be charged on all sales by non-Cypriot EU e-commerce sellers shipping from within the EU. Imported distance sales not exceeding €150 liable to Cypriot sales VAT with IOSS return option | |
| Cash accounting scheme | Permitted for resident businesses not exceeding €25,000 taxable sales per annum. | |
| VAT registered cash tills | N/a | |
| Statute of limitations | Six years. Extended to twelve in the case of fraud. | |
| Other | N/a | |
| VAT Returns | Frequency | Quarterly. Tax registered businesses are staggered by filing dates (so not on calendar quarters). They are grouped into three categories: retailers, industry or services. Traders in regular credit positions (export or intra-community dispatches etc) may apply to file monthly. |
| Filing method | Electronic via Taxisnet | |
| Deadlines (inc payments) | 40 days after the end of the reporting quarter (or next business day). | |
| VAT credits | Refunds for excess input must be made separately to VAT return. Automatic refunds once credit over eight months old. Must show mostly zero-rated supplies or intra-community/exports. | |
| Corrections | If error below €1,708 then via next VAT return. If above, then special corrective application form | |
| Non-residents | Permitted. Non-EU businesses require a VAT Representative (Fiscal Representative) unless reciprocity (see separate) | |
| Other filings | Monthly European Sales Listing for goods and services supplies 15th of month following, and there is no reporting threshold. Intrastat monthly by the 10th of the following month for supply of goods above threshold: dispatches: €75k; arrivals: €320k. | |
| SAF-T | N/a | |
| Penalties & interest | €100 for missed VAT return filing. 1.75% interest on unpaid VAT. There are fines for: incorrect use of the reverse charge (up to €4,000); missing invoices €85; and other offences. 10% penalty on undeclared VAT liabilities, plus late interest. | |
| B2C Distance Selling returns | Cyprus participates in the One-Stop-Shop OSS pan-EU VAT return for distance selling, introduced in July 2021. |
