Cypriot VAT rates and VAT compliance

While Cyprus follows European Union (EU) rules on VAT compliance, it remains free to set its own standard (upper) value added tax (VAT) rate provided it is above 15%. The standard VAT rate in Cyprus is currently set at 19%. There are also three reduced VAT rates of 9%, 5%, and 3%. A small number of services have a zero rating.

Suppliers of goods or services VAT registered in Cyprus must charge the appropriate VAT rate and collect the tax for onward payment to the Cyprus tax authorities through a VAT filing.

A number of supplies of goods or services are exempt from VAT in Cyprus. These include postal services, financial services, insurance services, real estate services, certain medical services, dental care services, services rendered by licensed medical professionals such as teaching, training, instruction, and education, land and building supplies and leases, cultural services provided by public bodies or nonprofit organisations such as museums, libraries, and art galleries.

Businesses exceeding an annual turnover of €15,600 must register for VAT in Cyprus. There is no registration threshold for non-resident businesses. Applications must be submitted in Greek to the Cyprus Tax Department. VAT returns must be filed electronically every quarter, and are due by the 10th of the month following the reporting period.

Once registered for VAT in Cyprus, a business or taxable person must follow local rules to fully comply with the country’s VAT legislation. This includes:

• Issuing invoices with the disclosure details outlined in the Cyprus VAT Act

• Issuing, when required, e-invoices with proper signature, authenticity, and agreement by the recipient

• Maintaining accounts of record, which must be held for at least six years.

• Correctly invoicing customers for goods or services in accordance with the Cyprus time of supply VAT rules

• Applying correct treatment of credit notes and other corrections

• Applying of foreign currency translation rates

  
  

Noncompliance penalties

If a business files a VAT return late, they may be subject to a fine of €100 for every late return. Late payments can also incur a penalty of 1.75% interest on the amount unpaid.

Fiscal representation

Non-EU businesses may be required to appoint a fiscal representative for VAT purposes, who will be jointly liable for VAT compliance obligations on behalf of the business.

Digital services

EU businesses supplying digital services in Cyprus must register for VAT if their annual turnover from sales in the country exceeds €10,000 (as in other EU member states). Digital businesses must also register for VAT if they store goods in Cyprus or make Fulfilled-by-Amazon (FBA) sales in Cyprus.

The tax point or time of supply rules in Cyprus determine when the VAT is due. It is then payable to the tax authorities 10 days after the VAT reporting period end (monthly or quarterly).

For most goods, it is the time of delivery or passage of title. For services, it is the completion of the service.