In Cyprus value-added tax applies to any supply or services, but also to other forms of transactions.
Rates of VAT in Cyprus
There are three levels of taxation for VAT in Cyprus:
The VAT reduced rate of 9 % is levied on the transport of passengers and their luggage within Cyprus by transportation means like buses or taxis, to restaurants and catering services, including alcoholic and non-alcoholic drinks, tourist accommodation, animal food, seeds, water and juices.
The VAT reduced rate of 5 % applies to: catering and supply of beverages, excluding alcoholic and soft drinks, to the supply of pharmaceutical products, books and magazines, hair salon services, tickets to theater, festivals, museums and others, repair and reconstruction work in private households after the first three years of living there and catering services in school canteens.
There is also a zero-rate VAT in Cyprus that applies to the export of goods, repair, supply and hiring of ship for industrial purposes, supply, maintenance, hiring planes for international traffic, delivery of services to the Navy and Air Force and transportation of passengers from Cyprus aboard and back by airplane or ships, health and welfare, education, postal services.
Property rental, insurances, financial services but not all, hospital and medical services, postal services and use of real estate planning permissions are exempt from VAT.
Registration for Cypriot VAT
Companies are required to register for VAT under two situations: at the end of any month, if taxable supplies at that year’s ending have exceeded the registration threshold of 15, 600 euros, at any time if the company has reasons to believe that the value of taxable supplies will exceed the 15, 600 euros threshold in the following 30 days period.
New Cypriot registered companies cannot apply for VAT registration in advance because they first need to exceed the 15, 600 euros threshold.
The same rules are applicable for non-residents, if they are making taxable supplies on Cypriot territory. In this case the company will need to appoint a representative that will apply for the VAT registration or the company will directly apply for VAT registration.
In order to receive a VAT refund in Cyprus, a company established in another EU member state can ask for a refund under the EU Refund Directive. A non-EU trader can recover VAT under the 13th EC Directive if it is registered in Switzerland or Israel.
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