Cyprus

VAT Basics

VAT Deduction Limits in Cyprus

Input VAT is generally deductible as long as the goods or services are used for business purposes. Unlike most EU countries, Cyprys only restricts VAT deduction on a few items.

• The following supplies are subject to special rules concerning input VAT deduction:
• Input VAT from the purchase or hire of saloon cars is not deductible, unless for resale, or other qualifying purposes.
• Accommodation, foodstuffs, and entertainment, unless for employees, is not deductible.
• Business gifts of a value less than EUR 17 are 100% deductible.
• Mobile phone, advertising, attendance to conferences and training, fuel expenses, etc. are 100% deductible.

A valid and fully compliant VAT invoice must be issued for each expense on which VAT is deducted.

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Statute of Limitations in Cyprus

The statute of limitations in Cyprus is six years.

The statute of limitations period determines the periods on which the tax authority can go back to review the information declared, and apply additional VAT assessments, penalties, or interests. However, voluntary corrections of the reported data can only go back 3 years, after which, the tax authorities must approve such voluntary correction.

Also, the statute of limitations determines the period a taxpayer can voluntarily correct any errors on past submissions, and deduct input VAT.

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Tax point rules in Cyprus

The tax point is the time when VAT becomes due. VAT due should be distinguished from VAT payable. VAT is due when the tax point occurs. VAT is payable between the day after the end of the reporting period and the due date to submit and pay the VAT return.

• General rule: VAT becomes due when the goods are put at the customer’s disposal, or when the services are completed.
• Invoice issuance: if an invoice is issued up until the 14th day after the tax point date following the general rule, then the invoice date becomes the tax point. The invoice needs to be sent to the customer in order to create the tax point. If that time has passed without the issuance of an invoice, then the tax point is determined according to the previous general rule.
• Supplies of goods with installation: the tax point is the day the goods are made available to the customer.
• Advanced payments or prepayments: the tax point is at the moment of receiving the prepayment or deposit.
• Continuous supplies of services: there is a tax point every time an invoice is issued or a payment is received, whichever occurs earlier.

Find here an overview of the tax point rules in Cyprus.

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VAT registrations and simplifications in Cyprus

When do I need a Cypriot VAT number?

Generally, a foreign business must register for VAT in Cyprus as soon as a taxable supply is made. The following are the usual examples of taxable transactions:

• Domestic supply of goods not reverse charged: A supply of goods located in the Cyprus where reverse charge does not apply requires a VAT registration of the supplier.
• Supply of services not reverse charged: Foreign non-established businesses supplying services on which Cyprus VAT is due by the supplier must register for VAT. These services are rather exceptional, as the general B2B rule would apply.
• Export: Exporting goods to a non-EU country requires a VAT number before the export is made.
• Intra-Community acquisition: Acquiring goods from another Member State where all conditions for intra-Community movements are met requires the customer to register for VAT.
• Intra-Community supply: Supplying goods to another Member State is also a taxable transaction that obliges the supplier to register for VAT.
• Distance sales: When applicable in case the Seller has not joined OSS. See the E-commerce manual for more information.

There is a registration threshold for Cypriot established companies amounting to EUR 15,600, although voluntary registration is possible in case of performing taxable transactions below the referred threshold. However, non-established businesses cannot benefit from the registrations threshold.

The forms required to complete for a Cypriot VAT registration are the form TD2001 and TD1101

The business liable to register for VAT purposes in Cyprus must apply for the registration within 30 days.

Find here the Cypriot registration forms. Also, find here, here and here general information about the VAT registration process in Cyprus, published by the tax authorities.

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Fiscal Representative Requirements in Cyprus

For businesses established in the EU the appointment of a Cypriot fiscal representative is optional. However, non-EU businesses must appoint a fiscal representative when registering for VAT purposes in Cyprus, unless the country of establishment has signed a reciprocity agreement. In principle, only Norway and Israel have signed reciprocity agreements with Cyprus.

The fiscal representative is jointly and severally liable for the transactions performed by the foreign company represented. must be established in Cyrpus and will be liable for all the operations of the foreign company in Cyrpus.

Marosa provides fiscal representation services through local partners.

Find here a brief official article about the requirement for non-EU businesses of appointing a fiscal representative in Cyprus.

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VAT Groups in Cyprus

Cyprus has introduced the VAT group regime as an option in its VAT system. Members of a VAT group are treated as a single taxable person for VAT purposes.

A VAT group may be formed by taxable persons closely bound by financial, economic, and organizational links. Financial links exist when the same person or business controls the other entities of the group. Organizational links exist when there is a common structure. Economic ties exist where the activities of the controlled entities are of similar nature; the activities are complementary; or, the activities of some member are for benefit of the others.

In addition, the following VAT grouping rules apply in Cyprus:

• Cypriot VAT grouping is optional.
• Intra-group transactions are disregarded for VAT purposes.
• Every group member is jointly and severally liable for the VAT debts and penalties of the entire group.
• Foreign companies not incorporated in Cyprus may be part of a VAT group.
• The VAT group must submit a single VAT return and pay the VAT for the activities of all the group members. There must be a representative for the VAT group.
• There is no minimum time period for the VAT groups to exist.

Find here the related forms for VAT grouping in Cyprus.

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Consignment and Call-off Stock in Cyprus

The EU introduced a call-off stock simplification that all EU Member States must implement. This was put into place so that businesses that operate under a consignment stock structure do not have to VAT register in the country of destination. Cyprus has introduced consignment stock simplification.

Cypriot Bad Debt Relief

The bad debt regime applies to scenarios where an invoice has been issued with VAT, reported in the VAT return and the VAT amount has been paid to the tax authorities but the whole price has not been collected from the customer.

This is often due to the client´s bankruptcy, insolvency, or simple missed payments to suppliers. In the EU, most countries allow taxpayers to recover the VAT initially paid to the authorities, however, the conditions change from one country to another.

Cyprus allows for bad debt relief provided that the following conditions are met:

• You have paid the VAT to the Tax Authorities
• You have deleted the transactions from the accounts and included it on a separate bad debt account.
• You have taken the necessary steps to claim the debt from the customer.
• The debt has remained unpaid for 12 months counted from the date of the transaction.

If you meet the above conditions, you can claim the VAT refund to the tax authorities within 4 years from the date on which the debt became due and payable, or from the transaction date, whichever is later.

In order to claim the VAT refund of the bad debt you need to deduct the VAT amount in your VAT return.

When your customer is a taxable person, you must send a communication within 7 days from the submission of the VAT return, informing about the bad debt relief.

Find the official guidelines from the Cyprus authorities on bad debt relief, information Form 14.

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Cypriot Import Deferral and Postponed VAT Accounting

Cyprus has not introduced any simplification measure to deal with import VAT. Therefore, there is no postponed import VAT accounting mechanism or import VAT deferral.

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Cypriot Customs and VAT Warehouses

Customs or bonded warehouses are available for goods that have not cleared customs in the EU (T1). VAT and excise duties are not due when these goods are directly placed in the Customs warehouse. As soon as they exit this regime, these amounts are due. Sales within the customs warehouse are zero-rated.

VAT warehouses are available for cleared goods (T2). These goods have already paid customs duties. The conditions are similar to those of Customs warehouses. The goods allowed are those included in Appendix V of the VAT Directive.

Find here application forms for tax warehousing in Cyprus. Also, find here more information about customs warehouse. Finally, find here the official EU guidelines on Customs’ special regimes.

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Special VAT Schemes in Cyprus

Find below the list of main special VAT schemes in Cyprus:

• The small businesses or special exemption regime. When the threshold of EUR 15,600 is not exceeded, small established businesses are not required to register for VAT purposes in Cyprus. Still, small businesses may opt to register for VAT purposes in Cyprus. Find here additional information. The special email address of contact for these businesses is: sme@tax.mof.gov.cy
• Farmers.
• Travel agents.
• Margin scheme.
• Investment gold.

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Reverse Charge in Cyprus

Reverse Charge for Non-Established Companies in Cyprus

According to Art. 194 of the VAT Directive, Member States may implement an optional reverse charge on supplies made by non-established businesses. Cyprus has introduced this reverse charge on supplies of services located in Cyprus.

Where a non-established supplier provides services located in Cyprus to a taxable person in Cyprus, the domestic reverse charge applies.

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The domestic reverse charge on services is rather exceptional as it would only apply where the B2B general rule on services does not apply. This is, for example, the case for supplies of services connected to immovable property.

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Reverse Charge on B2B Services in Cyprus

Article 196 of the VAT Directive requires the reverse charge mechanism on all services subject to the B2B rule introduced in art. 44 of the same Directive. The B2B rule locates the transaction where the business customer is located. In case the customer is a private individual, B2C rules locate the transaction where the supplier is located.

According to the general B2B rule, any business resident outside Cyprus supplying services to a Cypriot-based customer will not charge any VAT and the transaction will be reverse charged by the customer.

There are however several exceptions to this rule. Where these exceptions apply, reverse charge is still applicable in Cyprus provided the following conditions are met:

• Services connected to immovable property are located where the property is located.
• Passenger transport services will be located where the transport takes places (apportioned if necessary).
• Catering services are located where the catering takes place.
• Short-term leasing of means of transport is located where the vehicle put at the disposal of the customer.
• Access to conferences, fairs, and exhibitions is located where the event takes place.

The general rule may also be deviated where the supplier has a permanent establishment in the country of the customer and the PE has intervened in the supply.

Find out more about the rules for B2B services in the EU here.

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Reverse Charge on Specific Goods and Services in Cyprus

Domestic reverse charge may also apply on certain domestic supplies of goods and services. This reverse charge applies also to established taxpayers and regardless of the status of the supplier:

• Construction services, including repair, maintenance and demolition. The customer must be registered for VAT purposes in Cyprus in order to apply the reverse charge mechanism to the transaction.
• Supply of scrap and waste materials. The customer must be registered for VAT purposes in Cyprus in order to apply the reverse charge mechanism to the transaction.
• Supplies of mobile phones, integrated circuits and games consoles, PC tablets and laptops. The customer must keep separate records for six years concerning the purchase of these goods.

VAT Returns in Cyprus

Frequency of VAT Returns in Cyprus

The standard frequency of filing the periodic VAT returns is quarterly in Cyprus. However, the specific quarters may vary depending on the company’s activity, eg., for the Q1 could refer to Jan-March, February-April, and April-May. The tax authorities have created three groups belonging to different quarter periods to distribute the companies: retailers, industry, and services.

Under certain conditions, taxpayers may file monthly VAT returns in Cyprus for monthly refunds. The taxpayer must request the change to monthly submissions.

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Due Date of Cypriot VAT Returns

The due date for submitting CY VAT returns is by the 10th day of the second following month.

Find here the tax calendar in Cyprus.

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VAT Payments in Cyprus

In Cyprus, you will get the payment details after the submission of the return.

In TFA you can select the option “Make a payment” and click on “Pay now”. After indicating the VAT return that you want to pay, the payment options will be displayed in the screen. Normally, you will see the options:

Pay online

• Payment through a Cypriot Commercial Bank
• Or the option “Can’t pay with the above methods?” By clicking on this option, you will receive the payment details to make a bank transfer to the Central Bank of Cyprus, allowing taxpayers to pay from a foreign bank account.

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VAT Refunds in Cyprus

When a taxable person declares more VAT deductible (input VAT) – e.g., due to purchases-, than VAT collected from sales (output VAT), the difference is a VAT credit which may be claimed for refund or carried forward to the following period to compensate with future output VAT.

The general rule is that the excess of input VAT must be carried forward to the following reporting periods. Taxpayers may claim the VAT refund if the following conditions are met:

• Excess of input VAT was carried forward until the last reporting period of the year where it originated.
• The VAT credit has been carried forward for 3 years from the end of the tax period in which the entitlement to deduct it arose.
• The VAT credit corresponds to zero-rated supplies.
• The VAT credit corresponds to supplies made outside Cyprus.
• The VAT credit corresponds to the acquisition of capital goods.

In order to claim the VAT credit, you must complete and submit form 4B as well as form T.D. 1900 to authorize the payment to the bank account provided. A separate refund claim must be submitted for each period in which there is a refundable credit balance of VAT. Although you do not need to add any supporting document to your request, the relevant VAT books and records may be requested when the refund claim is examined by the tax office.

Interests accumulate until the VAT credit is paid starting by the fourth month after the VAT refund application is submitted.

The statute of limitations applies to the recovery of input VAT, in this case, six years.

Find here and here additional information about VAT refunds through TFA in Cyprus. Also, find here the indicated forms.

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Nil and Corrective VAT Returns in Cyprus

A nil VAT return needs to be submitted even if there are no transactions to be reported for that period.

You can correct VAT returns submitted during the previous three years (calculated from the end of the reporting period to which the amendment refers).

To correct a VAT return already submitted, you need to consider the following notes:

• In case you are within the deadline for submission, then you can amend all boxes in TFA.
• In case the deadline is passed, you can modify only fields from 6 to 11 that refer to the declared values, but not the tax amounts.
• In case the deadline has passed, and you want to modify the VAT amounts, you will have to send a written email request (Taxpayer Enquiry) to the Tax Department, through your account in the Tax For All portal.

To correct the VAT return in TFA, you need to select the corresponding VAT return and period from the My Accounts area, open it, and click on the button “Correct this VAT return”. You will have to complete an explanation box explaining the reason to amend the declaration.

Also, if you forgot to include purchase invoices (input VAT) in the corresponding reporting period, and the VAT amount does not exceed the threshold of EUR 1,708, you can deduct the invoice in the current reporting period.

Find here more information about corrective returns in Cyprus.

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VAT Penalties in Cyprus

If you fail to submit any tax returns required then you will be charged a fixed penalty amounting to EUR 100, an additional surcharge equal to 10% of the VAT due, as well as default interest on the tax amount due. The system will also proceed to the automatic calculation of estimated amounts of VAT due.

Find here the official information about penalties for non-compliance in Cyprus.

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Cypriot Tax Authorities Contact

• Phone directory
• Contact information.

‍‍VAT Refunds

• Telephones: (+357) 22 601852, (+357) 22 601850
• Email: operations@vat.mof.gov.cy

Tax Department – Ministry of Finance

• Telephone: +357 22308113
• Email: vatvima@vat.mof.gov.cy  

Address: 2, Tseriou Street, 2042 Strovolos, Nicosia. Cyprus.

OSS

Contact e-mail: ecomm@tax.mof.gov.cy

Intrastat returns:

Taxation Department, 1471 Nicosia

Email: vatvima@vat.mof.gov.cy

Customs contact

• E-mail: headquarters@customs.mof.gov.cy  
• Website.

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ESL Returns in Cyprus

Due Date and Frequency of ESL Returns in Cyprus

The due date for submitting ESL returns is always the 15th day of the following month.

The frequency of filing is always monthly.

Find here a video tutorial from the tax authorities on how to prepare ESL returns in Cyprus, and here additional information from the tax authorities’ website.

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Nil and Corrective ESL Returns in Cyprus

If there are no intra-Community supplies to be reported in a given period, a nil ESL return is due. Cyprus is one of the few countries where it is a requirement to submit a nil ESL return.

Also, in case there are errors in an ESL return, a corrective ESL must be submitted through the TFA taxpayer web portal. All corrections must be made within 1 month following the reporting period. Otherwise, a fine of EUR 15 for the correction is imposed.

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Penalties for late ESL Returns in Cyprus

In case of non-compliance, a penalty of EUR 50 is imposed. If the omission continues this is considered a criminal offense, punishable by a fine of up to  EUR 850.

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Intrastat returns in Cyprus

Frequency of Filing and Due date of Intrastat Returns in Cyprus

Like in most EU countries, Cyprus Intrastat returns are filed monthly. They follow the calendar month. The due date to file these returns is the 10th day of the following month.

Cypriot Intrastat returns must be submitted electronically on a monthly basis.

Find here the official information about the Intrastat deadline. Also, find here the Intrastat manual updated per year in Cyrpus (Guide for Traders).

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Cypriot Intrastat Thresholds

The following annual Intrastat thresholds apply in Cyprus (calendar year) for 2024:

Type of Intrastat: standard declaration

• Arrivals: EUR 320,000
• Dispatches: EUR 75,000

Type of Intrastat: detailed declaration

• Arrivals: EUR 2,700,000
• Dispatches: EUR 5,800,000

These thresholds are computed annually according to the calendar year. Once filed, a complete calendar year needs to be covered by a company in order to stop filing these returns. For example, if a company exceeds the threshold in March 2024 on arrivals, Intrastat returns for arrivals are due in December 2025. These thresholds are calculated according to the invoice value.

It is the responsibility of the economic operators to monitor these thresholds and start submitting Intrastat returns when due.

Have a look at our overview of Intrastat thresholds. Also, find here official information.

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Reporting of Specific Scenarios in Cyprus

Very often, the transactions reported in the Intrastat return are standard sales from one taxable person to another. However, a number of scenarios have specific reporting requirements. The nature of transaction codes in Cyprus have been recently updated and now have two digits. The official Intrastat manual contains the updated nature of transaction codes, including those applicable to specific scenarios. You can download the Intrastat Manual available on the official website of the tax authorities.

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Nil and Corrective Intrastat Returns in Cyprus

If no transactions are to be reported, a nil Intrastat return must be filed.

In case the Intrastat return needs to be corrected or completed, you need to inform the authorities in writing, stating the correct information that should be reported.

Regarding corrections, an Intrastat return is considered to be incorrect or incomplete if you failed to record the correct information for the following fields:

• Commodity code
• Country of origin/destination code
• Invoiced amount
• Statistical value
• Net mass (if required)
• Supplementary units

Also, in case you need to cancel all the declared data for a transaction line.  

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Intrastat Penalties in Cyprus

Failure to timely submit the Intrastat returns is subject to a penalty of EUR 15. If the non-compliance continues, it may constitute a criminal offence and the taxpayer may incur an additional fine of up to EUR 2,562.

The above penalties are indicated in the official website of the