VALUE ADDED TAX (VAT) – CYPRUS
Simplify Compliance. Maximize Efficiency.
Cyprus applies Value Added Tax (VAT) in line with EU Directive 2006/112/EC, offering a transparent and harmonized framework for businesses across all sectors. With one of the lowest standard VAT rates in Europe (19%), Cyprus ensures a competitive environment for trade, services, and international transactions.
At a Glance
| Category | VAT Rate | Description |
|---|---|---|
| Standard Rate | 19% | General goods and services |
| Reduced Rate | 9% | Hotels, catering, passenger transport |
| Reduced Rate | 5% | Basic food, medicines, books, first home purchases |
| Zero Rate | 0% | Exports, intra-EU supplies, international transport |
| Exempt | — | Financial, insurance, education, medical services |
A business-friendly VAT regime aligned with EU rules — efficient, transparent, and globally compliant.
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We manage VAT registration, quarterly returns, and cross-border reporting for your Cyprus operations.
1. Overview
The Cyprus VAT system is based on EU law and administered by the Tax Department. It applies to the supply of goods and services, intra-EU acquisitions, and imports made within Cyprus by taxable persons conducting business activities. VAT registration is mandatory when the turnover threshold exceeds €15,600 in any 12-month period.
2. VAT Registration
| Type | Threshold / Requirement | Notes |
|---|---|---|
| Mandatory Registration | €15,600 annual taxable turnover | Required within 30 days of exceeding threshold |
| Voluntary Registration | Below €15,600 | Allows VAT recovery on expenses |
| Non-Resident Registration | No threshold | Required for foreign businesses trading in Cyprus |
| Distance Selling / E-Commerce | EU-wide €10,000 OSS threshold | Register under One Stop Shop (OSS) for EU sales |
| Group Registration | Available | For related entities under common control |
Businesses involved in intra-EU or export transactions may also register for VIES (Intra-EU VAT Information Exchange System).
3. VAT Rates in Detail
| Rate | Description | Examples |
|---|---|---|
| 19% (Standard) | Most goods and services | Consultancy, telecoms, electronics, professional services |
| 9% (Reduced) | Hotels, restaurants, transport | Accommodation, catering, taxi, bus fares |
| 5% (Reduced) | Essentials and social goods | Food, books, medicines, newspapers, solar panels |
| 0% (Zero Rated) | Exports & international trade | Exports of goods, shipping, intra-EU supplies |
| Exempt | Non-taxable services | Education, insurance, finance, medical, residential rent |
Special Rate: 5% VAT on first residential property (primary home) applies up to 130m², subject to approval.
4. VAT Accounting and Returns
- VAT periods are generally quarterly (monthly for large taxpayers).
- Returns filed electronically via TAXISnet by the 10th of the second month following the quarter end.
- Payment is due on the same date as submission.
| VAT Quarter | Filing Deadline | Payment Due |
|---|---|---|
| Jan – Mar | 10 May | 10 May |
| Apr – Jun | 10 Aug | 10 Aug |
| Jul – Sep | 10 Nov | 10 Nov |
| Oct – Dec | 10 Feb (following year) | 10 Feb |
Late submission results in a €100 penalty and 2.25% annual interest on unpaid VAT.
5. VAT Refunds and Input Credits
- Businesses can deduct input VAT incurred on goods and services used for taxable activities.
- Refunds are available when:
- Input VAT exceeds output VAT, or
- Business exports or supplies zero-rated goods/services.
- Refunds typically processed within 4–6 months via the Tax Department or offset against future liabilities.
- Non-EU businesses may recover VAT under the 13th Directive refund procedure.
6. Intra-EU and International Transactions
| Transaction Type | VAT Treatment |
|---|---|
| Intra-EU Supplies (B2B) | 0% (reverse charge applies to recipient) |
| Intra-EU Acquisitions (B2B) | Recipient accounts for VAT under reverse charge |
| Exports Outside EU | 0% |
| Imports from Non-EU Countries | VAT paid at customs; recoverable as input VAT |
| Intra-EU Services (B2B) | Reverse charge under Article 196 EU VAT Directive |
| E-Commerce / OSS Scheme | Register via One Stop Shop (OSS) for cross-border EU sales |
Cyprus is part of the EU VAT Area, allowing simplified intra-EU trade and service transactions.
7. VAT Exemptions (Selected Categories)
- Financial and insurance services
- Medical and dental care
- Education and tuition
- Postal services by the state
- Residential property rent
- Cultural, charitable, and religious activities
Exempt activities cannot recover input VAT unless partly engaged in taxable supplies (partial exemption rules apply).
8. VAT in Property and Construction
| Transaction | VAT Treatment |
|---|---|
| Sale of New Property (first sale) | 19% or 5% (reduced for primary residence) |
| Sale of Used Property | Exempt from VAT (subject to transfer fees) |
| Commercial Property Leasing | Taxable at 19% (option to tax) |
| Residential Leasing | Exempt |
| Land Sale for Building | Taxable if sold by a business for development |
Developers and contractors must classify property transactions correctly to ensure proper VAT treatment.
9. Penalties & Interest
| Offence | Penalty |
|---|---|
| Late VAT return filing | €100 fixed fine |
| Late VAT payment | 5% surcharge + 2.25% interest p.a. |
| Failure to register for VAT | Up to €85 per month |
| Failure to maintain records | €100 per omission |
| Incorrect declaration | Administrative penalties or reassessment |
All VAT-related records must be kept for at least six years and made available during audits.
10. Why Clients Choose Our Firm
- VAT registration and EU/non-EU compliance setup
- Quarterly VAT return preparation and filing
- Intra-EU (VIES) and Intrastat reporting
- Real estate and import/export VAT advisory
- Audit support and refund recovery management
We simplify every aspect of your VAT compliance — ensuring accuracy, timely filing, and peace of mind under Cyprus’s EU-aligned VAT regime.