Taxation in Cyprus

There is VAT in Cyprus that is an analogue of the Russian VAT in the EU.

Peculiarities of taxation in Cyprus

The object of taxation is the supply of all goods and services in the territory of Cyprus, the acquisition of goods in other EU countries, as well as the import of goods from third countries. VAT is levied on any goods or services, the final recipient of which is the EU resident.

The base rate in Cyprus is 19% of the invoice amount.

There are preferential rates for certain types of business - 9% and 5%. And there is also a 0% rate if an invoice is issued to a company registered for VAT, which is a resident of another EU country.

If an invoice is issued to a non-EU resident and the final recipient of products / services is not an EU resident, then this operation does not fall under VAT, and VAT is not included in the invoice.

If an EU resident company buys goods from a company that is not an EU resident, then it independently pays VAT in the country of its residence.

Tax registration for VAT is obligatory for persons carrying out VAT-taxable sales of goods and / or services if:

• at the end of each month, if the number of taxable (VAT-taxable) transactions for the previous 12 months exceeds 15 600 euros;
• at any time, if there are considerable reasons to believe that the value of VAT-taxable operations over the next 30 days will exceed € 15.600
• at the end of any month, if the total value of VAT-taxable purchased goods / services from other EU countries, starting from January 1 of the year, exceeds € 10.251,61
• at any time, if there are considerable reasons to assume that the total value of VAT-taxable purchased goods / services from other EU countries in the next 30 days will exceed € 10.251,61
• any person conducting remote sales (sales from a person registered in another EU country) is obliged to register for VAT in the event that for the period from January 1 of the year the amount of remote sales exceeds € 35,000.

Penalty for non-registration is € 85 for each month of delay (it can be adjusted at the initiative of the Cyprus tax authority).

Also voluntary registration for VAT is possible:

1. A person who has a commercial representative office in Cyprus or a place of permanent residence in Cyprus and who makes deliveries outside Cyprus that would be subject to VAT, if carried out in the territory of Cyprus, has the right to voluntary registration for VAT purposes.
2. A contract and an invoice on the basis of the contract are required for the registration.

VAT reporting takes place in the form of filing quarterly declarations. To form a declaration, all invoices for the previous quarter are required. The declaration is submitted before the 10th day of the second month following the end of the tax period.

In addition, the cost of processing all invoices for the previous quarter is charged.

Penalty for late filing is 51 euros per declaration.

If invoices are not provided, then the auditor submits a zero declaration, and when preparing the reports, it will be necessary to amend all VAT declarations containing inaccurate information. For correction of information in VAT-declarations, a fine is stipulated:

• minor changes - free of charge;
• significant changes - penalty of 10% + interest from the difference in amounts in VAT declarations;
• additional penalty may be imposed from the officer.

VAT must be paid in the same terms as the preparation of the declaration (before the 10th day of the second month following the end of the tax period). Payment is made by auditors by check (self-payment by the client is not provided).

The fine for late payment of VAT is 10% of the amount due plus a penalty.

For all questions regarding taxation in Cyprus and registering your business in the above jurisdiction, please contact the lawyers of Law&Trust International. You can get detailed advice during personal conversation with our lawyer at the company's office, by phone or in chat.