Indirect tax ebook - Cyprus

Registration

If you are operating through a Cyprus company or foreign company with a permanent establishment for VAT purposes in Cyprus and you make taxable supplies in Cyprus you have to register for VAT with the competent VAT authorities of the Republic of Cyprus.

Foreign companies without permanent establishment in Cyprus may need to register with the VAT authorities if they provide services that are deemed to be provided in Cyprus e.g. on immovable property that is situated in Cyprus, in case that the person who receive the services is not registered for VAT purposes in Cyprus.

The registration threshold in case of transactions within the Country is currently €15.600 but there is no limit in case where there is acquisition of services from abroad. 


VAT on e-services; one registration for all sales in EU
As from the year 2015 it is expected to adopt the concept of the “one-stop-shop” where one return could be filed for certain electronic services provided in the various EU member states. The supplier may opt to file a consolidated VAT return in his own country. On the return the supplier must specify how much VAT should pay in each country where he has customers. The home member state will have the obligation to transfer the equivalent funds to each member state.


Distance sales
A person based in another member state can be obliged to register for VAT in Cyprus in respect of distance sales to unregistered Cyprus persons. As a general rule, this liability arises at any time if the value of distance sales since the preceding 1 January has exceeded the distance selling threshold, which is €35,000. If you become liable to register under this rule you have 30 days in which to notify VAT service, but your registration becomes effective immediately when the liability arises.

If you make such distance sales of goods subject to excise duty, then you are liable to register for VAT from the outset. No registration threshold is relevant in this case.


Group registration
Provided certain criteria of control are met it is possible that two or more legal entities established within Cyprus to apply and register for VAT purposes as a group. This means that the group will be allowed to file a single return. Transactions between members of the group are considered as internal and outside the scope of the VAT legislation.

Officially, the VAT group will be treated as such after 3 months from the date that the authorities accepted the application.

A VAT group can be constituted only by legal entities that have residency in Cyprus or have a permanent establishment in Cyprus. Each person constituting the VAT group is severally liable for the VAT due by the VAT group. The joint and several liability of the individual group members terminates when the conditions for a VAT group are no longer fulfilled, provided the VAT group has given written notice to the tax authority that the conditions for a VAT group are no longer met. 

 

• Introduction
• Scope
• Registration
• Tax rates
• Reporting & filing
• General tax application/Time of supply