VAT administration

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VAT Administration

Cyprus has been a member of the European Union since 2004 and is system for Value Added Taxes (VAT) is fully harmonized with relevant EU Directives in the field of VAT. According to the Cyprus VAT law, Cypriot VAT is due over the supply of services and goods (deemed to take place) in Cyprus. The general VAT rate in Cyprus is 19% whereas reduced rates of 9% and 5% may apply to certain supplies.

Cyprus companies have an obligation to register for VAT if the value of their supplies subject to VAT has exceeded € 15,600 in a certain 12 months period (or if such supplies are expected to exceed that level in the next 30 days).

However, Cyprus’ VAT law also provides for the possibility of voluntary VAT registration for companies that are able to submit proof of activity such as a contract for the supply of goods and/or services, an invoice for such supply or an agreement for the lease of office space in Cyprus.

We are in a position to offer all the required services in the field of VAT, such as VAT registration and VAT administration (i.e. the quarterly filing of VAT returns) to Cyprus companies. We can also assist Cyprus companies in obtaining refunds for overpaid Cypriot VAT (in our experience, Cyprus companies making overseas supplies are often in a net Cypriot VAT refund position, as their supplies usually qualify for a 0% rate but this still entitles them to deduction of Cypriot VAT suffered over domestic supplies such as fees charged by Cypriot lawyers, administrators, auditors etc.). Furthermore, we can take care of so-called VIES filing (a monthly obligation to report certain supplies to EU customers to the Cyprus Inland Revenue) for Cyprus companies.

Apart from the above, we are able to advise Cyprus companies on the Cypriot VAT aspects of their operations in general, including advice on how to optimize their Cypriot VAT positions, notably avoidance of unnecessary ‘VAT leakage’.

For example, in our experience, the use of Cyprus companies as holding- and (group) financing companies combined with charges from overseas supplies can have serious unforeseen, adverse Cypriot VAT consequences. We can also obtain rulings from the Cypriot Inland revenue regarding the Cypriot VAT consequences of (envisaged) operations conducted by Cyprus companies.