VAT Rates in Cyprus
Contributed by E R Team Global Consultants Ltd
26 June, 2020
VAT Rates in Cyprus are now at 19% (the general one), 8% , 5% and 0%. The general tax environment in Cyprus offers great opportunities and incentives to Cyprus companies of foreign ownership as the corporate tax rate in only 12.5%, it is zero on dividends, only 2.5% on revenues from IP property, and zero on revenues from trading in securities. Cyprus VAT is levied on all goods imported in the country or services rendered or given in the country. However all companies carrying trading or rendering services even offshore must secure a VAT registration number. This is an EU regulation so that it can control and check the movement of goods and services in the EU through the vies system. VAT Rates in Cyprus have been steady for many years and after the recent increase they should stay low for a long time. Our company can secure a VAT number in about 48 hours.
VAT Rates in Cyprus : Cyprus VAT Registration Number
All Companies must secure a VAT Registration Number if:
- Its total taxable supplies in the last 12 months amount to EUR 15.600 or are expected to amount to as much in the next 30 days.
- If it provides services to any E.U, V.A.T registered clients.
- If it is offering 0 rated services or goods.
- If it is acquiring goods from other E.U member states from persons or companies who offer exempt services or goods.
- It is a non-profitable organization with a threshold of EUR 10.250. Late registration with the VAT authority involves paying a fine of EUR 85.00 for every month.
VAT Rates in Cyprus at the moment are as follows
- The standard VAT rate is now 19%.
- Reduced rates of 8% apply to hotels, restaurants, catering etc.
- Also reduced Rates of 5% apply to fertilizers, pharmaceuticals, vaccines, books etc.
- Zero Rate apply to exportation of goods. Also no VAT is payable for B to B sales, or for goods, products, commodities that are not physically imported. Therefore the so called triangular trading gives tremendous opportunities to foreign investors.
- Exempt: Hospital and medical services, training etc.
Delay submitting the VAT returns entails paying a fine of EUR 51.00 (one-off). A delay in the payment of any tax owed is subject to a 10% fine and a 5% interest. Registered companies must submit a declaration every 3 months. Such returns can be filed in 40 days after the end of the 3-month period.
Cyprus Accounting - Cyprus Accountants
Cyprus accountants offer very high-quality accounting services. Our company cooperates can offer you all the accounting, audit and VAT services you will need for the operation of your company. The following list of accounting services are offered to all our clients:
- Full bookkeeping for the maintenance of your statutory books and records.
- Preparing and providing you with financial statements in accordance with IFRS (International Financial Reporting Standards).
- We can prepare for you management accounting reports.
- Guidance in setting up your company's computerized accounting systems for including training of your personnel in maintaining proper records and ongoing assistance on a consultancy basis.
- The preparation of annual tax computations.
- Preparing and submitting of your provisional tax declarations and paying of taxes due.
- We provide you with preparation, submission and maintenance of VAT returns.
- We take care of your monthly vies and Intrastate needs.
- Our firm will also provide for you the preparation of budgets to assist you for a cost effective administration and management of your company.
- Feasibility Studies including market research.
- Payroll services including preparation and processing of monthly payrolls.
- Management payment of tax and social insurance contributions.
- Submission of periodic tax returns.
Article 141 of the Company Law provides that each company must "keep proper books and accounts". The Company Law also provides penalties if no accounts are kept. The Assessment and Collection of Taxes Law 118(1)/2002, requires that every transaction of a company must be supported by relevant documentation such as bank statements, written agreements and invoices (sales and purchases). The VAT Law 246/90 and its amendments, art. 43, also provides that all such books must be stored and be available for inspection, for at least 7 years. Company Law Cap. 113, art. 142, enacts that all companies are required to ensure that financial statements on IFRS (International Financial Records Standards) are drawn. All companies also are required to appoint qualified local accountants and auditors. The audited accounts of a company must also be submitted to the Registrar on the 31st of December following the tax year audited, by submitting form HE32, on the pain of penalties if it is not submitted. Auditing is of the highest quality and ethical standards. Accountants are well organized and most are educated in the best European Universities.
Tax Residency of a Cyprus Company
A company is considered to be Tax Resident locally and pay tax at only 12.5% if its management and control are in the island. A company to have its management and control in locally must have:(a) Its registered office in the country (b) The majority of directors are persons or Cyprus IBCs, which are tax resident in the country. (c) The board of directors of such company meetings is held locally. A company's financial year begins on the 1st of January each year and ends on the 31st December. The tax return for each financial year must be filed with the Income tax authority at the latest on 31st December of the next year following the end of the company's financial year. A penalty of EUR 100.00 or EUR 200.00 is imposed for late submissions. A company which is not tax resident locally as described above, does not have to pay taxes. It has to keep and submit accounts to the inland revenue department however. Despite the above, it has to register in some other country in which it is trading for tax payment purposes or it is risking infringing the laws of that country. If a company is trading only through a website then it can avoid paying tax in any given country, but the laws of each country have to be examined carefully to verify this.
Provisional Tax Returns - Payment of Provisional Tax
By the 1st of August each financial year, all companies must file a provisional tax return to the income tax authorities. This return must include the taxable profits estimated to be realized for the fiscal year and also the tax payable. Such tax is payable in 3 installments, the first being on the 1st of August, the second installment is payable on the 30th of September and the third on the 31st of December. If the provisional tax declared and paid is less than 75% of the actual tax to be paid, then a penalty is imposed on the whole corporate tax payable of 10%. After payment of the provisional taxes the final payment of any corporate tax owed is done by the 1st of August of the next year, following the tax year in assessment. Late payment of involves paying 5% more as penalty. Such payments can be done in cash at the offices of the tax authorities in each town or online or through one's accountants. An arrangement for payment by instalments can be made with the District Director of the tax authorities but fines are fines.
Registration with the Tax Authority
By an amendment of the law, all companies must register with the tax department and get their TIC (Tax Identification Code) within 60 days from the date of their registration. The actual registration of a company with the tax authority is not a complicated process. It can be done in a couple of days by your provider. Failure to comply as above involves the payment of EUR 100.00 fine. By sect. 142 of the law, Cap. 113, directors of a company who do not comply with the above provisions can be punished with up to 1 year imprisonment or EUR 1000.00 fine or to both.
De-Registration from the VAT Authority
If a company is inactive (for a long time) or ceases to make taxable supplies, it can apply to the Commissioner for Cyprus VAT to de-register from the register. After a brief investigation the Commissioner de-registers.
« Go Back to Articles