Complete Guide to VAT in Cyprus 2024

A comprehensive guide to understanding VAT obligations, rates, and compliance requirements for businesses operating in Cyprus.

VAT in Cyprus: A Comprehensive Overview

Value Added Tax in Cyprus is governed by the VAT Law of 2000 (as amended), which aligns with EU VAT Directive requirements. Understanding your VAT obligations is fundamental to running a compliant business in Cyprus.

VAT Registration

Mandatory Registration

You must register for VAT if:

• Your taxable supplies in any 12-month period exceed €15,600
• You reasonably expect your supplies to exceed this threshold in the next 30 days

Voluntary Registration

Businesses below the threshold can voluntarily register for VAT. This is beneficial if:

• Your main customers are VAT-registered businesses (they can reclaim your VAT)
• You have significant VAT-reclaimable expenses
• You want to project a more established business image

VAT Rates in Cyprus (2024)

Standard Rate: 19%

Applied to most goods and services not qualifying for reduced rates.

Reduced Rate: 9%

• Hotel accommodation and related services
• Restaurant and catering services
• Passenger transport
• Minor repair of bicycles, shoes, clothing

Further Reduced Rate: 5%

• Books and newspapers
• Pharmaceutical products
• Medical equipment for disabled persons
• Food products (certain categories)
• Social housing

Zero Rate: 0%

• Exports of goods outside the EU
• International passenger transport
• Certain financial and insurance services
• Intra-EU supply of goods to VAT-registered buyers

Input Tax Recovery

Businesses can recover input VAT on purchases used for making taxable supplies. Input tax cannot be recovered on:

• Business entertainment expenses
• Private use of vehicles
• Purchases related to exempt supplies

Partial exemption applies when a business makes both taxable and exempt supplies - you can only recover the proportion of input tax relating to taxable activities.

VAT Invoicing Requirements

A valid VAT invoice in Cyprus must contain:

1. Sequential invoice number
2. Invoice date
3. Supplier's name, address, and VAT registration number
4. Customer's name and address
5. Description of goods/services supplied
6. Date of supply (if different from invoice date)
7. Net amount, VAT rate, VAT amount, and gross total
8. Customer's VAT number (for B2B transactions)

Related: cybooks generates compliant invoices with sequential numbering and correct VAT rates out of the box.

Special VAT Schemes

Cash Accounting Scheme

Available to businesses with turnover under €2 million. VAT is accounted for when payment is received/made rather than when invoices are issued.

Flat Rate Scheme

Simplified scheme for small businesses - you pay a fixed percentage of turnover rather than calculating exact VAT.

Margin Scheme

For dealers in second-hand goods, art, antiques - VAT is calculated on the profit margin rather than the full selling price.

Compliance Calendar