VAT in Cyprus

• Categories of Supplies
• Transactions outside the scope of VAT
• Taxable Person
• VAT rates
  • Supplies with 9% VAT rate
  • Supplies with 5% VAT rate
  • Zero-rated supplies
  • Exempt supplies

Value Added Tax (VAT) is an indirect broad based consumption tax levied on supplies of goods and services provided in Cyprus and on imports.  The relevant law is "VAT Law 95(I)/2000 as amended".

VAT is levied on

• any supply of goods and services made within Cyprus
• where those goods and services are taxable supplies
• made by a taxable person for consideration
• during the course or furtherance of any business activity

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Categories of Supplies

• Taxable supplies; are supplies which have rates of 19%, 9% or 5% levied on them, and businesses who make taxable supplies can claim VAT input tax.  Imports of goods are a taxable supply irrespective of whether they are made by a taxable person or for private or business reasons, with or without consideration, VAT is imposed on imports at customs. 
• Zero-rated supplies; are supplies which have a rate of 0%  levied on them, such as exports, food and medicine.  Businesses who make taxable supplies can also claim VAT input tax.
• Exempt supplies; are supplies which are specifically exempted from VAT (listed in Schedule 7 of the VAT law), including, postal services, hospital services, medical care, dental, education, sports, cultural services, insurance, financial services and lotteries.  Businesses who make exempt supplies cannot claim VAT input tax.

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Transactions outside the Scope of VAT

The following are outside the scope of VAT

• recovery of second hand goods under a hire purchase agreement or an insurance contract
• transfer of a going concern
• assignment of rights in goods subject to hire purchase
• disbursements by an agent
• services by an auctioneer in connection with the sale of goods
• supplies made outside Cyprus
• supplies made by a person who is not a taxable person
• supplies made that are not in the course or furtherance of a business (private transactions)

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Taxable Person

A taxable person is a person who carries on a business and is registered or required to be registered for VAT. 

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Reverse Charge

See Services Provided from outside Cyprus to Cyprus Entities (Reverse Charge)

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VAT Rates

The default rate of VAT is 19%, certain supplies have reduced rates of 5% or 9% as below (please note these are not complete listings)

Supplies with 9% VAT rate

• Restaurants, catering for food (excluding alcohol which is 19%)
• Accommodation by hotels, letting of campsites and caravan parks
• Transport by buses and taxis

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Supplies with 5% VAT rate

• Certain foods, e.g. confectionery except biscuits and cakes, but including those wholy or partly covered with chocolate, ice-cream
• Books, newspapers and magazines
• Bottled water (but ice tea and ice coffee is 0%)
• Burial services
• Gas
• Adminssions to cultural events, cinemas
• Hairdressing services 
• Renovations and repairs of private dwelling (excluding costs of materials)

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Zero-rated supplies

• Exports of goods to third countries (non EU)
• Food for human consumption (see exemptions above)
• Pharmaceutical products
• Veterinary vaccines and services 

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Exempt Supplies (no claim for VAT input tax)

• Land and buildings
• Lotteries
• Financial transactions
• Insurance
• Education
• Medical care by registered doctors, dentists etc.
• Hospital and medical care
• Postage stamps and postal services
• Social welfare and social security work
• Dental care
• Sports and cultural services

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