VAT in Cyprus: 5 Key Points Every Business Should Know

VAT registration is mandatory when your taxable turnover exceeds €15,600 in a 12-month period. You may also need to register in certain situations, even if you are below the threshold.

Yes. You can register voluntarily even if you haven’t reached the threshold. This can allow you to recover VAT on business purchases and expenses, which can improve your cash flow.

Cyprus has a standard VAT rate of 19%, with reduced rates of 9% and 5% applying to certain goods and services. Some supplies may also qualify for the 0% VAT rate.

The correct VAT rate depends on the goods or services you provide and the nature of the transaction.

For a VAT-registered business in Cyprus, the reverse charge generally applies to goods and services received from VAT-registered businesses in other EU countries, as well as to services received from suppliers outside the EU.

Goods imported from outside the EU are treated differently, with import VAT generally accounted for at Customs.

The purpose of the reverse charge is to shift the responsibility for accounting for VAT from the supplier to the recipient. Instead of the supplier charging VAT, the recipient calculates and reports the VAT through their own VAT return.

VIES is used to report qualifying sales of goods and services from a VAT-registered business in Cyprus to VAT-registered businesses in other EU countries. It allows EU tax authorities to exchange VAT information and monitor cross-border transactions.