Value Added Tax (VAT) in Cyprus 

The correct application of VAT becomes particularly important when Cypriot companies are actively used in cross-border trade in goods and services, as well as in business structuring. A clear understanding of how the VAT system functions, including registration procedures and reporting requirements, enables companies to comply with their obligations in a timely and proper manner.

VAT: General Information

By registering a company in Cyprus, entrepreneurs can benefit from the advantages of this jurisdiction, including relatively moderate tax rates. The corporate tax system in Cyprus includes value added tax (VAT), among other taxes.

VAT is imposed on the following operations:

• the supply of taxable goods and services within Cyprus;
• the acquisition of goods from other EU Member States; and
• the import of goods into Cyprus from third countries.

In fact, VAT is borne by the final consumer, while the taxpayer (i.e., the Cypriot company) acts as a tax agent, collecting VAT from customers and paying it to the state. This is why VAT is classified as an indirect tax.

VAT in Cyprus is governed by the Value Added Tax Law (95(I)/2000), as amended, which was adopted to implement EU Directive 2006/112/EC of 28 November 2006 on the common system of value added tax.

VAT rates in Cyprus

Depending on the category of goods and services, the following rates apply:

Rate	Goods and Services
19%	The standard VAT rate applies to all goods and services in Cyprus which are not subject to the zero rate or the reduced rates.
9%	Applies, for instance, to: catering and hotel accommodation services, transportation of passengers and their luggage within Cyprus, as well as  certain services and supplies of goods by nursing homes.
5%	Applies to: the supply of foodstuff (subject to certain exceptions),  the supply of pharmaceutical products and vaccines, hairdressing services, certain renovation and repair works relating to residential property, as well as other goods and services.
3%	Applies as of July 2023 to: books and periodicals, specialized appliances and medical devices, certain utility services and admission to cultural events.
0%	Applies to: the export of goods,  international transportation of passengers,  certain operations relating to aircrafts and sea vessels used on international routes, as well as certain goods.

Moreover, a number of operations are exempt from VAT, such as:

• rental of residential property;
• financial services (subject to certain exceptions);
• medical and educational services (under certain conditions);
• postal services, among others.

Company Registration for VAT in Cyprus

As in many other countries, VAT registration in Cyprus may be either mandatory or voluntary. Thus, a company must register for VAT in Cyprus if, for instance:

• the value of taxable supplies exceeds EUR 15,600 over the last 12 months;
• the value of taxable supplies is expected to exceed this threshold within the next 30 days;
• it acquires goods from other EU Member States with a total value exceeding EUR 10,251.61 within a calendar year;
• it is involved in the intra-Community supplies of goods or services;
• it receives services from foreign counterparties where the reverse charge mechanism applies to such services, provided that the threshold of EUR 15,600 is reached within 12 consecutive months.

Companies with turnover below the indicated threshold have the option to register for VAT voluntarily. Companies that carry out operations not subject to VAT but entitling them to input VAT recovery are also eligible for voluntary registration.

VAT registration is carried out electronically through the tax portal. An application must be completed in the prescribed form. In certain cases, supporting documents and an additional questionnaire may be required.

As a rule, the registration process takes up to two weeks, although a VAT number may be issued within a shorter period.

Registering a Company in the OSS system

Within the European Union, the One Stop Shop (OSS) system is applied as a unified VAT administration mechanism. In its current form, the OSS system has been functioning since 2021. It is an electronic portal through which companies can comply with their VAT obligations across the EU on a centralised basis. 

Although the usage of this mechanism is not mandatory, it allows taxpayers to:

• register for VAT in one EU Member State for all distance sales of goods and cross-border supplies of services to retail consumers within the EU;
• submit a single VAT return covering all supplies and pay VAT to one state;
• interact with the tax authority of their country of registration.

One of the key changes affecting the use of the OSS system is connected with the introduction of new sales thresholds for cross-border trade in goods. Once the threshold of EUR 10,000 is exceeded, VAT is due in the Member State of the customer.

Under such circumstances, the use of the OSS system is advisable, as it allows companies to register in one EU Member State and comply with their VAT reporting and payment obligations on a centralised basis.

Reporting and Payment of VAT in Cyprus

Apart from the requirements to prepare audited financial statements in Cyprus, the law establishes an obligation to file tax returns.

Thus, a Cypriot company is required to submit a quarterly VAT return. The tax must be paid by the 10th day of the month following the end of the reporting period.

The legislation provides for the following penalties:

Violation	Penalty
Late registration with the tax authority	EUR 85 for every month of delay
Late submission of VAT return	EUR 100 for each return
Late payment of VAT	10% of amount due

INTRASTAT and VIES

As Cyprus is a member of the European Union, additional VAT reporting requirements are imposed on Cypriot companies at the EU level.

INTRASTAT and VIES are used for collecting statistics on the movement of goods between EU Member States, as well as for information exchange.

INTRASTAT

Key Features	Description
Purpose	To collect statistics on the trade in goods within the EU. INTRASTAT applies only to the actual movement of goods and does not cover the provision of services.
Companies’ Obligations	Once the relevant thresholds are exceeded, a company is obliged to register in the system and file monthly declarations on the movement of goods within the EU. For 2026, the following thresholds apply: EUR 380,000 for import of goods into Cyprus from other EU Member States and EUR 75,000 for dispatches of goods to other EU Member States. Late submission of declarations is subject to penalties.

VIES

Key Features	Description
Purpose	To exchange information on VAT operations between the tax authorities of EU Member States.
Companies’ Obligations	Companies are required to register in the system regardless of their turnover and must submit VIES declarations no later than the 15th day of the month following the reporting period. Declarations must be submitted in all cases, even if no operations were carried out during the reporting period. Late submission of VIES declarations is subject to penalties.

Reverse Charge Mechanism

Under the reverse charge mechanism, the recipient of goods or services must account for taxable goods or services on their VAT return and pay VAT to the tax authority. In this case, the supplier shall not include VAT in their invoices.

In Cyprus, the reverse charge mechanism applies when services are provided by suppliers situated outside Cyprus to a person situated in Cyprus, provided that the following conditions are met:

• the recipient is a taxable person in Cyprus,
• the place of supply is Cyprus,
• the services are not subject to the zero VAT rate or exempt.

Failure to apply the reverse charge mechanism results in penalties. In particular, a penalty of EUR 200 per tax period may be imposed, capped at EUR 4,000.

Registration of non-residents for VAT purposes

Specific rules apply to individuals and legal entities that are non-residents of Cyprus and do not have a permanent establishment there. Such persons are required to register for VAT if they provide taxable supplies in Cyprus. In this case, no minimum threshold applies.

VAT registration in Cyprus is mandatory if:

• the person provides taxable supplies in Cyprus or expects to provide taxable supplies within the next 30 days;
• the operations are related to the person’s business activities;
• the person has no business or permanent establishment in Cyprus; and
• the person has not been already registered for VAT in Cyprus.

VAT registration is completed online by submitting an application in the prescribed form together with supporting documents. A VAT number is typically issued within one or two days.

Failure to comply with the registration requirements may result in penalties. In particular, the tax authorities may register the taxpayer on their own initiative retroactively and impose a fine of EUR 85 for each month of non-compliance.

Conclusion

VAT for companies in Cyprus is regulated at both the national and EU levels. To apply VAT rules in a proper manner, it is important to consider the following key points:

• VAT applies to a wide range of taxable operations involving the supply of goods and services within Cyprus, as well as to certain international supplies;
• Companies carrying out taxable activities in Cyprus are required to register for VAT upon reaching the relevant turnover threshold, and in some cases regardless of its value.
• After registration, taxpayers are required to regularly file tax returns and comply with their tax payment obligations.
• The standard VAT rate in Cyprus is 19%, while reduced rates, as well as a zero rate or exemptions, apply to certain categories of goods and services.
• Cyprus VAT is also governed by special rules relating to intra-EU supplies, along with specific administrative mechanisms.