VAT in Cyprus

Cyprus is a member of the European Union (EU) and draws up its tax rules according to the laws or directives issued from Brussels by the EU. The current VAT directive applies to all 27 member states of the European Union, and it governs the rules on VAT compliance, and in some part, covers the setting of VAT rates.

As an EU member state, Cyprus is obliged to implement the VAT directives, which provides guidance on VAT. Where there is a conflict, the European Union’s directive takes precedence. Cyprus is a member of the European single market economy and uses the Euro (€) as its currency.

VAT registration in Cyprus

Both EU and non-EU businesses may trade in Cyprus without establishing a local presence. This is known as non-resident VAT trading. There is no VAT threshold in Cyprus for the registration of non-resident traders, but you will need one to record transactions and your Cypriot customers will want proof that you have obtained one.

There are strict rules on the situations where VAT registration is permitted. Common scenarios that require Cypriot VAT registration include:

• Importing goods into Cyprus;
• Organising live events, conferences, etc. in Cyprus;
• Holding goods in a warehouse in Cyprus as stock for resale;
• Buying goods within Cyprus that are subsequently re-sold in-country;
• Selling goods from Cyprus to other EU member states;
• Distance-selling to private individuals in Cyprus, e.g. internet retailing or trading through an e-commerce platform.

Registering for Cypriot VAT generally takes between four to six weeks once all documentation has been submitted to the tax authority, but this varies from seller to seller and will depend on the specifics of an individual company.

VAT compliance in Cyprus

There are detailed rules controlling the recording and processing of Cypriot transactions for VAT purposes. This includes guidelines on:

• Cypriot invoice requirements;
• When to issue a Cypriot tax invoice;
• Foreign currency reporting;
• Credit notes and corrections;
• Correcting entries from prior returns;
• Which accounting records must be maintained.

VAT rates in Cyprus