Value Added Tax
Rates & Exemptions
There are three rates for value added tax (VAT): the standard rate of 15 per cent, which was introduced on 1st January 2003; the reduced rate of 5 per cent, which came into force on 1st January 2000; and zero rating for certain goods and services.
Since 2002, VAT rating has changed on a number of goods, but below are the main items currently included in each category. VAT regulations have still not been finalised since the country’s EU accession, so always check the latest situation with your financial adviser or lawyer, especially when buying property.
Since 1st May 2004, when Cyprus joined the European Union, VAT has applied to all new properties, except those where the application for planning permission was submitted to the Planning Department before 1st May 2004. (Previously all immovable property had been exempt from VAT.) First-time buyers qualify for VAT at the reduced rate (5 per cent); all other buyers must pay VAT at the standard rate (15 per cent).
Exemption from VAT
Certain goods and services are exempt from VAT, including rents, medical services and insurance and financial services. (The difference between exemption and zero rating is that businesses that supply only exempt products may not recover any VAT they’ve been charged.)
Zero Rate
Zero-rated good and services include supplies of goods to other EU member states, exports, certain foods, medicines, children’s clothing, international air and sea transportation, and commissions received from abroad.
Reduced Rate
Reduced rate goods and services include new property (first-time buyers only), animal feed, accommodation in hotels and tourist establishments, refuse collection, and books, newspapers and magazines.
Standard Rate
This is imposed on all goods and services, except those that are exempt or at the reduced rate, including new property (other than for first-time buyers).
Also in this section
- Banks: Where to manage your finances
- Accounts: How to open a bank account in Cyprus
- Cash, Cheques & Credit Cards: How to use them
- Cost of Living: What is the cost of living in Cyprus?
- Importing & Exporting Money: How to receive and transfer money
- Taxes in Cyprus: An introduction to Cyprus' tax system
- Income Tax Liability: Who is liable to pay income tax?
- Taxable Income: What part of my income is taxable?
- Taxation of Foreign Pensions: How will your pension be taxed in Cyprus?
- Taxation of Property Income: How much is tax on property income?
- Income Tax Rates: Calculating your income tax
- Calculation & Tax Return: Filing and payment
- Immovable Property Tax: Who needs to pay it?
- Capital Gains Tax: Who needs to pay it?
- Value Added Tax: Rates & Exemptions