CYPRUS: COVID-19 VAT IMPLICATIONS

CYPRUS– Update 23rd September

COVID-19 VAT RELATED MEASURES

• Temporary deferral of VAT payments for certain businesses
• Temporary change of VAT reporting periods and due VAT payments for certain businesses
• Temporary reduction from 9% to 5% VAT rate for certain hospitality and travel services

QUICK FIXES IMPLEMENTATION IN CYPRUS

• Amendments to Article 10 of VAT Law in respect of the place of supply of goods in certain chain transactions
• Amendments to Article 42C of VAT Law in respect of the Recapitulative (VIES) Statements

VARIOUS AMENDMENT OF THE VAT LAW

• Changes concerning the write off of VAT debts
• Changes in certain definitions
• Changes in the local reverse charge provisions
• Refund of VAT credit balance
• Increase of certain monetary penalties
• Important changes to the VAT registration obligations of non-established taxable persons
• Correcting omissions and inaccuracies

Source Credit – VATupdate.com

CYPRUS– Update 15th June

Commission approves €33 million Cypriot scheme deferring payment of VAT to support companies affected by coronavirus outbreak

The European Commission has issued a release announcing its approval of a EUR 33 million Cypriot scheme to ease the liquidity constraints of companies affected by COVID-19.

The European Commission has approved a €33 million Cypriot aid scheme deferring VAT payments to ease the liquidity constraints of companies affected by the coronavirus outbreak. The scheme was approved under the State aid Temporary Framework adopted by the Commission on 19 March 2020, as amended on 3 April and 8 May 2020.

Executive Vice President Margrethe Vestager, in charge of competition policy, said: “The €33 million Cypriot scheme will allow the delayed payment of VAT by companies affected by the coronavirus outbreak. This will help businesses to address their immediate liquidity constraints and continue their activities in these difficult times. The Commission works in close cooperation with Member States to swiftly approve measures during these difficult times, in line with EU rules.”

The support measure

Cyprus notified to the Commission under the Temporary Framework a scheme allowing companies facing difficulties due to the coronavirus outbreak to delay the payment of VAT due by 10 April, 10

May and 10 June 2020. Under the scheme, no interests or penalties are imposed on those companies that will pay the due VAT by 10 November 2020 instead. The total estimated budget of the measure is €33 million.

The scheme will be accessible to companies of all sizes and all sectors, except the sectors which continued to operate during the lockdown in Cyprus. The aim of the scheme is to ease the liquidity constraints faced by those companies that are most severely affected by the economic impact of the coronavirus outbreak, thus helping them continue their activities.

The Commission found that the scheme notified by Cyprus is in line with the conditions set out in the Temporary Framework. In particular, the support is granted before 31 December 2020, and the end date of the deferral is 10 November 2020, thus before the end date of 31 December 2022 defined in the Temporary Framework.

The Commission concluded that the Cypriot scheme is necessary, appropriate and proportionate to remedy a serious disturbance in the economy of a Member State, in line with Article 107(3)(b) TFEU and the conditions set out in the Temporary Framework.

On this basis, the Commission approved the measures under EU State aid rules.

Source Credit – Orbitax

CYPRUS– Update 8th June

The Cyprus VAT Association (CYVA) has realised its first webinar ‘VAT: Measures against the pandemic’

The Cyprus VAT Association (CYVA) has released its first of a series of online seminars, titled ‘VAT: Measures against the pandemic’
The 40-minute-long, pre-recorded webinar is delivered in Greek by the Chairwoman of CYVA, Demetra Constantinou, and is now available for general viewing.
The webinar

• presents the VAT measures that were adopted in Cyprus to combat the financial effects of the Covid-19 pandemic;
• outlines the measures that were announced but were never adopted;
• sets forth various VAT measures and suggestions by CYVA to soften the adverse effects of Covid-19 on the economy.

The webinar is addressed to anyone dealing with VAT in both the private and public sectors.
Ms. Constantinou is a partner with Kinannis LLC and heads the law firm’s Accounting & VAT Department.
CYVA was established in 2019 with the aim of providing a unified and independent voice to all professionals and businesses in Cyprus on VAT matters.
Its main objectives are to promote VAT, legal and related matters with the Government, the House of Parliament and the Tax Department for the purpose of adopting and implementing them. Also, to contribute to the proper adoption of VAT European Directives and Regulations, to help modernise and simplify the Cyprus VAT legislation, and to liaise and consult with the European Commission and other international bodies on Cyprus VAT matters.
 
Source Credit – VATSolutionscyrpus
 CYPRUS– Update 2nd June

Cyprus: plans to temporary reduce the VAT rate on restaurants and hotel accommodation from 9% to 5% as from 1 July 2020 until 10 January 2021

On 27 May 2020, the President of the Republic of Cyprus, Mr. Nicos Anastasiades, announced a set of new measures to be taken by the Government to support the economy in view of the COVID-19 crisis.
One of the new measures to be taken up concerns VAT. In particular, it was announced that “in order to strengthen the sector of tourist accommodation and catering, the reduction of VAT has been decided from 9% to 5% for the period from 1st July 2020 until 10 January 2021″.
It is noted that the announced VAT measure has not yet been enacted into law, hence further updates are to be expected.
 
Source Credit – PIO.Gov
 

CYPRUS– Update 29th April

Changes to VAT periods and deadlines

As per a VAT decree issued by the Cyprus Tax Department on 16th of April 2020 which is part of the COVID-19 Government measures for the Cyprus economy.

The following VAT returns reporting periods and respective deadlines would apply:

Thereafter the following monthly VAT return periods would apply up to 30/6/20:

Source Credit – BDO Cyprus

CYPRUS– Update 21st April

Extended submission deadline of VAT returns and VAT payments

New VAT measures were taken by the Cyprus Council of Ministers in an attempt to counteract the negative impact of Covid-19 on the 16th of April 2020.Until the 16th of April two measures had been passed into law as follows:

1. The suspension of the VAT payment for the VAT quarter ending on the 29th of February 2020 which was due by the 15th of April 2020, to the 10th of November 2020, which was passed into law on the 27th of March 2020. 

This law exempts certain categories of businesses as follows:

Producers of Electricity Collection and distribution of water (for water supply)

Groceries and supermarkets that are mainly for food Convenience stores and mini markets• Retailing of a variety of goods in department stores where food, beverages and tobacco are not predominant Retail of fruit and vegetables – fruit shops Retail sale of meat and meat products including poultry Retail sale of fish and seafood-fish and molluscs

• Retail sale of bread, other bakery and confectionery products
• Retail sales of fuel
• Retail sale of computers, peripherals and software including video games
• Retail sale of books
• Retail sales of newspapers and stationery• Retail sales of toys of all kinds except video games
• Pharmacies
• The Cyprus Telecommunications Authority (“CYTA”)
• Internet services
• Satellite telecommunications services
• Other telecommunication services besides CYTA 

Consequently, the aforementioned businesses which are not considered to be impacted by the pandemic, are not eligible to the suspension of the VAT payment. They have to follow the provisions of the law and pay the relevant VAT on time.

2. On the 2nd of April 2020, the decree ΚΔΠ 145/2020 passed into law providing that certain businesses will be liable for monthly VAT payments of 30% of the vat due by the 15th day of each month, as a measure to boost the liquidity of the budget. On the 16th of April 2020 a new decree was published in the official gazette ΚΔΠ 170/2020 cancelling the previously issued decree (ΚΔΠ 145/2020) published on the 2nd of April 2020.

The new decree ΚΔΠ 170/2020, refers to specific businesses. It particularly mentions that only the businesses which have been notified by the Department of Taxation through the e-mail they have provided to Taxisnet, are affected. In a nutshell, the decree ΚΔΠ170/2020 provides for the following:

1. Change of the duration of the VAT returns;
2. Change of the deadline for submission of the relevant VAT returns to the 27th day following the end of each reporting period;
3. Partial VAT payment for some businesses, by enabling them to only discharge 30% of the total VAT due as at the date of submission of each VAT return (i.e. 30% of the VAT due as per the current VAT return + 30% of the VAT due referring to previous VAT returns).

Change of the duration of the VAT returns and respective deadline for the submission of the VAT Return and payment of the VAT due

In particular, the duration of the VAT returns of the notified companies will change so as all affected companies to submit their VAT returns and pay the relevant amount of VAT due by the 27th of April 2020 as follows:

Thereafter, as from April, all affected companies to be liable to submit monthly VAT Returns until June 2020, by the 27th day of the month following the reporting month as follows:

Source Credit – Kinanis

CYPRUS– Update 17th April
The Cypriot Tax Authority has announced temporary extensions of VAT payment deadlines will be enacted for the majority of businesses. The previous turnover condition has been removed. It is necessary to submit VAT returns on time to benefit from the deferral and the payment of any deferred VAT must be made before 10 November 2020. The previously proposed VAT rate reductions have been withdrawn. The businesses that are excluded from the deferral include those involved in the retail of food, books and newspapers, computers and toys.  

Source Credit – Accordance VAT

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