VAT Returns & Recovery in Cyprus
Taxable individuals and businesses in Cyprus are typically required to file their VAT returns using Form VAT 4 and pay any VAT owed on a quarterly basis.
The deadline for filing these returns is the 10th day of the second month following the end of the quarter, although repayment traders may be eligible to submit monthly returns instead. If the due date falls on a weekend or public holiday, an extension is given until the next working day.
Read more about VAT recovery and VAT returns in Cyprus in our comprehensive guide.
VAT Returns in Cyprus
Electronic Filing
In Cyprus, it is mandatory for taxpayers to file their VAT returns and VIES returns electronically, and they must do so by using the TAXISnet online portal. The TAXISnet portal allows taxpayers to securely submit their returns, and it is available 24/7, making it convenient for taxpayers to file their returns at any time.
Interest and Penalties
Interest
The current rate of interest on late payments of VAT in Cyprus stands at 4% per annum. According to Article 45(3) and (4) of the Cyprus VAT Law, any taxpayer who fails to file VAT returns or make payments on time is liable to pay an additional tax and is also subject to 9% interest per annum on the outstanding VAT from the due date.
Penalties
In Cyprus, taxpayers may face administrative penalties for various offenses related to VAT compliance, including:
- Failing to submit VAT returns on time, which can result in a penalty of €100 per return for regular VAT returns, €50 per return for VIES returns, and €15 per return for corrective VIES returns.
- Failing to submit a VIES return can lead to a penalty of up to €850 and may also be considered a criminal offense.
- Late registration with the VAT authorities may result in a penalty of €85 for each month of non-compliance.
- Failing to keep books and records for the required six-year period or failing to provide information or documents during an audit, can result in a penalty of €341.
- Issuing unauthorized invoices can lead to a penalty of €85.
- Late payment of VAT can result in a penalty of 10% of the outstanding amount per year.
- As of July 1, 2021, failing to apply the reverse charge mechanism under Article 45(7B) of the VAT Law can lead to a penalty of €200 per tax period, up to a maximum of €4,000.
Global VAT Compliance can help you with all aspects of your VAT compliance in Cyprus. It is important to take actions before the Cyprus Tax Authority issues notifications, therefore, for more information, please contact one of our experts at support@gvc.tax
Selling in Cyprus?
VAT Recovery in Cyprus
In Cyprus, the sum of VAT payable for a specific duration can be lowered, and can even go below zero, by taking into account the credit for Cypriot VAT paid on particular purchases, which is commonly referred to as “input VAT.”
Deductible (recoverable) input VAT can be used to reduce VAT liability in Cyprus if certain conditions are met:
- The requirement that the claimant or the recipient of the supply must be a taxable person and that satisfactory supporting evidence is provided.
- The relevant goods and services must also be used for the business, and if they are used partly for personal purposes, an apportionment will need to be made.
- The input tax must relate to supplies that, if made outside of Cyprus, would have been taxable if made in Cyprus, and if exempt, fall within the de minimis rules.
VAT incurred on goods and services that are utilized for non-business purposes or personal use cannot be deducted or recovered as input VAT.
In addition, input VAT cannot be deducted if it pertains to the provision of goods and services utilized for the following purposes:
- Goods and services used for entertaining any person who is not an employee of the business.
- Purchases or expenses on private motor cars, except for the input tax on motorcar running expenses that can be claimed if it is incurred for business purposes.
- Supply of goods and services that are exempt, except in cases where the de minimis rules apply.
- Situations where a margin scheme is utilized
To maintain neutrality in the EU VAT system, input VAT deduction rules apply, including a de minimis threshold of around EUR 171 per month for exempt supplies. Failure to meet the deduction criteria means input VAT cannot be claimed.
Last Updated: 27/03/2024
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
