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1. When is a tax invoice issued;
2. When and how is the registration of a person cancelled;
3. When does a person become liable to be registered for VAT and what are the consequences if he fails to be registered? When is a person entitled to be registered?
4. What books and records must be kept and for how long?
5. Which transactions are charged with the VAT rates 18%, 8%, 5%, 0% and which transactions are exempted?
6. Where are the VAT offices located?
7. How can a person obtain a certificate stating that any amounts due to the VAT Service have been settled for the purpose of submitting tenders to the Government?
8. How does a person fill in a tax declaration, what happens if a tax declaration is submitted with wrong amounts, what happens if a person does not receive a tax declaration form on time and what are the consequences of failing to submit a tax declaration on time?


1. When is a VAT invoice issued;

As a general rule, every registered taxable person,

- who makes taxable supplies of goods or services to other taxable persons in Cyprus
- makes a supply of goods or services, other than an exempt supply, to a person in another member state
- receives a payment on account from a person in another member state for a supply that he has made or intends to make

, is required to provide them with VAT invoices.

This obligation does not apply if the supply involved is:
- made for no consideration;
- made by a taxable person that uses the Profit Margin Scheme.

Registered retailers may issue the "retail invoice", if the customer is a taxable person and asks for a tax invoice, provided that the consideration is below €85.


2. When and how is the registration of a person cancelled;
Registration is cancelled in the following cases:

(i) Cancellation of registration due to decreasing business turnover:

Where any registered person notifies the VAT Commissioner that the value of taxable supplies in one year has fallen below €13.668,81 and applies for cancellation of his registration, then αν authorised VAT officer, if satisfied of this fact, shall cancel the registration with effect from the date of the notification or from any other later date as may be agreed between the VAT Commissioner and that person.
(ii) Cancellation of registration due to termination of taxable supplies or termination of the intention to make taxable supplies
When a registered person ceases to make taxable supplies and is not entitled to remain registered or ceases to have the intention to make taxable supplies, he has to notify the VAT Commissioner of that fact within 60 days of the date of the termination, by submitting an “Application for Cancellation of Registration” (
Form VAT 204). Failing to comply, the person is liable to a levy of €85. If an authorised VAT officer is satisfied of the fact of the termination he shall cancel the registration with effect from the date that the person ceased to make taxable supplies or ceased to have the intention of making taxable supplies or from any other later date as may be agreed between the VAT officer and that person.

(iii) Retrospective cancellation of registration
When the VAT officer is satisfied that on the day when a registered person was neither entitled nor liable to be registered, the VAT officer can cancel the registration and the cancellation takes effect as from the above date.

Further information on Deregistration for the cases referred to in paragraphs (i) to (iii) above, may be found in information leaflet 4 “Deregistration.”

(iv) Deregistration in the case of Distance Sales

A person registered for making or intending to make distance sales in Cyprus, is liable to notify deregistration when he no longer makes or intends to make distance sales in Cyprus and he is not liable to register in Cyprus for any other taxable transactions.

(v) Deregistration in the case of Acquisitions

A person registered for making or intending to make acquisitions in Cyprus, is liable to notify deregistration when he no longer makes or intends to make acquisitions in Cyprus.

Further information on Deregistration for the cases referred to in paragraphs (iv) and (v) above, may be found in information leaflet 3A “Acquisitions and Distance Sales.”

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3. When does a person become liable to be registered for VAT and what are the consequences if he fails to be registered? When is a person entitled to be registered?

Liability to register

Taxable Supplies

According to the VAT legislation, every person making taxable supplies is liable to be registered in the following cases:

(i) At the end of any month, if the value of his taxable supplies in the period of one year then ending has exceeded €15.600
(ii) At any time, if there are reasonable grounds for believing that the value of his taxable supplies in the period of thirty days then beginning will exceed €15.600.

A person who by virtue of (i) is liable to be registered, is obliged to notify the VAT Commissioner of his liability by submitting an “Application for Registration in the VAT Register” (
Form VAT 101) to the local VAT Office, within thirty (30) days of the end of the relevant month and his registration is effective as from the end of the month following the relevant month or from such earlier date as may be agreed between the person and the VAT Officer.
If a person is liable to be registered by virtue of (ii), he is obliged to notify the VAT Commissioner of his liability by submitting an “Application for Registration in the VAT Register” (Form VAT 101) to the local VAT Office, before the end of thirty-day period to which the liability arises and the registration is effective as from the beginning of this period.
Failing to comply, the person is liable to a levy of €85 for every month or part of month of the delay or refusal or omission.

Acquisitions

Any person making acquisitions in Cyprus is liable to be registered:

(a) at the end of any month , the total value of that person΄s acquisitions from all other member States in the year beginning from 1 January has exceeded the registration threshold of €13.668,81; or
(b) at any time that there are reasonable grounds to believe that the value of the acquisitions that person would be making in the following 30 days alone will be over the registration threshold of €13.668,81;

A person making acquisitions according to the previous paragraph is liable to notify his/her obligation to be registered on Form VAT 106. Any person liable to be registered by virtue of paragraph (a) above is liable to notify within 30 days from the end of the month in which the liability arises. Any person liable to be registered by virtue of paragraph (b) above, is liable to notify by the end of the thirty day period in which the liability arises. Failure to comply, renders the person liable to a levy of €85 for every month of the delay or refusal or omission.

Further information on Acquisitions may be found in information leaflet 3A “Acquisitions and Distance Sales.”

Distance Sales

Any person making distance sales (sales from a person established in another member State), is liable to register fro VAT purposes in Cyprus and account for VAT in Cyprus, if in the period starting from the 1st January of the year, the value of distance sales exceeds €35.000. This person is liable to notify liability to register on Form VAT 105, within 30 days from the day that the liability arises. Failure to comply, renders the person liable to a levy of €85 for every month of the delay or refusal or omission.

Further information on Acquisitions may be found in information leaflet 3A “Acquisitions and Distance Sales.”

Other information
It is clarified that the liability of a taxable person to be registered exists whether or not he has submitted an application for registration. The VAT Commissioner is authorized by the Law to register a taxable person retrospectively, that is from the date that person was, according to the Law, liable to registration. If a taxable person liable to registration neglects to be registered, he is still liable to pay tax on all the supplies he made from the date he was liable to registration.
The VAT legislation provides that Governmental Authorities, Local Authorities and Public Authorities are not deemed to be taxable persons for the supplies of goods or services made by them in carrying out their mission. There are, however, certain supplies explicitly defined in the legislation, for which the aforementioned persons are considered taxable persons.

Entitlement to register

A person not liable to be registered is entitled to be registered in the following cases:
(i) Voluntary registration
If a person makes taxable supplies the value of which does not exceed the thresholds that would make him liable to be registered, then he is entitled to apply for voluntary registration by submitting an “Application for Registration in the VAT Register” (Form VAT 101).
(ii) Intending traders
If a person engages in a business and intends to make taxable supplies of goods or services, he is entitled to apply to be registered as intending trader by submitting an “Application for Registration in the VAT Register” (Form VAT 101).

If a person intends to carry out acquisitions or distance sales, he may submit Form VAT 106 or Form VAT 105 respectively.

The registration is effective from the date of the application or any other previous date as may be agreed between the VAT officer and the taxable person.

Additionally, farmers are entitled to voluntary registration, regardless of the value of the supplies they make in the period of one year, which consist of agricultural products of their own produce or agricultural services.

Relevant to the above is the information leaflet 3 “Registration in the VAT Register”.


Additionally, farmers are entitled to voluntary registration, regardless of the value of the supplies they make in the period of one year, which consist of agricultural products of their own produce or agricultural services.

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4. What books and records must be kept and for how long?

According to section 43 and the Tenth Schedule of the VAT Law, every taxable person must keep books and records and preserve them for at least six (6) years after the completion of the entries or deeds written therein, unless the VAT Commissioner, by relevant notification to the person concerned, fixes otherwise. Every taxable person has to keep books and records of all the taxable supplies of goods or services he makes or receives for the purpose of his business and for intracommunity transactions he makes. Books and records must be kept up-to-date, with adequate information and in a manner that enables taxable persons to use them to calculate the payable or claimable amount of tax and fill in tax declarations. Books and records must also be kept in a manner that VAT officers can easily examine them in order to verify VAT declarations but this manner should not be contrary to business practices. In addition VAT legislation provides for special arrangements concerning keeping books and records in connection with the special regimes i.e. Retail Schemes, Profit Margin Schemes etc.
Taxable persons must keep and preserve the required books and records at the premises of the business.
Relevant to the above is chapter VIII of the
VAT Guide, information leaflet 10 and information leaflet 12A on the Margin Scheme for Tour Operators. published by the VAT Service.

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5. Which transactions are charged with the VAT rates 18%, 8%, 5%, 0% and which transactions are exempted?

VAT is charged on every supply of goods or services at the standard rate of eighteen per cent (18%) (As from 13/01/2014 the standard VAT rate will be 19%). The reduced rate of 5% is imposed on the supply of coffins, services supplied by undertakers, services of writers, artists, on the supply of fertilizers, foodstuff for animal, live animals, seeds, non bottled water, newspapers, books, periodicals, certain products for persons with special need, ice cream, certain types of nuts (salted etc), transport of passengers and their accompanying luggage with urban and rural buses, the letting of camping sites and caravan parks.

As from 19 October 2007, the following are taxable at the reduced rate of 5%:
· hair salon services,
· repair and maintenance of private households (based on specific condition)
· animal feedstuff
· confectionary product
· bottled water
· Juices
· pharmaceutical products that were previously taxed at the standard rate of 15%
· entry fees to theaters, cinemas at sports events, luna parks and similar cultural events
    As from the 1st August, 2005, the following are taxable at the reduced VAT rate of 8% (From the 13/01/2014 the reduced rate will be 9%): transport of passengers and their accompanying luggage within Cyprus, with urban, suburban and rural taxis as well as with tour and suburban buses.
    The VAT reduced rate of 8% is also imposed as from the 1st January, 2006 up to 9/1/2011, on the services of restaurants and the supply of food in the course of catering (except the supply of alcoholic beverages wine and beer, which was chargeable at 15%, until the 09/01/2011. Since the 10/01/2011 it is chargeable at 8%), as well as on the provision of accommodation in the hotel sector or in sectors with a similar character. As from the 1st January, 2006, the transport of passengers and their accompanying luggage by sea, within Cyprus is taxable at the VAT rate of 8%.
    Certain supplies of goods or services are zero-rated; the supply, hiring and repair of sea-going vessels and aircrafts, the supply of services to meet the direct needs of sea-going vessels, the supply of goods entered into customs regime, the supply of medicines and food – except the supply of food in the course of catering. In addition, a supply of goods is zero-rated if the VAT Commissioner is satisfied that the goods have been exported or supplied to a registered person in another member state.
    No VAT is charged on supplies of goods or services which are exempted under the VAT legislation; leasing or letting of immovable property, the supply of immovable property with the exception of buildings or parts of buildings and the land on which they stand if the application for a building permit was submitted after the 1st May, 2004, financial services, lotteries, medical care, social welfare, education, sports, cultural services, insurance transactions etc.

    Since the establishment of V.A.T. legislation on the 1/7/1992 the changes for V.A.T. rates are shown in the table that follows:

    V.A.T. Rates

    Dates / Periods
    Standard Rate
    Reduced Rate 1
    Reduced Rate 2
    01/07/1992 - 30/09/1993
    5%
    ---
    ---
    01/10/1993 - 30/06/2000
    8%
    ---
    ---
    01/07/2000 - 30/06/2002
    10%
    5%
    ---
    01/07/2002 - 31/12/2002
    13%
    5%
    ---
    01/01/2003 - 31/07/2005
    15%
    5%
    ---
    01/08/2005 - 29/02/2012
    15%
    5%
    8%
    01/03/2012 - 13/01/2013
    17%
    5%
    8%
    14/01/2013 - 12/01/2014
    18%
    5%
    8%
    from 13/01/2014
    19%
    5%
    9%

    6. Where are the VAT offices located?

    V.A.T. Head Quarters
    Click
    here

    VIMA Section - VIES, INTRASTAT, MUTUAL ASSISTANCE, TAXISNET, EXEMPTION CERTIFICATES UNIT
    Click here
    Intrastat
    Click here
    Vies
    Click here
    Taxisnet
    Click here
    Exemption Certificates Unit
    Click here

    Nicosia Local V.A.T. Office
    Click here

    Limassol Local V.A.T. Office
    Click here

    Larnaka Local V.A.T. Office
    Click here

    Paphos Local V.A.T Office
    Click here

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    7. How can a person obtain a certificate stating that any amounts due to the VAT service have been settled for the purpose of submitting tenders to the Government?

    An application for this certificate must be in writing and may be sent by fax (Fax. No. 22 60 27 84). The application must contain the following Information:

    (i) Name, VAT Registration Number and telephone number of the taxable person
    (ii) The number of originals requested
    (iii) The deadline of submission of the tender.

    As long as certain conditions are met, the certificate is issued and may be collected at VAT Headquarters on the next working day, provided that the person produces a €1,71 stamp for each copy.

    For further information please contact us at 22 60 18 48.
    8. How does a person fill in a tax declaration, what happens if a tax declaration is submitted with wrong amounts, what happens if a person does not receive a tax declaration form on time and what are the consequences of failing to submit a tax declaration on time?

    Every taxable person is liable to submit Tax Declarations (Form VAT 4) and pay the tax that may be due, usually every three months. Tax declarations relate to certain tax periods that are made known to the taxable person at the stage of his registration. The VAT Service dispatches tax declarations to the last known address of a registered person. The liability to submit tax declarations exists regardless of the relevant form being received or not by the taxable person. Thus, if he has not received it on time, he should contact the VAT Office of his district and ask for the form to be reissued.
    Tax declarations must be submitted not later than the 10th day following the end of the month following the end of each tax period. If a tax declaration is not submitted on time, the VAT Commissioner will impose a levy of €51.

    On the tax declarations, taxable persons calculate their output tax (the tax on supplies of goods or services and acquisitions they made during the relevant tax period) and their input tax (the tax on supplies of goods or services made to them and acquisitions as well as the tax paid on the importation of goods). If the difference of the two amounts is positive, then that amount is paid to the VAT Commissioner (debit balance).
    If a taxable person finds out that he submitted a tax declaration with wrong amounts, he will have to correct the VAT Account he keeps for the tax period in which the mistakes are spotted. It must be noted than no correction of the VAT Account is allowed if a VAT Officer notifies the taxable person of a control visit.










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