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Customs and Excise Department

1. Which products are taxable in the Republic of Cyprus with excise duties and what are their applicable rates?
The taxable products and the applicable rates of excise duties are being set out in the Tables.

2. When do you applied total exemption or reduction in the level of taxation on taxable energy products?

A. Exemptions to the excise duty taxation

Under certain provisions and under fiscal control, total exemptions in the level of taxation are applied when energy products are intended for delivery:

i. to organizations and armed forces (article 23 -Directive 92/12/EEC) as well as for the armed forces of UK established in the Republic under the Treaty of Establishment,

ii. for the use as fuel for the purpose of air navigation or navigation within Community waters
iii. for the production of electricity (for at least 100MWh per annum)
iv. for the production of cement,
v. for the use in certain machineries/vehicles in agriculture, horticultural or piscicultural works and in forestry,
vi. as raw materials for the production of other goods (e.g. paints)

Also, biofuels used for transport purposes are exempted from the payment of excise duty under certain provisions.

B. Reduced rate of excise duty taxation

Reduced rate in the level of taxation is applied when energy products(gasoil and kerosene) are intended for delivery:

i. For the use as heating fuel
ii. For stationary motors,
iii. For the technological development of more environmentally-friendly products or in relation to fuels from renewable resources.
iv. For combined heat and power generation
v. For dredging operations in navigable waterways and in ports
vi. For purposes other than heating or propellant use

3. I want to receive energy products. What permits are needed by the Customs Department?

"Energy Products" are defined as the products referred to in Article 33 (1) of the Excise Duty Law No. 91(I)/ 2004 and are charged with excise duty in accordance with Article 36 of this Law. The duty rates are shown in the First Appendix of the Law which are displayed against each product respectively. Additionally, when imported (received from third countries), these products are burdened with import duty rates as specified in the Common Customs Tariff.

A . If you wish to receive from a Member State of the European Union energy products under suspension of the imposition of excise duty, you must ensure all the relevant permits from the Department of Customs.

These permits will cover both your capacity as a person who will be involved in owning and intra-Community movement of the products, and places where you will receive the energy products.

Depending on your status as a recipient, you will need to issue the following permits:

1. If you will receive energy products under suspension of excise duty in your own premises, you must ensure special permission from the Director of Customs for approval of premises to be used as a tax warehouse under Article 9 of Law 91 (I) / 2004 and Notification 311/2010 . Additionally required special permission from the Director as authorized warehouse keeper owner of the tax warehouse under Article 10 of the Law 91(I)/2004 and Notification 312/2010.

2. If you receive energy products under suspension in the warehouse of other warehouse keeper premises, you should secure a permit from the Director that you can use approved tax warehouse that the other authorized warehouse under Article 10 of Law 91 (1) / 2004 and the Notification 312/2010.

3. If you will receive energy products under the payment of Excise Duty, you should ensure you have special permission from the Director as registered consignee, in accordance with Article 13 of Law 91 (I) / 2004 and the Notification 313/2010 and314/2010.

With the issuance of these permits you will be given the registration number of Excise Duties which will occur at different administrative documents that accompany the products within the handling of.

B. In case you receive energy products from third countries you should secure permission of customs warehouse under the provisions of Regulation (EEC) No 2913/92, of Regulation (EEC) No 2454/93 for receipt and storage of energy products as well as the Order Notification no. 440/2004 issued under Article 56 (1) of Law 94 (I) / 2004.

Using the customs warehousing procedure you can receive imported energy products for storage without imposing customs and tax duties or commercial policy measures until they receive another destination from the Department of Customs.

In that respect I inform you that the same warehouses / tanks can be approved at the same time as tax warehouses and customs warehouses which will provide you with the ability to use them as storage of energy products without having to pay the customs any attributable tax charges both from other Member States of the European Union as well as from third countries.

Please note that customs and tax charges should be payable upon release of energy products for consumption, which can be done by filing the relevant declaration.

Additionally I inform you that with the Notification of the Director no. 351/2008, sets out the rates of loss that can be accepted for purposes of exemption from excise duty given that there is sufficient proof to the Director that the energy products that are under suspension exhibit losses during the procedure of import / entry and storage in the Republic and handling within the Republic from one tax warehouse to another through pipeline.

For any further information or clarification, please contact us at the following phone numbers: 22601875, 22601885 and 22605074.

4. You may conduct a blending of oils which are in a customs warehouse / Tax Warehouses?

In accordance with the Community provisions, for the products that are in the customs warehouse allows only the usual work to maintain them, improve their appearance or marketable quality or prepare them for distribution or resale by the tax warehouse keeper of energy products under the terms and conditions that the Director may determine, in accordance with the Notification of Director no.408/2004.

Typical tasks that may be performed are listed in Annex 72 of Regulation (EEC) No 2454/93. The specific permit may be granted from the Customs Control, conditional on submission of a written request under the term that the prescribed inspection fees or overtime fees will be paid when required.

Note that the blending of petroleum products does not fall the normal operations allowed under the customs warehousing procedure.

5. What is the level of guarantee required for / or licensing of bonded warehouses and energy tax warehouses?

The amount of guarantee that is required for the issuance of permits for bonded warehouses and tax warehouses for energy products shall be determined by the amount of any customs and tax duties of any warehouse as follows:

Customs and tax LEVELS IN €
11 to 500,000
2500,001 to 1,000,000
31,000,001 to 3,000,000
43,000,001 to 6,000,000
56,000,001 to 12,000,000
612,000,001 to 24,000,000
724,000,001 and above
550,000 or 1% of the customs and tax duties, whichever is greater

It is clarified that the above guarantee level is the minimum required for the respective category of customs and tax duties in which each warehouse falls within and this may be increased depending on the specifics of each warehouse taking into account other factors, such as historical records, the solvency of manager, the risk inherent in the activities etc.

Note that the amount of customs and tax duties of warehouses that are approved and operating in parallel as tax warehouses and bonded warehouses will be considered and a single guarantee will be deposited covering both guarantees, the amount of which will vary depending on the relevant category falling in which the customs and tax duties fall in.

6. In what circumstances the multiple petroleum products storage is allowed?

According to Article 8 of the Excise Laws of 2004 to 2010 the production, processing and holding under suspension of energy products, occurs within the bonded warehouses. Further in accordance with paragraph 4 (a) of the Notification of Director no. 311/2010 on General Tax Warehouses, it is possible to receive, hold and ship products to more than one authorized warehouse keeper, in exercise of the profession as defined in Article 10 of the Excise Laws of 2004 to 2010.

In cases where delivery of energy products from third countries occurs they should be saved in premises for which a license has been obtained for the customs warehouse, in accordance with the provisions of Regulation (EEC) no. 2913/92, of Regulation (EEC) no. 2454/93 for the receipt and storage of energy products as well as the Notification 440/2004.

Additionally I inform you that according to the Notification 411/2004 which was issued based on Article 49 of Law 91 (I) / 2004, energy products:

(A) imported placed under suspensive customs regime

(B) imported placed into free circulation with simultaneous release in a tax warehouse;

(C) locally produced, deposited in a tax warehouse,

(D) sent from a tax warehouse of another Member State of the European Union to a tax warehouse Republic

(E) moving between tax warehouses in the Republic received and stored in common by product approved tanks without being able to be physically separated. These products must be within the same eight-digit CN code, have the same commercial quality and the same technical characteristics.

Note that the authorized warehouse keeper’s accounts and reports should be kept and sent to the Director with respect to all the received and the delivered quantities, must register and take note of every class and type of energy products and their substitutes separately.

Note also that in the case where there is facility of products, accounts should be kept in total per product and any deficits in the absence of agreement between the cooperative warehouse keepers be allocated according to the quantities held by every warehouse keeper at the moment.

7. I want to produce biodiesel for use as motor fuel. What permits are required?

A. Biodiesel production

Biodiesel to be used as motor or heating fuel is considered energy product and its production should be performed on premises to be approved by the Director, under terms and conditions that he wishes to impose. Consequently, if you wish to produce biofuels you must secure a permit from the Department of Customs. In order to ensure the above permit, you must:

- possess or use a tax warehouse ∙

- to possess a permit of authorized warehouse keeper ∙

- to submit a statement for the biofuel production based on the form ED 25. Authorization granted on terms and conditions that are governed by the Notification 311/2010 for permission of tax warehouse, the Notification 312/2010 for permission of authorized warehouse as well as the Notification 134/2007 on the production of biofuels.

Applications must be submitted through the Chief of the customs office of the district in which the premises are located in which you intend to produce biofuels.

B. Taxation-Use of biodiesel

In accordance with Articles 36 (b) and 36 (c) of the Excise Law 91(I)/2004, excise duty, is imposed on energy products (including the most kinds of biofuels) and on any product intended to be offered for sale or used as motor fuel at the rate of the equivalent motor fuel specified in the First Appendix of the Law 91(I)/2004.

However, if the biodiesel is used as transport fuel it can be exempted from payment of excise duties according to Notification 405/2007. For the grant of such an exemption and for more information you can contact us at tel. ++357: 22601875, 22601885 and 22601759.

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