Book of Laws

VAT Update 15/2020, 20 August 2020

Various VAT changes published in the Official Gazette

Nicosia - 20 August 2020

 

The various VAT changes, voted recently by Parliament, were published today in the Official Gazette. 

 

In brief:
- VAT debts to be written off as per the Accounting, Financial Management and Financial Control Law

- 'Legal person' definition added
- Art 11B (local reverse charge in the construction industry) extended to transactions of taxable recipients with non-taxable suppliers 
- From 1 Oct 2020 - local reverse charge mechanism in respect of mobile phones, gaming consoles, laptops, etc (Art 11E)
- Suspending VAT refunds if failure to submit income tax returns timely + no interest 
- Right to claim VAT refunds of credit balances capped at 6 years 
- Late VAT return submission penalty increased to €100
- From 1 July 2021 - penalty for failure to apply reverse charge - €200/VAT return but not exceeding €4.000 in total
- 60-day deadline added for objections under Art 52A
- Interest due on VAT amounts payable to taxpayers after High Court decisions
- Changes to Art 54A - Tax Tribunal procedure 
- Removal of VAT registration threshold for non established taxable persons
- 'Renovation' definition amended in Part B of Sch 5
- Para 5 of Sch 6 restored - 0% international passenger transport
- Para 1(a)(vi) of Sch 8 amended replacing 'buildings' with 'immovable property'

Link to the Gazette (see pages 2 to 11 of the file)

Waiter Serving Wine with Ocean View

VAT Update 14/2020, 3 July 2020

Latest news from the Cyprus VAT Association - VAT on hospitality and transport temporarily reduced to 5%

 

Nicosia – As part of its efforts to boost the coronavirus-stricken economy, the Cyprus government has temporarily reduced the VAT rate that applies to certain services in the tourism, restaurant and transport industries from 9% to 5%.

The Council of Ministers, exercising the relevant powers granted under Article 18(2) and Article 18A(2) of the VAT Law 95(I)/2000-2020 as amended, issued Decree Κ.Δ.Π 268/2020 which amends Schedule 5 (supplies of goods and services subject to the reduced rate of 5%) and Schedule 12 (supplies of goods and services subject to reduced rate of 9%) of the Cyprus VAT Law.

The Decree was published in the Cyprus Official Government Gazette on 23 June 2020 and it is applicable for the period from 1 July 2020 until 10 January 2021 in respect of:

  1. Accommodation services provided by hotels and similar establishments, including the provision of holiday accommodation;

  2. Restaurant and catering services;

  3. Transportation of passengers and their accompanying luggage within the Republic by urban, intercity and rural taxis and by tourist and intercity buses.

 

Effectively, by removing the above items from Schedule 12 – where they are currently found – and inserting them in Schedule 5, the VAT rate applicable to the particular services is reduced from 9% to 5%.r 

For the further points to consider, please click at the source link here.

Catering

VAT Update 13/2020, 23 June 2020

Temporary reduction of the VAT rate applicable to hotel accommodation, catering and certain passenger transport services in Cyprus 

 

VAT Decree Κ.∆.Π. 268/2020 - published today, 23 June 2020, in the Official Gazette of the Republic of Cyprus - temporary reduction from 9% to 5% of the VAT rate applicable to:

(1) hotel accommodation
(2) restaurant and catering services, and
(3) passenger transport in urban, intercity and rural taxis and tourist and intercity buses,

for the period from 1 July 2020 until 10 January 2021.

Schedule 5 the Cypriot VAT Law (95(I)/2000-2020) is amended accordingly by adding sub-paragraphs (18), (19) and (20) respectively and Schedule 12 is amended by deleting sub-paragraphs (1), (2) and (3).

Link to the VAT Decree here (pages 5-6).

 Scales of Justice

VAT Update 12/2020, 14 May 2020

Log of the CJEU VAT decisions in 2020 (updated periodically)

Please find a link to a log of the decided during 2020 VAT cases from the Court of Justice of the EU.

 

The file will be updated periodically. The file also contains links to the decisions from Curia. Decisions, which are not available in English language, are included in the file in their Bulgarian version, however you can search Curia and find the respective decision(s) in your preferred language.

You can download the log (in MS Excel) here.

Open Space Office

VAT Update 11/2020, 13 May 2020

Extended Opening Hours for the Department of Taxation in Cyprus - from 18 May until the end of May 2020 only

From 18 May until the end of May 2020 (that is for two weeks), the Department of Taxation in Cyprus will be open for the public - at the announced locations - in the afternoons of Monday, Tuesday and Thursday from 14:30 until 17:30, in addition to the regular opening hours from 8:30 to 14:30. 

It is emphasised that visits in person are only allowed where there is no possibility to resolve the relevant matter by telephone or email.

Link (Greek) here.

Remote Office

VAT Update 10/2020, 30 April 2020

New Contacts at the Department of Taxation in Cyprus

 

Aiming to assist and to promote electronic communication - via email or telephone, the Department of Taxation in Cyprus published New Contact Details.

 

It should be noted that applications for VAT registrations, must be still submitted in original hard copies to the respective regional office for the process to be completed, even though a copy of the application forms can now also be submitted by email.
 

The telephone numbers and respective email addresses for contact with the Department of Taxation in respect of Indirect Tax (VAT) are:

Link (Greek) here.

VAT Update 9/2020, 17 April 2020

Covid-19: Council of Ministers New VAT Decree KDP 170/2020 (of 16 Apr 2020) 

 

 

We have prepared the attached table for better understanding of the provisions of the new VAT Decree KDP 170/2020 (of 16 Apr 2020).

 

PLEASE NOTE, only those taxpayers that have been notified by e-mail from the Tax Office in Cyprus are obliged to comply with the Decree. This is also confirmed by the yesterday's written Announcement of the Tax Department.

 

There is still uncertainly about the length of the reporting periods after 30 June 2020 for Stagger groups 2 and 3, which could be shorter or longer than 3 months in order to get back to the regular reporting periods. My table assumes longer periods but that might not be the case in the end. 

Link to the table.

VAT Update 8/2020, 16 April 2020 (updated 0n 21 April 2020)

Covid-19: Council of Ministers New VAT Decree KDP 170/2020 (of 16 Apr 2020) 

 

The VAT reporting periods of certain businesses have now been changed to monthly in respect of the period from 1 January until 30 June, with VAT payments due as per a defined schedule by a new deadline, being 27th of the month following the new reporting period. 

 

Some categories of those taxpayers will be required to pay 100% of the due VAT by the new deadline, while others will be required to pay 30% of the remaining VAT balance due at the end of each month by the new deadline. 

 

Further details are available from the two announcements made from the Department of Taxation in this respect. 

Link (Greek) to the Announcement 1 from the Department of Tax here.

Link (Greek) to the Announcement 2 from the Department of Tax here.

Link (Greek) to the new Decree (170/2020) here.

VAT Update 7/2020, 10 April 2020

Covid-19: Council of Ministers Decree (2/4/202) - VAT payments on Account - SUSPENDED

 

 

The latest in respect of the Decree passed by the Council of Ministers on 2 April 2020 that provided for VAT payments on account for certain businesses. The Decree has been suspended!

Link (Greek) here.

VAT Update 6/2020, 8 April 2020

Covid-19: Council of Ministers Decree (2/4/202) - VAT payments on Account

 

 

A particular group of VAT registered businesses in Cyprus (including the ones not yet registered but liable to be registered) are now called upon (on a very short notice!) to make VAT payments on account with the Council of Ministers Decree of 02/04/20 (link below).

 

These are the businesses that are excluded from the specific COVID-19 measure of deferral of VAT payments until 10/11/20 (list in the link).

 

The measure covers the period from 01/01/20 until 31/05/20 and sets a requirement for payment on account of 30% of VAT due (i.e. an earlier payment).

 

Regretfully, the text of the Decree is not entirely clear. Hopefully, the expected shortly second Degree - to give details as to the method of payment, will achieve the necessary clarity!

 

A possible interpretation (BUT not the only one!) of Decree (2/4/2020) is that businesses with VAT reporting periods ending on:

(A) - 31/03/20 (covers 01/01/20 to 31/03/20);

(B) - 30/04/20 (covers 01/02/20 to 30/04/20); and

(C) - 31/05/20 (covers 01/03/20 to 31/05/20),

 

should make payments as follows:

(A) - 30% by 15/04/20 & 70% by 11/05/20 (10/05 falls on Sunday here);

(B) - 30% by 15/05/20 and 70% by 10/06/20; and

(C) - 30% by 15/06/20 and 70% by 10/07/20.

Link (Greek) here.

VAT Update 5/2020, 6 April 2020

Covid-19: Cash flow management - Bad Debt Relief provisions - Reminder

 

 

One of the main areas businesses across the world are urgently addressing in these unprecedented circumstances is their cash flow management. Businesses in Cyprus are no exception.

 

In this respect, a reminder of the applicable in Cyprus VAT provisions on bad debt relief could be very useful. Even though the conditions under which the bad debt relief applies have not been eased in response to the current crisis, which would be a welcome measure, some businesses might find that VAT previously paid by them on goods or services they have supplied could be claimed back subject to the applicable conditions and timeframes.

 

To check if they are eligible for bad debt relief, VAT registered businesses in Cyprus should review all their outstanding receivables in order to confirm if the conditions of the bad debt relief are met. The guide below aims to assist VAT registered businesses in Cyprus in evaluating the relevant conditions.

Link (English) here.

VAT Update 4/2020, 27 Mar 2020

Covid-19: House of representatives approves VAT measures

The House of Representatives in Cyprus approved earlier today, 27 Mar 2020, a package of ten (10) bills as COVID-19 measures. Amongst the voted bills is also the attached VAT amending law.

 

The initially approved by the Ministry of Finance temporarily rates reduction was dropped. The final VAT measures cover the three (3) upcoming VAT periods, ending on 28 Feb, 31 Mar and 30 Apr, and due on 10 Apr, 10 May and 10 Jun respectively.

 

The amending Law provides that, no additional tax and penalties (including interest charges and penal charges) will be imposed in respect of the stated 3 VAT periods, provided that the returns are submitted by their due dates and any resulting VAT payable settled by 10 Nov 2020.

 

Certain tax payers, listed in the law by their respective codes of economic activities, are specifically excluded from the measures (e.g various food retailers, suppliers of internet services, pharmacies, suppliers of telecommunication services, electricity, water, etc). The full text of the VAT law is attached and link to the Gazette provided below (see page 135-137).​

Links to the press release (in Greek): link here.

VAT Update 3/2020, 19 Mar 2020

Covid-19: Two VAT bills approved

NOW REPLACED by amending VAT Law N.24(I)/2020 - no extension to the submission deadline given & no reduction of the VAT rates - only deferral of VAT payments but some business are excluded - see next update!

The Ministry of Finance in Cyprus announced yesterday the approval of two VAT bills with which:

1) The obligation to submit the VAT return for the period 01/12/2019 - 29/02/2020 is suspended until 30 April 2020 where


(a) the VAT payable for the said VAT period is settled not later than 10 November 2020, and
(b) the total revenues for the period 01/03/2019 - 29/02/2020 does not exceed EUR 1 million.

2) The standard VAT rate and one of the reduced VAT rates are temporary reduced:


- from 19% to 17% for the period 01/04/2020 - 31/05/2020
- from 9% to 7% for the period 01/04/2020 - 15/07/2020.

Links to the press release (in Greek): link here.

VAT Update 2/2020, 27 Jan 2020

Updates for organisers of artistic events 

On Friday, 24 Jan 2020, Notification Κ.Δ.Π. 27/2020 was published in the Official Gazette of the Republic of Cyprus in relation to Order Κ.Δ.Π. 427/2019 (from 27 Dec 2019) concerning the obligation of organisers of artistic events (as defined in the Order), to pay in ADVANCE a set minimum amount of VAT to become due as a result of the event.

 

The Notification contains the form that needs to be completed in respect of the said artistic events - link here

 

The Order sets the relevant provisions and deadlines - link here.

VAT Update 1/2020, 21 Jan 2020

Information Leaflet 17A - Call-of stock provisions - Quick Fixes 2020

 

The Tax Department in Cyprus published recently Information Leaflet 17A in respect of the VAT 'Call-off stock simplification' effective from 1 Jan 2020 (1 of the 4 Quick Fixes). (Perhaps the interesting part is that Cyprus has not yet transposed the EU VAT Quick Fixes legislation in national law. Still, there has been a tendency to enact legislation retrospectively, so the Quick Fixes is said to follow the same path.)

Link here.

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