VAT registration is obligatory for persons performing a business activity and importing goods and receiving services from the Member States of the European Union as well as from non-Member States.
1. Obligation for VAT registration in detail
Every person is obliged to register if:
- At any point in time if the taxable person transacts with other taxable persons in the other Member States, (nil threshold), or
- At the end of any month, if the total value of the acquisitions by the Member States during the twelve-month period beginning on 1 January of the year has exceeded the limit of € 10,251.61 or there is a valid reason to believe that during the thirty days from any point in time the value of the acquisitions of this person will exceed € 10,251.61, or
- If any person makes distance sales in Cyprus (sales from a person in another Member State to unregistered persons in Cyprus) if during the twelve-month period beginning on 1 January of the year the value of his distance sales exceeds € 35,000.
- Acquisition of goods from other EU member states that relates to persons who provide exempt supplies of goods and services with registration threshold of €10.250;
- As of 20 August 2020, non-established in Cyprus persons (legal entities or individuals), who are engaged in taxable activities in Cyprus with no establishment in Cyprus are obliged to register for VAT purposes (no threshold). EU persons do not need to appoint a VAT representative in Cyprus. The non-established person can apply for an exemption for VAT registration in Cyprus, on the basis that he / she is engaged only in activities that are subject to 0% VAT. Taxable persons established in the United Kingdom and who carry out taxable transactions within Cyprus are exempt from the appointment of a VAT tax representative.
2. Right for registration:
Persons who trade outside Cyprus, in goods or services which would have been taxable if they were provided within Cyprus, Groups of companies, and Divisions of Companies.
3. Intra-Community trade
The following declarations must be completed by persons engaged in intra-Community trade with the other Member States of the European Union:
Entered in the VAT return (in total)
Summary Table of Intra-Community Traditions (VIES statement)
Entered in the VAT return (total at a rate of 0%)
Taxable persons who deliver goods and/or services to persons registered in the VAT register of another Member State are required to register with the VIES system and submit monthly VIES electronic statements (summary table).
5. Management of intra-Community transactions (Cyprus Intrastat)
Companies undertaking intra-Community transactions, ie the acquisition and/or supply of goods to/from the EU Member States are subject to the management of intra-Community transactions through monthly Intrastat electronic declarations. The relevant reference limits for the Cypriot Intrastat for 2022 are as follows:
- Exemption limit: € 230,000
- Simplification limit: € 2,700,000
- Exemption limit: € 75,000
- Simplification: € 5,800,000
6. Chain transactions within the EU for VAT purposes
Chain transactions for VAT purposes are considered to be when:
- The goods are delivered successively with at least 3 persons
- The goods are dispatched or transported from one Member State to another Member State.
- The goods are sent directly from the first to the last.
- The transfer shall be arranged by the intermediary or by a third party on his behalf.
- The general rule on-chain transactions within the EU applies when a supply is attributed to the intermediary and the dispatch or transportation is settled by the intermediary. In such a case the dispatch or the transportation of the goods is attributed to the supply to the intermediary. If the intermediary has a VAT number of another Member State, and the dispatch or transportation is attributed to the intermediary, then the supplier makes an intra-Community supply and the intermediary makes an intra-Community acquisition and then the intermediary makes a domestic supply.
- A derogation from the above rule on-chain transactions applies if the intermediary gives to the original supplier the VAT number of the Member State where the movement of the goods is initiated. In such a case, the dispatch or transportation is attributed to the supply by the intermediary to the final customer. The transaction from the supplier to the intermediary is domestic and the intermediary gives the VAT number of that Member State where goods have been departed. The supplier makes a domestic supply and then the intermediary carries an intra-Community supply. The intra-community acquisition is made by the final customer.
7. Simplified VAT procedure in the case of triangular transactions
In the case of triangular transactions, 3 different Member States are involved and the supply is made by the supplier to the intermediary where the supplier makes an intra-Community supply from his Member State and the intermediary carries out an intra-Community acquisition in the Customer’s Member State where the goods finally end up.
The intra-Community acquisition of goods is carried out by a taxable person, an intermediary who is not established in the Member State where the final customer is located and the goods are dispatched or transported, but registered for VAT purposes in his Member State.
The acquisition of the goods by the intermediary is carried out for the purposes of the next supply of the goods by the intermediary to the final customer established in its Member State.
The goods are transported directly from the supplier’s Member State which is different from the state where the intermediary is registered which is to make the next supply to the final customer.
The person to whom the next supply is to be made is the final customer who is another taxable person who is registered for VAT in his Member State.
The final customer is responsible for the payment of VAT due for the supply made by the intermediary.
8. Triangular trade and triangular commercial simplification – VAT treatment
- Both the intra-Community supply by the supplier and the acquisition by the intermediary are excluded from obligations to their Member States respectively. No VAT reverse charge is imposed by the intermediary in its Member State.
- The intermediary obtains the VAT number of the Member State of the final customer.
- The intermediary reports to its Member State the transaction to VIES as a triangular transaction and states “triangulation” or “VAT reverse charge” on the invoice.
- The customer in its Member State applies the VAT reverse charge.
- Both the supplier and the intermediary have Intrastat obligations to their Member States respectively.
9. Placement of goods in a VAT warehouse.
Taxable persons who are not established in Cyprus can place goods in a VAT warehouse. A taxable person may register or appoint a VAT representative for this purpose. Under certain conditions, the goods are not subject to VAT and therefore no VAT registration is required.
How Can We Help
Please contact us to share any questions you have about the above topic
Tel. +357 22 340000
Email: [email protected]
The authors expressly disclaim all and any liability and responsibility to any person, entity, or corporation who acts or fails to act as a consequence of any reliance upon the whole or any part of the contents of this publication.
Accordingly, no person, entity, or corporation should act or rely upon any matter or information as contained or implied within this publication without first obtaining advice from an appropriately qualified professional person or firm of advisors, and ensuring that such advice specifically relates to their particular circumstances.