1. VAT reverse charge in Cyrus on B2B services
Cross-border services as a general rule are subject to VAT reverse-charge Cyprus. The customer will be regarded as a taxable person in respect of all services received, unless the person does not carry out an economic activity i.e., holding company.
Identifying Cyprus VAT Reverse Charge in VAT transactions
To identify reverse charge in VAT transactions, it is important to consider:
- the persons involved (B2B),
- the type of transaction whether the transaction is a supply of goods or services, whether the transaction is an intra-community acquisition of goods, whether there is an import of goods
- Identify the place of supply and the place of transaction is taxed
- Possible exemptions
- The burden of obligation to discharge the VAT, the supplier, or the recipient under the reverse charge mechanism.
VAT reverse charge transactions
- VAT is paid by the Cyprus recipient for (B2B) transactions where the services are supplied by a taxable person not established within the Member State of the recipient (subject to conditions)
- VAT is paid by the Cyprus recipient for (B2B) intracommunity transactions where the customer is established (subject to conditions).
Τhe above applies if a recipient is a taxable person and the place of supply of the services is Cyprus and the services are of any description of Parts I and II of the Thirteenth Annex of the Cyprus VAT Law
The above does not apply to services described in the Sixth and Seventh Annex of the Cyprus VAT Law
Cyprus VAT Reverse charge in simple terms the recipient charges (output) VAT and examines the right to deduct (Input) VAT.
Where the supplier is not established in Cyprus where the VAT is due, Cyprus opted to extend the reverse charge to apply to those described in Parts I and II of the Thirteen Annex of the Cyprus VAT Law i.e., in installation supplies, services relating to immovable property, transportation of passengers, transportation of goods, services relating to the hiring of goods subject to conditions, telecommunications services, and short-term hiring of means of transport
Under Cyprus VAT Law, the Cyprus VAT reverse charge mechanism is also applicable to the following transactions between business persons
2. VAT reverse charge in Cyprus
VAT reverse charge in Cyprus | The relevant article of the Cyprus VAT law |
| Gas and electricity are delivered by persons outside the Republic. | 11A |
| Construction services Taxable persons in relation to construction have to apply VAT reverse charge in Cyprus on domestic suppliers not registered for VAT purposes. The obligation of a taxable person to self-charge for VAT in Cyprus by applying the Cyprus VAT reverse charge mechanism on services or services together with goods in relation to the construction, modification, demolition, repair, or maintenance of a property (as the recipient of the services) under Article 11B of the Cyprus VAT Law has been expanded to cases where the supplier of the services is not a taxable person for VAT purposes | 11B |
| Trade of specific goods (I.e. scrap metals) | 11C |
| Disposal of immovable property and plots to the Borrower as part of loan restructuring | 11D |
| Supply of certain electronic devices, Mobile phones, and Integrated circuit mechanisms, such as microprocessors and central processing units, prior to their integration into end-user products and Game consoles, computer tablets, and laptops. The seller will issue invoices without imposing VAT and the purchaser will be responsible for self-account for output VAT under the VAT reverse charge. The supplier must, therefore, not charge the customer Cyprus VAT on its invoice and (1) include the Cyprus VAT number of the customer on the invoice, (2) request written confirmation that the electronic device will be used for business purposes, (3) Requesting evidence that the customer is registered in Cyprus for VAT purposes | 11E |
| Unwrought and semi-wrought precious metals (new provision from 7 October 2022) | 11F |
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