The Standard rate of VAT in Cyprus as of January 2014 is 19%, with a reduced rate of 9% for matters related to restaurant services, tourism and transportation, a reduced rate of 5% on the construction or acquisition of residential property in Cyprus used as primary or permanent residence by locals or foreigners whether residents or non-residents of Cyprus, a reduced rate of 5% or 0% rate for various product supplies, and exemption on financial services, hospital and medical services, postal services, insurance services, rental of immovable property and disposal of immovable property where the application for building permission was submitted prior to 01/05/2004.Added value tax is imposed on the provision of goods and services in Cyprus as well as on the importation of goods into Cyprus. It is imposed on all supplies of goods or provision of services made within the Republic which are not exempt (taxable transactions).
The place of supply for goods is where the goods are located when they are delivered to the client. Services are considered to be rendered in the place where the person who is rendering them belongs (basic rule) unless the services fall within certain categories for which special rules apply. For example, special rules apply for advertising, intellectual property rights, certain professional services, telecommunications which are considered to be rendered in the place where the recipient of the services is considered to belong. The person rendering the services is considered to belong in a given country if he has a business establishment there and not somewhere else or he does not have such an establishment anywhere but his habitual residential place is there (for legal persons this is the country of their registration) or he has such establishments in that country and somewhere else but his establishment more closely connected to the supply is located in the give country. Therefore based on the above, depending on the nature of their supplies and where they belong, Cyprus Companies could be liable to registration, could be entitled for registration or will neither have the right nor the obligation for registration.