Value Added Tax Rates and Exemptions in Cyprus

If you are planning a move abroad to Cyprus and are confused about the value added tax, or VAT as it is commonly called, then you should familiarize your self with the laws that spell out the rates and exemptions for the VAT.

If you are familiar with VAT the only thing that you may know about it is that it is a tax. What you may not know is that in Cyprus there are three different rates for VAT. There is the standard rate which is 15 percent and was introduced in 2003. There is the reduced rate, which is only five percent and was introduced in 2000. And there is the zero rate that applies only to certain goods and services in Cyprus.

The VAT rating on goods has changed since 2002, which means that it is a good idea to check with a lawyer on the financial implications of making a purchase, especially a large purchase such as property. Since May of 2004 when Cyprus joined the European Union VAT has applied to all new properties. The only exceptions to this are properties where the application for planning permission has been submitted before May of 2004. This is because immovable property was exempt from VAT before May 2004. If you are a first time buyer then you can get VAT at a reduced rate of five percent. Otherwise you will have to pay the standard 15 percent.

There are certain goods and services that are exempt from VAT. Such items include rent cost, insurance, medical services and financial services.

There are also certain goods and services that are given a zero rate for VAT. Such items include supplies of items to other European Union countries, certain foods, exports, children's clothes, medication, commission received from abroad, international air and sea transportation.

There are also certain goods and services that are given a reduced rate VAT. Such items include new property for first time home buyers, trash collection, animal feed, books, accommodation in hotels, magazines and newspapers.