Cyprus VAT Submissions
The Cyprus VAT laws are complicated, and the requirements for submitting these taxes vary depending on the kind of goods or services sold. If you are looking for expert help with Cyprus VAT submissions, you can contact a company formation expert. In some cases, you will be exempted from paying VAT if you are performing import or export activities, or you will be exempted from VAT if you are providing passenger transportation by bus or taxi. But you must provide evidence that you have reached the VAT threshold in order to get this exemption.
Input VAT deduction rules are essential for preserving neutrality
The EU principles of neutrality require that tax payers have the right to deduct input VAT amounts when carrying out activities that are subject to Cyprus VAT Submissions This principle applies to intra-community acquisitions and to intra-community sales, as the purchaser is responsible for both input and output taxes. In such a scenario, the purchaser may claim to deduct both taxes, provided that he meets the statutory requirements.
In order to claim an input VAT deduction, the taxable person must receive the supplies for business purposes. This is known as the “recipient of the supplies” principle. In addition, there must be supporting evidence to justify the deduction. This evidence will typically include the original VAT invoice from the supplier. The goods and services must be used in a business or for personal use.
The European Commission has commented on the distortions of competition that may occur when a taxable person fails to deduct VAT on a product or service. The taxable person will attempt to pass on the non-deductible VAT to the next link in the supply chain, but the conditions of the market may not allow this. This will inevitably result in a reduced profit margin for the taxable person.
Recipient businesses can request an input VAT deduction if they have been registered for at least two years. This rule applies to non-EU companies that are not resident in Cyprus VAT Submissions. The period for claiming an input VAT deduction is between five and six years for resident businesses, and nine months for non-resident EU companies. In addition, refusal decisions of the tax authorities cannot be reversed by subsequent cancellation of invoices.
Late payment of outstanding Cyprus VAT Submissions balance results in imposition of additional tax
Unless you’ve filed for an automatic extension, it’s likely you’ve already missed the April-May deadline for Cyprus VAT payments. In April, the government offered several tax relief measures, including the postponement of late payments without penalty. Now, a second emergency fiscal plan has been launched, comprising 11 initiatives ranging from indirect tax relief for small businesses, the abolishment of special taxes on motorcycles and rental cars, and training allowances. Furthermore, income and payroll taxes have been lowered as of January 1, 2021.
Exempt supplies fall within the de minimize rules
Generally, you can deduct Cyprus VAT from certain purchases made in your business. Exempt supplies fall within the de minimize threshold, which is EUR 171 per month. The rules for deducting input VAT from purchases are essential to maintaining neutrality, one of the most basic principles of the EU VAT system. Exempt supplies include:
Late submission of the Recapitulative Statement (VIES) results in imposition of a penalty
VAT-registered Cyprus companies must verify that the buyer has a valid VAT number before making a transaction. To do this, the seller must check the VAT number of the buyer through the EU VIES database. The EU VIES FAQ has extensive information on VIES. VAT-registered Cyprus companies must submit their Recapitulative Statement to the VAT Service by the deadline set by 2022.
VAT rules in the intra-EU apply to all business structures, including sole traders and limited liability companies. VAT registration is mandatory for every company, even if it sells goods or services within the EU. VAT-registered companies must submit recapitulative statements when they sell goods or services in another EU country. The VIES monthly return is due 15 days after the end of the month.
VAT-registered entities must submit their Recapitulative Statement to the VAT Service by the tenth day of the second month. Failure to comply with the deadline will result in imposition of a penalty of 51 euro per month. The maximum penalty for non-compliance is three months. Once a VAT-registered entity fails to submit its Recapitulative Statement on time, it will incur a penalty of up to three months.
