- If a Cyprus IBC provides services (e.g. consultancy, marketing, etc.) to another Cyprus IBC irrespective of where the services takes place then the IBC will be subject to VAT registration if the annual income from such services exceeds 15,600
- For sale of goods and services (outside Cyprus) no VAT registration is applicable if goods/services are sold to non-EU residents (otherwise registration is applicable)
- VAT registration is also applicable in cases of reverse charge situations. This is, for example, when a Cyprus IBC receives services from companies situated outside Cyprus (e.g. Consultancy, marketing etc.) in which case it must register for VAT if such services exceed 15,600 per year but in effect no vat is suffered on services received as the respective calculated output VAT (thus reverse charge) is also considered as input VAT (hence, no vat expense). It is however noted that some services received from outside Cyprus (we can send you a list upon request) do not constitute reverse charges (e.g. directorship services, sale of goodwill, filing services, etc). In reverse charge situations the company which registers for VAT can claim a VAT refund on all vatable expenses whilst no VAT is charged on their services offered to non-EU companies or to companies based in the EU (provided they are also VAT registered).
In essence, by registering for VAT, no VAT is suffered by the company and VAT can be claimed on expenses such as legal fees, audit fees and other expenses incurred in Cyprus. Having said this, VAT registration, implies costs of maintaining VAT records and some administration burden which could best be avoided (for furthermore information please contact our Nicosia office).
