New Amendments of the VAT Legislation

 

 

New Amendments of the VAT Legislation

 

The Cy Parliament voted and published the below amendments to the VAT Law with effective date the 20^th of August 2020. The amendments are as follow:

• Definition of Legal Person.

The Definition of a Legal Person was added the 2^nd Annex of theVAT law. A legal person can be a company, a partnership, a union, a club and any other association formed under or not the provision of any other legislation.

 

• C2B Transactions under the provision of Article 11B

The phrase ‘’subject to VAT person’’ in the subparagraph a of the paragraph 4 of the Article 11B is been replaced with the phrase ‘’any person’’.

 

• Reverse Charge for local transactions of electronic goods ( i.e. Mobile phones)

In the Article 11E is now added the application of reverse charge of the receiver of electronic goods in local transactions. For the reverse charge rule to apply, the receiver must be registered to the VAT and/or receive the good for performing economic activity. Article 11E will be effective from 1^st of October 2020.

 

The goods that fall under the description of the term electronic goods are:

• Mobile phones or other devices that can use the established networks.
• Microprocessors, mainframes and complete circuits.
• Gaming consoles, tablets and Laptops

 

• VAT Refunds

The commissioner of Tax has the right to postpone the VAT refund to a VAT register person if by the date of the refund application has not complied with Article 5 of the Assessment and Collection of Taxes law and submitted his Income Tax Return. This postpone is not subject to any interest.

In addition, the limit of six (6) years for VAT Refund was added to Article 20 of the VAT Law.  Once the six (6) year are past the taxpayer loses the right to file an application for VAT Refund.

• Penalties

The penalties are amended as follow:

• The penalty for late submission increases from 51€ to 100€.
• The failure to comply with the articles 11, 11B, 11Γ, 11Δ, 11E and 12A is penalised with 200€ per VAT return with the maximum penalty to be the 4000€.

The new penalties will apply from the 1^st of July 2021.

 

• Registration/de-registration of non-Cyprus established persons

 

The 1^st  Annex of the VAT Legislation is amended and the limitations for the VAT registration apply only for the entities with establishment is the Republic.

 

• The definition of Renovation

The 5^th Annex of the VAT Legislation is amended, and the term of Renovation is modified as:

Additions, improvements, repairs in a private residence which consider to be old. Old means that at least three (3) years have passed from the first establishment.

 

• Imposition of zero rate for international transport

The 6^th Annex of the VAT Legislation is reset and from 20^th of August the transport of international passengers is subject to zero rated (0%) VAT.

 

PHS and Partners Ltd is always at your disposal for any additional information or clarifications that you may need.

 

Andreas Germanos

Head of Accounting and VAT