In light of the negative consequences of Covid-19, the Cyprus government has announced a national fiscal package of measures to help the affected economy. The support package includes a VAT payment pause of two (2) months and the reduction of VAT from 19% to 17% and from 9% to 7%.
The VAT-related measures are:
- Temporary extension of the VAT payment obligation for two (2) months for business liquidity purposes, without the imposition of penalties. Thus, the deadline for the VAT quarter ending 29 February 2020, which is 10 April 2020, will be extended for two months, meaning the new deadline will be 10 June 2020.This relates to companies with a turnover of less than €1 million, as well as companies whose turnover is reduced by more than 25% due to the crisis, according to their tax declarations submitted in 2019. Arrangements will be made for tax due to be paid in instalments by 11 November 2020.
The deadlines for the submission of the VAT return of the quarter ending 29 February 2020 will be extended until the end of April 2020, provided that the relevant VAT liability will be settled not later than 10 November 2020. This relates to companies with a turnover of less than €1 million.
- Temporary reduction of VAT from 19% to 17% for a period of two months (1 April 2020 – 31 May 2020).
- Temporary reduced VAT rate reduction from 9% to 7% for a period of three and a half months (1 April 2020 – 15 July 2020). The rate applies mainly to hotels and similar accommodation services, restaurants, and domestic passenger transport.