Are you letting your villa in Cyprus? What about VAT! Are you declaring your sales via the Cyprus VAT system? If not then this article is for you.

All Cyprus property owners who let their villas / properties and exceed the VAT threshold of Euro 15,600 must be VAT registered and start charging VAT.

The applicable VAT rate is usually 9% however this must be confirmed by your accountant or vat expert as the entire arrangement with the property management company must also be examined before determining the correct applicable VAT rates.

All property owners must be VAT registered?

The compulsory VAT registration for property owners (as for all physical or legal persons exercising business activities) is Euro 15,600 within 12 consecutive months.  Hence, if you have been earning more than 15,600 per annum in rental income you must become VAT registered and account for VAT on your rental income at the applicable VAT rate.

What happens if I have not been registered?

You should voluntarily register the soonest possible. We can assist you with the entire process.

What are the penalties and fines for omission to be VAT registered?

10% on the VAT amount due + interest + Euro 50 for each late VAT return submission.  

In other words, the penalty is significant and should be taken into consideration.

If the discrepancies took place up to 7 years ago then the VAT penalties and fines could be in the region of Euro 10k – 15k + the actual VAT amount due which will be calculate on the rental income exceeding the Euro 15,600 multiplied at the applicable VAT rate.

So please be careful and become VAT registered if you exceed the threshold!

How will the VAT find me!!! - Very Easily!

Here comes the bad news.

It is so easy to be found that we urge you to become VAT registered. The Cyprus VAT or Income Tax Office can request statements from the management companies or booking software you are using such as Booking.com, Airbnb, Cyprus Lettings and so many other companies and obtain the total rents you have received per annum up tyo 7 years back.

On top of those fees, you will have to pay the applicable VAT rate (9% or 19%) depending on the arrangement with the property letting company + the above penalties and fines explained.

What happens if I own a property management company?

Again, you will have to charge VAT however the manner and VAT rate depends on the commercial agreements with the property letting companies and the property owners.

Feel free to contact us to explain you the logistics and different vat treatments that apply in your case.

T:+357 99 428 543

E:kt@cyprusaccountants.com.cy

I hope you found this article useful, looking forward for your comments!