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Following on with the most recent measures announced by the Minister of Finance in support of the Cyprus economy, the Council of Ministers has issued a new Decree (Κ.Δ.Π. 268/2020) on 23/6/2020. This decision effectively reduces the applicable VAT rate for certain services relating to the tourism industry, from 9% to 5%.
Services affected by the reduction
The services which may benefit from the reduction are the following:
- accommodation provided by hotels and similar establishments, including the provision of holiday accommodation
- restaurant and catering services accompanied by sufficient support services.
- transportation of passengers and their luggage within the Republic by urban, intercity and rural taxis, tourist and intercity buses.
Timing of changes
The aforementioned changes will apply for the period from 1 July 2020 until 10 January 2021.
Comments
The changes to the VAT rate will require precise application of the rules governing the time of supply as well as the transitional provisions provided for by the VAT law in situations of VAT rate changes, to ensure the correct VAT amount is accounted for.
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