In December 2012, the Cyprus House of Representatives voted a number of new laws and amendments to existing legislation to comply with the Memorandum of Understanding which is signed between the Republic of Cyprus and Troika.
The amendments are intended to strengthen public finances and enhance the stability of the financial sector, while at the same time retaining the benefits that Cyprus offers to international investors who choose Cyprus as a reputable international business center.
One of the amendments is the increase of the VAT rates as of 13th of January 2014 and it is as follows:
1.  The standard rate increases from 18% to 19% and applies to the provision of all goods and services in Cyprus.
2.  Reduced rate 5% (no changes) applies to:

• The supply of foodstuff and/or beverages (excluding alcoholic drinks, beer, wine and soft drinks) or both, irrespective of whether the goods are delivered from the supplier to the customer or taken away by the customer.

• The supply of pharmaceutical products.

• Newspapers, books and magazines.

• Hairdressing services.

• Entry fees to theaters, circus, festivals, Luna parks, concerts, museums etc.

• Entry fees at sports events and fees for using athletic centers.

• Renovation and repair of private households after three years of first residence.

• Supply of catering services from school canteens.

3.  The reduced rate of 8%, now increased to 9% applies to:

• All restaurant catering services (including the supply of alcoholic drinks, beer, wine and soft drink).

• Hotel Accommodation.

• Transportation of passengers and their accompanying luggage within Cyprus using urban, intercity, water and rural taxis and tourist and intercity buses.

4.  Certain supplies of goods or services are Zero-Rated:

• Supply, hiring and repair of sea-going vessels and aircrafts.

• Supply of services to meet the direct needs of sea-going vessels.

• Supply of goods entered into customs regime.

• Supply of medicines and food, except the supply of food in the course of catering.

• If the goods have been exported or supplied to a registered person in another member state.

• Supplies of goods or services which are exempted under the VAT legislation.

• Leasing or letting of immovable property.

• Financial services, lotteries, medical care, social welfare, education, sports, cultural services, insurance     transactions etc.

Social Insurance Contributions (increased 1%):
Social Security Contributions that are payable by the employees and the employer are now 7, 8% from each and for self-employed persons is now 13, 6% contribution of their annual income.

Immovable Property Tax is levied on all immovable property which is located in the Republic of Cyprus.
The calculation of tax is based on the rates stated below, on the value of the property of each owner, for each year.

• Owner means the person who is entitled to be registered as the owner of the immovable property, whether he is registered or not.

• Immovable property includes mainly, land and buildings or other structures or projects and trees or privileges and rights of use stated in them.

• Value of the immovable property
  For taxation purposes, the value of the immovable property which is located in the Republic of Cyprus, is the market value as per 1st of January 1980 as this is stated on the title deed.

• Factors of Immovable Property Tax

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In case the total amount of the value of the immovable property does not exceed the amount of €12,500, taxes are not imposed and shall not be received on the value of the immovable property.
FAQ (FREQUENTLY ASKED QUESTIONS):

• Who is obliged to pay the Immovable Property Tax?
  Any physical or legal person who owns immovable property in the Republic of Cyprus.

• Over what value of the immovable property is the tax calculated?
  On the market value of the property as per 1st of January 1980 as stated on the title deed.
• If a person during the year proceeds with additions / renovations or subtractions on the property what should he do?
  There is an obligation to submit a Supplementary Statement – Form E.Pr.303 (2007), stating any changes made in real property.
• When is a person obliged to submit the relevant documents and pay the tax?
  The tax is to paid by 30th of September of each year.
  From the year 2013, if the Immovable Property Tax is paid at least 30 days before the 30th of September, a discount of 10% is offered to the taxpayer.
• On which properties is the immovable property tax imposed on 30 September of each year?
  On any immovable property possessed by a person on the 1st of January.
  e.g. The immovable Property Tax due on 30/09/2013 concerns property held on 01.01.2013.
• If a person has not filled any forms or paid any tax so far, what are his/her obligations?
  Must fill the form E.Pr.303 (2007) – Additional Declaration (with reference to the additions / reductions) for each year of non-submission of the relevant declarations. The tax is calculated based on their current tax rates applicable in the period the additions / reductions were made.
• If the title deed has more than one beneficiary, who has the obligation to pay the Immovable Property Tax?
  The immovable property tax is divided proportionately to all beneficiaries, based on their ownership share.
• Is a person who is in possession of a property but is either a minor or a non-resident of the Republic of Cyprus, under any obligation to pay the immovable tax?
  Yes, if the property is in the Republic of Cyprus the obligation is transferred to the guardian or to the trustee.
• If a person fails to submit a declaration and pay the tax due, would there be any additional charges and penalties?
  Yes, the following interest charges and penalties are imposed:
  – Non-submission of the declaration – € 100
  – Non-payment of the tax due – 5% of monetary charge (lump sum payment) (from 1.7.2011) and 10% (from                  1.10.2013) and 4.75% interest valid from 1.1.2013.
  The Director of the Department of Inland Revenue is entitled to issue a certificate of assessment of tax at any            point.
• If a person owns a property in the occupied territory and / or in the buffer zone, is he obliged to pay the Immovable Property Tax?
  No, the properties in the occupied territory and the buffer zone are exempted from the Immovable Property Tax.
• What measure can be taken, if the owner disagrees with the valuation of the property given by the Director?
  The owner can file an objection or appeal under the provisions of the Assessment and Collections of Taxes Laws.