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.