VAT updates

BREXIT VAT and Customs implications

On 3/2/2020 the Cyprus Tax Department issued a series of announcements in relation to Brexit and its impact on the application of the EU VAT refunds procedure, VIES, MOSS and Intrastat reporting.

The United Kingdom (UK) as of 1st February 2020 has exited the EU following ratification of the Withdrawal Agreement which provides for a transitional period.

All transactions with the UK during the transitional period will continue to be regulated as if the UK remains a Member State of the European Union. The transitional period will apply from 1/2/2020 until 31/12/2020.

VIES

As a result of the above, the VIES Recapitulative Statement will include intra-community supplies of goods and services to VAT registered persons established in the UK occurring during the transitional period. Supplies of goods and services to the UK occurring after the transitional period (1/1/2021) will no longer be regarded as intra-community supplies and will not be declared in the Recapitulative Statements.

Intrastat and on-going movements of goods

Similarly, dispatches and acquisitions of goods occurring during the transitional period will continue to be declared in the Intrastat declarations. The exports and/or imports of goods to and from the UK after the transitional period (1/1/2021) will not constitute intra-community dispatches or acquisitions and will no longer be declared in the Intrastat declarations.

Goods dispatched  from the UK and acquired by consumers who normally reside in the Republic will be subject to customs clearance, including the imposition of importation VAT on their taxable value. A movement of goods whereby the dispatch or transport from the UK to the Republic begins before the date of withdrawal from the EU and is not completed before 1/1/2021, at the time of arrival in the Republic will be considered as an importation into the Republic.

MOSS

Services supplied by taxable persons established in the Republic to non-taxable persons normally residing in the UK which fall within the scope of the Mini One Stop Shop (Moss) during the transitional period, will continue to be declared on MOSS declarations. As of 1/1/2021 these transactions will be deemed to be supplied in the recipient country (UK) without posing an obligation to account for VAT in the Republic.

VAT refund for VAT incurred in the UK on business expenditure

The announcement provides information relating to applications by  taxable persons established in the Republic for a VAT refund on expenses inured in the UK. For VAT incurred in the UK during the year 2019 the request should be submitted by September 30th, 2020. For the period from 1/1/2020-31/1/2020 the application may be submitted at any date within the period  between 1/4/2020 and 31/12/2020. The application by a taxable person resident in the Republic, for a refund of VAT incurred in the UK during the period between 1/2/2020 and 31/12/2020, should be submitted pursuant to the provisions of the 13th VAT Directive (Directive 86/560/EEC).

The above are subject to amendments resulting from presently unforeseen developments during the negotiation process and further updates from the Cyprus Tax Authorities cannot therefore be excluded.