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3)
VAT
registration is also applicable in cases of “reverse charge”
situations. This is, for example, when a Cyprus IBC receives
services from companies situated outside Cyprus (e.g.
Consultancy, marketing etc.) in which case it must register
for VAT if such services exceed CYP £9,000 per year. It is
however noted that some services (we can send you a list
upon request) do not constitute “reverse charges” (e.g.
directorship services, sale of goodwill, filing services,
etc.) In “reverse charge” situations the company which
registers for VAT can claim a VAT refund on all vatable
expenses whilst no VAT is charged on their services offered
to foreign companies or on trading of goods taking place
outside Cyprus.
In
essence, by registering for VAT, no VAT is suffered by the
company and VAT can be claimed on expenses such as legal
fees, audit fees and other expenses incurred in Cyprus.
Having said this, VAT registration, implies costs of
maintaining VAT records and some administration burden which
could best be avoided (for furthermore information please
contact our Nicosia office).
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