A. Introduction

The House of Representatives voted for the following three amendments in the VAT Law, which were published in the Official Government Gazette on 21 and 24 May 2019, and are in force retroactively as of 01/01/2019.

B. First amendment (Law 70(Ι)/2019) – Amendment of Schedule 13

Schedule 13 of the VAT Act was modified by the addition of new subparagraphs 2 to 4 to par-agraph 18.

Sub-paragraph 1 of 18 provides that the place of supply of digital services to non-registered persons is where the non-registered person is established. Until now, the provider of the said services had liability to either register in the Member State (MS) where the non-taxable per-son was established or under Mini One Stop Shop (MOSS) regardless of the value of said ser-vices.

The new sub-paragraph 2 of paragraph 18 relieves the provider of the digital services from the liability to register in the country where the non-registered client is established or under MOSS if the value of supplies to all MS within one calendar year does not exceed the amount of EUR 10,000.

The new sub-paragraph 3 of paragraph 18 provides that, if at any time in the calendar year the threshold of EUR10,000 is surpassed, the provider of these services must register either in the MSs of the non-taxable persons or under MOSS.

Sub-paragraph 4 obliges the provider, if he has elected so, to consider the place of supply of his services to be The Republic of Cyprus and account for VAT using the relevant VAT rate for at least two calendar years.

C. Second amendment (Κ.D.P. 174/2019) – Exceptions in invoicing rules

The second amendment relates to the replacement and recasting of paragraph 3 of Regula-tion A11 of the Basic Regulations of the VAT act with the new paragraph 3 which makes ref-erence to the exceptions to the invoicing regulations.

In accordance with point (a) of the new paragraph 3, if the person providing the services or supplying the goods does not have a fixed establishment in the MS where the services or goods are considered to be delivered, the invoicing regulations of the MS of the business es-tablishment of the person making the supply are applicable. Even in the case where there is a fixed establishment in the MS the transaction is considered to be taking place, the invoicing regulations are those of the MS of the business establishment of the person making the sup-ply, as long as that the fixed establishment does not interfere with the transaction. The same applies if the transaction takes place outside the EU.

Point (b) of new subparagraph 3 provides that when services are provided under MOSS, the pricing regulations applied in the MS that the taxable person chose to register under MOSS (no reference to MOSS was previously included).

D. Third amendment (Κ.D.P. 175/2019) – Non-Established taxable person with re-gards to Telephone, Radio Broadcasting and electronic services

The third amendment relates to paragraph 1 of regulation 2 and paragraph 2 of regulation 3 of the special regulations KDP 479/14 issued under Article 42B (Special scheme for telecom-munications, radio and television or e-services).

Paragraph 1 of Regulation 2 refers, inter alia, to the meaning of 'non-established taxable per-son' regarding the special scheme for Telecommunications, Radio and Television or Electronic Services.

The amendment emphases on the rephrasing of the above-mentioned meaning and is making reference to EU 'Community' instead of 'Member State'.

Current definition
According to the existing definition, "Non-established taxable person" is a person who offers digital services in the framework of carrying on a business and does not have any business establishment or other kind of fixed establishment in the region of a MS and that is not ob-ligatory to be registered for VAT purposes in The Republic of Cyprus under any other provi-sions of the CY VAT Act or the law of another MS.

New definition
According to the new definition, 'Non-established taxable person' is a taxable person who does not have his place of business or a permanent/fixed establishment in the region of the Community’.

Amendment of Paragraph 2 of Regulation 3 requires the non-resident to make a declaration that he has no place of business or permanent establishment in the region of Community, compared to the original point where the non-resident person had to state that he did not have a VAT number in the Community.

Savva & Associates aims to work with clients to ensure their Cyprus, international and personal structures are established and administered to the highest level of international standards. Our highly experienced and qualified team will ensure the correct structuring of your Companies and provide comprehensive advice in all VAT and Tax matters.

For further information please contact Mr. Charles Savva by telephone +357 2251 6671 or email c.savva@savvacyprus.com