Cyprus SME rules

SME Scheme – General features

Exemption

It is possible to opt for the SME scheme in Cyprus.

Transactions excluded from the SME scheme

The following transactions are excluded from the SME scheme: 

• Occasional transactions, like the supply before first occupation of a building or parts of a building or the supply of building land,
• Exempt cross-border supplies of new means of transport made from one Member State to another.

National annual threshold

Cyprus national annual threshold is €15.600. More information can be found on TEDB.

Cyprus does not apply sectoral annual thresholds.
 

Domestic SME scheme

Cyprus does not operate a special scheme for SMEs on national level. Simply, SMEs not exceeding the domestic VAT registration threshold do not have the obligation to VAT register (they can register voluntarily, if there is a need).

Simplified VAT obligations

A small enterprise established in Cyprus who applies the SME scheme in Cyprus only (domestic SME scheme) is released from the following VAT obligations: 

• to state the beginning of its activity
• to submit periodical VAT returns
• to issue invoices
• to keep accounts
• to submit administrative statements

Cross-border SME scheme

The cross-border SME scheme applies in the situation where the small enterprise aims to apply the SME scheme in Member States other than the Member State of establishment.

VAT obligations to register for the cross-border SME scheme:

The VAT registration in each Member State where the small enterprise applies the SME scheme is replaced by  a prior notification submitted through the Cyprus SME-SS platform. 

Small enterprises applying the cross-border SME must submit only a single quarterly report through the Cyprus SME-SS platform for all Member States. 

Please note that small enterprises applying the cross-border SME, that established in Cyprus, may need to submit periodical VAT returns in Cyprus only for the supplies that are not covered by the SME-SS (if any). For this reason, they will have access to VAT Return submission, but it will not be required, in order to avoid any penalties.

Currency

The values of supplies of goods and services to indicate in the prior notification, in the update to a prior notification and in the quarterly reports must be in EUR. 

Way of submission

The prior notification, the update to a prior notification and the quarterly reports should be submitted by electronic means on this page (Webpage is currently inaccessible till 01/01/2025 when the SME-SS will go live).

Loss of simplified VAT obligations

Non-compliant small enterprises applying the cross-border SME scheme in Cyprus must: 

• register in Cyprus VAT
• submit periodical VAT returns

Transitional period

Cyprus does not apply any transitional period in case the national annual threshold is exceeded during the current calendar year.

Practical examples of the application of the transitional period and its consequences are available in the Explanatory Notes.
 

Quarantine

Quarantine period in case of exclusion from the SME scheme

Small enterprises excluded from the SME scheme in Cyprus are not able to benefit from that exemption during a quarantine period (If applicable, depending on the exclusion reason). 

You can consult the quarantine period applicable in Cyprus on TEDB database.

Practical examples on the application of the quarantine period and its consequences are available in the Explanatory Notes.

Quarantine period in case of voluntary departure from the SME scheme

No quarantine period imposed.

Appeals

Domestic SME scheme

Appeals should be addressed to your Member State of establishment (MSEST).

Cross-border SME scheme

Member State of establishment (MSEST)

Appeals related to the following topics should be addressed to MSEST:

• Union annual turnover
• Prior notification, correction and update to a prior notification
• Quarterly reports and correction of a quarterly report
• Exclusion for exceeding the Union annual turnover

Member State of exemption (MSEXE)

Appeals related to the following topics should be addressed to MSEXE:

• National annual turnover
• Denial to access the cross-border SME scheme in MSEXE
• Loss of simplified VAT obligations in respect of MSEXE
• Exclusion for exceeding the national annual threshold/sectoral threshold in MSEXE

Calendar

VAT simplified procedures

Not applicable