VAT standard rate in Cyprus will increase by 1% to 19%

As of Monday the value added tax (VAT) standard rate in Cyprus will increase by 1% to 19%, as part of a series of obligations, included in the €10 billion bailout the island agreed with its international lenders in March last year (EC, ECB and the IMF).

The standard rate, to increase from 18% to 19%, covers approximately 80% of the goods and services whereas the reduced VAT rate covers restaurants, cafeteria and catering services.

Hotel services, transport of passengers and their luggage within Cyprus by urban, suburban and rural taxis as well as by tour and suburban buses also increased from 8 to 9%.

Foodstuffs, medicine, water, fertilizers, animal food and books are taxed with 5% VAT.

Residence taxed at 5% for eligible persons and children’s car seats taxed with 5% VAT are also not affected by the new measure.

Despite the VAT hike Cyprus continues to have the third lowest VAT rate in the European Union, following Malta with 18% and Luxemburg with 15%. The government of the latter announced however it plans to raise the VAT rate.