The Cyprus Tax Office on Thursday warned the public to be careful when purchasing a second-hand car directly from dealers, especially a luxury model from the UK.
In a statement, the Tax Office said that luxury cars are being advertised at knockdown prices on social media by UK companies to lure private buyers from Cyprus. However, the sellers may be involved in a tax scam.
Cyprus, in cooperation with UK authorities, is investigating cases of traders selling cars to Cyprus, who may have avoided paying the VAT in both the UK and Cyprus.
The suspect fraudsters are said to be pulling off the tax dodge through double invoicing.
It is believed that mainly UK dealers issue one invoice to the buyer who uses it to clear the car from customs and register it in Cyprus and a second showing that the car has been sold to a VAT registered company in Cyprus which they present to UK authorities.
In the first case, it is assumed that the VAT was paid in the UK, while in the second case the company supposedly registered in Cyprus will pay the VAT.
The Tax Office urges the public to be careful with such transactions and to ensure that VAT payment is correctly stated in the sales documents either in the UK or in Cyprus.
“If at some point it is proven that the VAT payment was not correctly stated, there is a possibility that buyers may find themselves under investigation for criminal offences and also be called upon to pay the required VAT,” said the announcement.