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12.2. VAT on the Supply of Services by Non-Residents

If a company receives certain services from abroad from any person situated either within the EU or outside the EU it will be required to apply the reverse charge mechanism. By applying this principle, the recipient acts as if it is both the supplier and the customer, it imposes VAT on the services received itself and then, assuming that the services relate to VAT taxable supplies that the recipient supplies, it can claim it back as input VAT with zero balance. In the event that the recipient also offers exempt services, then it cannot claim it in full but in proportion to the taxable / exempt services offered during the particular VAT period.

If the natural or legal person offering the services is from the EU, then the Cypriot taxpayer will provide its VAT registration number to its EU supplier so that it will not be charged with VAT, otherwise, VAT will be charged by the supplier.