VAT on Hotel and Accommodation in Cyprus

The 9% rate for hotel and tourist accommodation

Hotel accommodation, tourist apartments, serviced apartments and similar short-term tourist accommodation in Cyprus qualify for the 9% reduced VAT rate. This covers the room charge, bed and breakfast arrangements and accommodation-only packages. The 9% rate applies across all star ratings and accommodation types — budget hotels, boutique hotels, resort hotels and tourist villas and apartments all benefit from the reduced rate when providing short-term tourist accommodation.

What the 9% accommodation rate covers

The 9% rate covers the provision of accommodation itself — the room or unit charge. Food and non-alcoholic beverages provided as part of a bed and breakfast, half-board or all-inclusive arrangement are also subject to 9%. Meals taken in the hotel restaurant whether included in a package or charged separately are at 9% for food and non-alcoholic drinks. The hotel pool, gym, beach access and other amenities included in the room rate share the 9% treatment when bundled with the accommodation.

What is excluded from the 9% accommodation rate

• Alcoholic beverages — always 19% regardless of accommodation package
• Spa treatments sold separately from accommodation
• Car parking charged separately
• Internet and telecommunications charged separately
• Mini-bar items — typically 19%
• Conference and meeting room hire — 19%
• Long-term residential accommodation — exempt not 9%

Holiday lets and Airbnb accommodation

Short-term furnished accommodation let on platforms such as Airbnb, Booking.com and Vrbo qualifies for the 9% reduced rate in Cyprus where the letting has a hotel-type character — furnished, short-term, with some services. The distinction between a holiday let at 9% and a long-term residential rental at exempt depends on the nature of the arrangement. Key factors include the duration of the letting, whether it is marketed as tourist accommodation and whether any hotel-type services are provided.

VAT registration for accommodation providers

Accommodation providers — hotels, serviced apartments, holiday let operators — must register for VAT if their annual turnover from accommodation services exceeds €15,600. For a hotel this threshold is reached almost immediately. For a small individual holiday let operator running one or two properties it depends on occupancy rates and nightly rates. An individual with one holiday apartment generating €1,500 per month in rental income would cross the threshold in approximately 10 months of operation.