VAT on Food in Cyprus

Why food VAT is more complex than it looks

Food VAT in Cyprus depends on how the food is supplied, not just what it is. The reduced 9% rate applies specifically to restaurant and catering services — food and non-alcoholic beverages supplied in a hospitality context. Food and non-alcoholic drinks sold in supermarkets and shops are generally at 5%, alcohol and soft drinks are at 19%, and a list of basic items is temporarily at 0%.

VAT rates on food and drinks in Cyprus

Supermarket food at 5% and the temporary 0% items

Food and non-alcoholic drinks sold in shops and supermarkets are at the 5% reduced rate. Alcohol and soft drinks are at the standard 19% rate. On top of that, Cyprus has zero-rated a list of basics for a limited period: bread, milk, coffee, sugar and baby food from 12 October 2026, and fresh, chilled or frozen meat and fish from 1 October 2026, both until 31 May 2027. Children's milk and listed fresh fruit and vegetables are at 0% until 31 December 2027, together with nappies and feminine hygiene products. Eggs are not on the list. When a temporary measure ends the item returns to its normal rate, so check the date on each invoice.

Restaurant and catering services at 9%

The supply of food and non-alcoholic beverages in restaurants, cafés, bars and similar establishments qualifies for the 9% reduced rate. This applies both to food consumed on premises and to food prepared and sold for takeaway from the same establishment. The 9% rate is specific to the catering service — the combination of prepared food with the restaurant environment. A supermarket selling the same food item without any preparation or catering service does not use the catering rate — it applies the retail rate — generally 5%, or 0% for the items temporarily zero-rated.

Alcohol is always 19%

Alcoholic beverages are always subject to the standard 19% rate in Cyprus regardless of where they are served. A restaurant charging 9% on food must still charge 19% on wine, beer and spirits. This means a restaurant bill covering both food and alcohol has two different VAT rates applied — 9% on the food and non-alcoholic drinks and 19% on alcoholic beverages. The invoice or receipt should correctly reflect this split.

Practical implications for food businesses

A Cyprus restaurant or café must correctly split its sales between 9% and 19% categories on its VAT return. The 9% applies to food and soft drinks. The 19% applies to alcohol. A business that applies 9% to all its sales including alcohol is undercharging VAT and will face an assessment. Equally a food retailer applying the catering rate to packaged food sales creates the same problem. Correct rate application from the start avoids potentially large correction liabilities.