VAT on Shipping and Logistics in Cyprus

VAT on international shipping from Cyprus

The transport of goods from Cyprus to destinations outside the EU is zero-rated for Cyprus VAT purposes. This covers sea freight, air freight and road transport where the final destination is a non-EU country. The zero-rating applies to the entire freight charge including the domestic and EU legs of the journey. Evidence requirements are strict — export declaration, bill of lading or airway bill confirming the goods left the EU and the destination outside the EU. Without adequate documentation the zero-rating can be disallowed.

Intra-EU transport of goods

Transport of goods between EU member states — from Cyprus to Germany, from Germany to Cyprus — is subject to the B2B general place of supply rule. The place of supply for B2B freight transport is where the customer belongs. A Cyprus freight company transporting goods to Germany for a German business customer accounts for German VAT via reverse charge — the German customer handles it. For B2C intra-EU transport the place of supply follows more complex rules proportional to the distances in each country.

Domestic freight within Cyprus

The transport of goods within Cyprus — collection and delivery within the island — is subject to the standard 19% VAT rate. Domestic freight transport is a taxable supply at 19% and the freight company must be VAT registered if its turnover exceeds the threshold. Customers who are VAT registered can reclaim the 19% input VAT on their freight invoices. Non-VAT-registered customers cannot reclaim it and bear the 19% as an additional cost.

Passenger transport at 9%

Passenger transport within Cyprus — taxis, buses, scheduled services, boat crossings — qualifies for the 9% reduced rate. This applies specifically to the carriage of passengers. Vehicle hire without a driver — car rental — is not passenger transport and is subject to 19% as a hiring service. International passenger transport — flights, ferries leaving Cyprus — is zero-rated as international transport rather than subject to the 9% domestic passenger rate.

Warehousing and storage services

Warehousing and storage services are subject to 19% VAT in Cyprus. The place of supply for warehousing is where the warehouse is located — Cyprus VAT applies to warehousing services performed in Cyprus regardless of where the customer is based. Where storage is genuinely ancillary to an identified international export supply the storage service may be zero-rated as part of the export supply chain — but specific evidence linking the storage to a particular export is required.