Are you charging EU VAT correctly on digital sales?
The short answer
Telecom, broadcasting and electronically supplied services sold to consumers are taxed in the customer's country. Once your sales of these services and your distance sales of goods to consumers in other EU countries pass €10,000 a year, you charge each customer's local VAT, usually declared through OSS. Sales to VAT-registered businesses in other EU countries are reverse-charged by the customer. Building a software or digital business in Cyprus? tax.com.cy covers the Cyprus IP box.
- EU distance-sales threshold
- €10,000
- Cyprus standard rate
- 19%
- Keep VAT records for
- 6 years
OSS vs IOSS — Which do you need?
OSS — One Stop Shop
IOSS — Import One Stop Shop
⚠ Note: If you sell both digital services AND physical goods under €150 you may need both OSS and IOSS registrations. They are separate schemes with separate returns. Need help? See our IOSS registration in Cyprus guide.
OSS Threshold Tracker
What were your cross-border EU B2C sales in the last 12 months? (€)
EU VAT Rates by Country — 2025/26
| Country | Standard Rate | Reduced Rate |
|---|---|---|
| Cyprus | 19% | 5% and 9% |
| Germany | 19% | 7% |
| France | 20% | 5.5% and 10% |
| Italy | 22% | 5% and 10% |
| Spain | 21% | 10% |
| Netherlands | 21% | 9% |
| Belgium | 21% | 6% and 12% |
| Poland | 23% | 5% and 8% |
| Sweden | 25% | 6% and 12% |
| Ireland | 23% | 9% and 13.5% |
| Portugal | 23% | 6% and 13% |
| Greece | 24% | 6% and 13% |
| Malta | 18% | 5% |
| Austria | 20% | 10% and 13% |
When you sell B2C digital services to EU consumers via OSS you charge each customer their local country rate shown above.
SaaS VAT — What you need to know
B2B customers — reverse charge
EU business customers give you their VAT number. You invoice without VAT. They account for it themselves. Keep VAT numbers on file — they are your evidence if audited.
B2C customers — OSS
Individual consumers cannot reverse charge. You charge their local VAT rate. OSS lets you report all of this in one Cyprus return instead of registering in 27 countries.
Validating B2B status
Always validate EU VAT numbers via VIES before invoicing without VAT. If a number is invalid the supply defaults to B2C and you owe the VAT.
IOSS — How it works in practice
Customer orders on your website
VAT calculated at checkout at their local rate
Customer pays total including VAT
Goods shipped — IOSS number on customs declaration
Customs clears goods without additional VAT charge
You remit collected VAT via monthly IOSS return in Cyprus
Without IOSS your customer gets a VAT bill at their door plus a handling fee. Cart abandonment at delivery is a known ecommerce conversion killer.
Non-EU businesses selling digital services into Cyprus may also need to register for VAT — see our non-resident VAT guide →
Selling physical goods under €150 to EU consumers? Register for IOSS →
Digital Services VAT Compliance Checklist
Review and check off each item to ensure compliance.
⚠ Important: Non-compliance with EU digital VAT rules is increasingly enforced. EU tax authorities share data — a gap in one country triggers reviews in others.
Frequently asked questions
Work out the VAT on your own figures
Add or remove VAT at any Cyprus rate, with the rates from our facts table.
Open the VAT calculator →