Cyprus VAT Margin Scheme — Pay VAT on Profit Not Sale Price
The VAT margin scheme lets eligible dealers pay VAT only on the difference between what they paid and what they sold for. Designed for second-hand goods, art, antiques, collectibles and vehicles.
The short answer
Under the margin scheme, dealers in second-hand goods, works of art, antiques and collectors' items account for VAT on their margin, the difference between the selling price and the purchase price, instead of the full price. The VAT is worked out at the standard 19% from the margin, the invoice doesn't show VAT separately, and the dealer can't reclaim VAT on goods bought under the scheme.
- Rate on the margin
- 19%
- Registration threshold
- €15,600
- Keep VAT records for
- 6 years
VAT on margin only
Not on full sale price
Significant cash flow advantage
No input VAT
Cannot reclaim VAT on purchase
Trade-off for the scheme
Customer benefit
No VAT shown on invoice
Clean pricing
Margin Scheme Calculator
Margin Scheme
Net to you
€0.00
Standard VAT
Customer pays
€0.00
Standard VAT is better for this transaction by €0.00. This happens when your margin is very high — above approximately 83% of sale price.
Does your stock qualify for the margin scheme?
Margin Scheme — How it works
You buy second-hand goods
From private individual or non-VAT seller. No VAT invoice. Purchase price recorded in stock book.
Goods held in stock
Each item tracked individually with purchase price. Cannot be combined with standard VAT stock.
You sell the goods
Invoice shows total price only — no VAT breakdown shown to customer. VAT is hidden in the margin.
Calculate VAT on margin
Margin = sale price minus purchase price. VAT = margin × 19/119. This is your VAT liability.
Report on VAT return
Total margin scheme sales and VAT reported in specific boxes on your Cyprus VAT return. Separate from standard VAT sales.
Margin Scheme Record Keeping
The margin scheme requires meticulous stock records. The Tax Department can disallow the scheme entirely if records are inadequate.
Stock purchase book — every item, purchase date, seller name and address, purchase price
Sales record — every item, sale date, buyer details, sale price
Margin calculation — per item or global accounting method
Purchase invoices or receipts retained for every item
Separate records for margin scheme and standard VAT stock
No VAT shown on sales invoices for margin scheme goods
The global accounting method — pooling all purchases and sales in a period — is simpler but loses you the ability to identify per-item margins. Dealer-specific advice recommended.
Tour Operators Margin Scheme — TOMS
Tour operators and travel agents have their own variant — the Tour Operators Margin Scheme. VAT is charged only on the margin between what the operator pays for travel, accommodation and services and what they charge the customer.
Who it applies to
Businesses buying in and reselling travel, accommodation, transport and related services as a package. Applies even if you do not call yourself a tour operator.
How the margin is calculated
Total receipts from customers minus total cost of bought-in services equals the margin. VAT at 19% on the margin only.
No input VAT recovery
As with the goods margin scheme — you cannot reclaim input VAT on the bought-in services that form part of the TOMS calculation.
Margin Scheme vs Standard VAT — When to use which
Use margin scheme when
You buy from private sellers with no VAT invoice
Your margins are modest — typically under 40–50%
Your customers are private individuals who cannot reclaim VAT
You want clean pricing without VAT breakdowns on invoices
Use standard VAT when
You buy from VAT-registered dealers with full VAT invoices
Your margins are very high — margin scheme VAT exceeds standard VAT
Your customers are businesses who want to reclaim input VAT
You are selling new goods alongside second-hand stock
You can use both — but separately
Run margin scheme and standard VAT stock simultaneously
They must be tracked and reported completely separately
You cannot mix margin scheme and standard VAT goods in the same invoice
Mixing records is one of the most common audit triggers for dealers
Second-Hand Goods VAT — Sector Guides
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.
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