Indirect Tax Update - Services provided by retirement homes

Services provided by retirement homes

On the occasion of the release of Circular 237 by the Tax Authorities on 17 July 2019, this notification aims at summarizing and informing of the VAT treatment of services that are usually provided by retirement homes. Circular 226 issued on 23 April is replaced with Circular 237 which essentially refers to the VAT rate that should be imposed on services provided by profit making retirement homes.



Related content


Main points of circular 237

A.     Services and goods supplied by non-profit organizations

The circular refers to the provisions of paragraph 7 of Table A of Schedule Seven of the Cyprus VAT Act which exempts from VAT, the supply of goods and services which are closely linked to social welfare and insurance, including those supplied by retirement homes that are operated by non-profit making organizations.

Whether a retirement home is considered non-profit-making and exempt from VAT is dependent on whether the following criteria are met:

        i.           No profit distribution to members is allowed.

       ii.           The administration and management of the organization must be carried out by persons receiving no salary and who have no direct or indirect relationship with the activity of the organization.

      iii.           The exemption does not create a risk of distortion of competition to other taxable persons.

B.     Services and goods supplied by profitable organizations

It is emphasized that organizations which are not exempted in accordance with the provisions of paragraph 7 of Table A of Schedule Seven of the VAT Act, are liable to impose the reduced VAT rate (9%) on the total value of the services they provide (Schedule 12 Paragraph 5).

Under no circumstances the various elements comprising a single service should be separated e.g. physiotherapy, accommodation, nutrition, medical care, medicines, etc., on the invoice issued, imposing different VAT rates for each separate element.

Exemption from the above rule applies only to medical care services falling under paragraph 3 of Schedule Seven of the VAT Act in cases where such services are provided and invoiced directly to a person/patient who is staying in a retirement home or other similar establishment. In all other circumstances, the charge for medical services should be part of a single charge of the establishment to its tenant and the reduced VAT rate (9%) should be imposed on the total value of the provided services.

How can KPMG assist?

Should you like to further discuss the content and potential impact of the Circular to your business, please contact one of our trusted advisors from the Indirect Tax Department at KPMG Cyprus.

KPMG’s Indirect Tax team provides advice and assistance at the Cyprus and international level. We structure our effort to dovetail with your business issues and strategy. Our focus is on supplying value adding and pragmatic advice rather than just a list of recommendations.

Our tax professionals are able to review your company’s current tax position and provide relevant advice and planning on a range of indirect taxes, including VAT, customs duties and excise taxes (such as tax audits, reorganizations and acquisitions, etc.). Furthermore, we can help your company with its administrative obligations and contacts with administrative bodies.


© 2022 Copyright owned by one or more of the KPMG International entities. KPMG International entities provide no services to clients. All rights reserved.

KPMG refers to the global organization or to one or more of the member firms of KPMG International Limited (“KPMG International”), each of which is a separate legal entity. KPMG International Limited is a private English company limited by guarantee and does not provide services to clients. For more detail about our structure please visit

Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

Connect with us


Want to do business with KPMG?


loading image Request for proposal

Stay up to date with what matters to you

Gain access to personalized content based on your interests by signing up today

Sign up today