Date: 19 July 2021 

On 13 July 2021 the EU Council adopted Directive 2021/1159 which amended the EU VAT Directive as regards temporary exemptions on importations and on certain supplies, in response to the Covid-19 pandemic. The so called ‘buy and donate’ directive is expected to make it easier for the Commission and EU agencies to buy goods and services in order to distribute them free of charge to member states. Therefore, as a result of the amendment the VAT exemption will cover purchases made by an EU body for both official use and for donations to Member States, health authorities or hospitals.

The ‘buy and donate’ directive has been given retrospective effect, being thus applicable since January 1st 2021. However, once the COVID emergency situation is over, the applicable VAT rates will be restored.

As far as the Republic of Cyprus is concerned an exemption to the imposition of VAT in relation to the delivery of in vitro diagnostic medical devices and vaccines for covid-19 disease and to the supply of services closely related to such products has already been introduced in the VAT Act (95(I0/2000) through Regulations 629/2020 and 263/2021 respectively.

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.

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