The tax authorities in Cyprus released guidance (Circular 237) concerning the value added tax (VAT) treatment of services that are usually provided by retirement homes.
The supply of goods and services related to social welfare and insurance—including those supplied by retirement homes that are operated by non-profit-making organizations—are exempt from VAT.
A retirement home is considered to be non-profit-making and exempt from VAT if:
Organizations that are not exempt from VAT (i.e., profitable organizations) may be subject to a reduced rate of VAT of 9% on the total value of the services provided.
Under the VAT rules, services cannot be listed separately on an invoice in order to obtain different VAT rates for each separate service. However, certain medical care services may be exempt from VAT when such services are provided and invoiced directly to a person/patient who is a resident of a retirement home or other similar establishment. In all other circumstances, the charge for medical services would be part of a single charge of the establishment to its patients, and the reduced VAT rate (9%) then would be imposed on the total value of the provided services.
Read an August 2019 report prepared by the KPMG member firm in Cyprus
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