As reported at the time, in October 2012 the Cyprus VAT Law was amended to provide for the payment of interest on VAT refunds in accordance with the provisions of Council Directive 2008/9/EC of 12 February 2008. A taxable person who submits a claim for a refund of VAT which is not paid within four months of submission of the claim is entitled to interest at the statutory rate (currently 5% per year) from the date the four-month period expires, provided that the delay in repayment is not due to any fault, action or omission on the part of the taxable person.
The amendment took effect on 19 February 2013, and affects tax periods commencing after that date. The first such period is 1 March- 31 May 2013, in respect which of the due date for submission of returns was 10 July 2013. If refunds due for the period are not paid within four months of submission of the return, the taxpayer will be entitled to interest.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.