Date: 06/09/2022
On 7 July 2022, the Cyprus Tax Tribunal issued its judgment in the FIDESCORP LIMITED & FIDESCORP SERVICES LTD case (case no. 4/2021E & 5/2021E). The Tribunal ruled that the place of supply of services related with the citizenship application under the Cypriot Investment Program (CIP) is Cyprus and as such CY VAT must be imposed.
Background facts
The abovementioned companies provided services related with the citizenship application to non-taxable (physical) persons established outside the EU. Such services included the completion and submission of the citizenship application, filling forms, preparing the necessary information, forwarding them to the competent authorities of the Republic, as well as monitoring the process until citizenship was granted.
The companies did not impose CY VAT on the value of services provided to non-taxable (physical) persons established outside the EU arguing that such services were of an advisory/consulting nature falling under the provisions of Schedule 13 paragraph 17(2)(c) of the CY VAT Act. Hence, they considered that the place of supply of those services is the place where those persons are established (i.e. outside the Union), thus falling outside the scope of CY VAT.
The Tax Commissioner ruled that the above services are of an administrative nature rather than advisory/consulting and as such do not fall under the provisions of Schedule 13. Therefore, the place of supply of such services must be determined under the provisions of Article 10A of the CY VAT Act, according to which the place of supply is where the supplier is established i.e. Cyprus.
Judgement
The Tax Tribunal agreed with the decision of the Tax Commissioner and ruled that services related with the citizenship application under the Cypriot Investment Program (CIP) as those at hand are of an administrative nature. Therefore, the place of supply is Cyprus and as such CY VAT must be imposed.
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