EU products or imported goods from non EU Member States, for which all import duties and taxes have been paid and were released for sale in the local market of an EU Member State, that are consigned to Cyprus from another EU Member State incur no customs duties though VAT is to be applied in specific cases as provided for in the EU Customs Legislation.

For customs clearance procedures as regards goods imported from third countries, any person intending to be involved in such procedures has to be registered in the Customs Register. The relevant application form can be found on the Customs and Excise website.

Upon goods arrival an electronic customs declaration (Single Administrative document) has to be submitted to the computerized import system “THESEAS”. At the time of submission of the declaration the person concerned, must have at his possession for presentation, upon customs request, all supporting documents such as invoice, licences, certificates in compliance with the Customs Legislation.

Cyprus implements the EU’s Common External Tariff to goods imported from third countries.

Customs duties incurred by goods from non-EU countries as well as prohibitions and restrictions at EU level, depending on the products Taric code and country of origin, can be found in the taric website.

In addition, other national taxes, such as excise duty or some further inspections required for imported goods at national level can be found in the Cyprus Integrated Tariff system.

The rate of applicable import duty can either be expressed as ad valorem, or specific or a combination of both. The ad valorem rate is calculated on the customs value that includes the purchase price paid plus the transportation and insurance costs up to the Republic of Cyprus (C.I.F value).

Regarding Value Added Tax (VAT), most products are liable to the standard rate of VAT, which is currently 17 per cent. However, some categories of products, such as foodstuffs, medicines and books are charged with the reduced rate of VAT which is 5 per cent. The basis for the calculation of VAT is the aggregated value, which includes the customs value increased by the amount of import duty and any other taxes paid.

Leveraging the Island’s Logistics Base

Cyprus’ role as a trade and logistics hub in the Mediterranean also benefits companies that buy and sell at a global level. Trading through Cyprus can result in increased profitability and competitiveness for companies as EU legislation provides for a number of procedures which offer commercial benefits by suspending customs duties and other import taxes.

For instance, non-EU companies exporting goods to the EU can take advantage of the Onward System Relief (OSR) mechanism, whereby the payment of VAT might be deferred in Cyprus if the goods are intended for another EU country.

Outward processing relief (OPR), allows EU companies to temporarily export goods to a non-EU country for processing/repair and claim full or partial duty relief when the goods are re-imported.

Certain imported goods may be placed, in Cyprus, under Processing Under Customs Control (PCC) arrangements without the payment of import duties and VAT, if they are processed in Cyprus to a product which attracts lower import duties than the imported goods. Upon release for free circulation of the final product, the import duties for the product are charged.

Inward Processing Relief (IPR) is another procedure which allows EU-companies to obtain relief from import duties and VAT charges on goods that are imported from non EU countries, for processing in Cyprus and re-exported to non-EU countries.  The processing operations allowed under IPR procedure, can include anything from repacking to high-value manufacturing processes.

Furthermore, the customs warehousing procedure allows the storage in an approved customs warehouse of non-community goods, without such goods being subject to import duties and taxes or commercial policy measures until the goods are placed under a different customs-approved treatment or use. Duties and taxes become payable once the goods are released for free circulation.

All these measures might result in significant cash-flow advantages for companies trading on a global level, which can also benefit from Cyprus’ proximity to European, African and Middle Eastern markets.