General
The existing tax framework provides that every person (natural or legal) engaged in business activity is required to issue legal invoices and receipts, as stipulated by the Assessment and Collection of Taxes Law and the Value Added Tax Law, as amended.
It is emphasized that for the electronic issuance of invoices and receipts, the implementation and operation of an approved Fiscal Electronic Mechanism (FEM/FEMS) is required.
On the website of the Department of Electromechanical Services (www.mcw.gov.cy/ems), under the section “Authorized Organizations → Licensed Maintainers of Fiscal Electronic Mechanisms (FEM),” one can find the approved models of Fiscal Electronic Mechanisms (FEM) and Fiscal Electronic Mechanisms for Signatures (FEMS).
Legal Framework
- Article 45(9) of the VAT Laws (Law No. 95(I)/2000), as amended:
“any person who fails to comply with the Regulations issued pursuant to paragraph 1A of the Tenth Schedule, according to which they are obligated to issue a legal receipt” - Article 30 of the Assessment and Collection of Taxes Law (Law No. 4/1978), as amended:
“any person who derives income in accordance with Article 5 of the Income Tax Law (Law No. 118(I)/2002), as amended, is obliged to issue receipts according to relevant Regulations issued by the Tax Department”
INFORMATION LEAFLET – ISSUANCE OF LEGAL INVOICES AND RECEIPTS
Regulations / Notifications
- Regulatory Administrative Act KDP 29/1997: Defines the procedure for issuing legal invoices and receipts in handwritten form and refers to notifications issued from time to time providing for the use of electronic means for issuing legal invoices and receipts.
- KDP 179/1997, KDP 108/2005, KDP 224/2010: Notifications / Technical Specifications for issuing legal invoices and receipts using fiscal electronic mechanisms with fiscal memory, which are amended in accordance with technological progress.
Circulars
- 2015/21: Issuance of legal receipts and invoices
- Interpretive Circular 161 dated January 13, 2012
Penalties / Administrative Fines
For VAT purposes, any person who fails to issue a receipt is subject to a financial penalty equal to twenty percent (20%) of the value of the transaction to which the legal receipt pertains.
For Income Tax purposes, any person who does not comply with the issuance of legal invoices and receipts is subject to an administrative fine of €100 according to Article 50A. Accounting books may not be accepted, taxation may be imposed by estimation, and the court may impose a monetary fine of up to €1700 or imprisonment for up to 3 years, or both, based on the Regulations.
Source:
https://www.mof.gov.cy/mof/TAX/taxdep.nsf/All/C25B69C06A50C4E0C225841500349DE7?OpenDocument
